The city developed this identity theft prevention program (“program”)
pursuant to the Federal Trade Commission’s red flags rule (“rule”),
which implements section 114 of the Fair and Accurate Credit Transactions
Act of 2003, 16 C.F.R. section 681.2. This program was developed with
oversight of the city manager and city secretary with the approval
of the city council. After consideration of the size and complexity
of the utility’s (city water utilities) operations and account
systems, and the nature and scope of the utility’s activities,
the city manager or city secretary along with the city council determined
that this program was appropriate for the city water utility system,
and therefore approved this program retroactively to November 1st,
2008.
(Ordinance adopted 11/17/09, sec.
I)
(a) Fulfilling requirements of red flags rule.
Under the
red flags rule, every financial institution and creditor is required
to establish an “identity theft prevention program” tailored
to its size, complexity and the nature of its operation. Each program
must contain reasonable policies and procedures to:
(1) Identify relevant red flags for new and existing covered accounts
and incorporate those red flags into the program;
(2) Detect red flags that have been incorporated into the program;
(3) Respond appropriately to any red flags that are detected to prevent
and mitigate identity theft; and
(4) Ensure the program is updated periodically, to reflect changes in
risks to customers or to the safety and soundness of the creditor
from identity theft.
(b) Red flags rule definitions used in this program.
(1) The red flags rule defines “identity theft” as “fraud
committed using the identifying information of another person”
and a “red flag” as “a pattern, or specific activity
that indicates the possible existence of identity theft.”
(2) According to the rule, a municipal utility is a creditor subject
to the rule requirements. The rule defines creditors “to include
finance companies, automobile dealers, mortgage brokers, utility companies,
and telecommunications companies. Where nonprofit and government entities
defer payment for goods or services, they, too are to be considered
creditors.”
(3) All the utility’s accounts that are individual utility service
accounts held by customers of the utility, whether residential, commercial,
or industrial, are covered by the rule. Under the rule, a “covered
account” is:
(A) Any account the utility offers or maintains primarily for personal,
family or household purposes, that involves multiple payments or transactions;
and
(B) Any other account the utility offers or maintains for which there
is a reasonably foreseeable risk to customers or to the safety and
soundness of the utility from identity theft.
(4) “Identifying information” is defined under the rule as
“any name or number that may be used, alone or in conjunction
with any other information, to identify a specific person” including
name, address, telephone number, social security number, date of birth,
government issued driver’s license or identification number,
alien registration number, government passport number, employer or
taxpayer identification number, unique electronic identification number,
computer’s Internet Protocol address, or routing code.
(Ordinance adopted 11/17/09, sec.
II)
In order to identify relevant red flags, the utility considers
the types of accounts that it offers and maintains, the methods it
provides to open its accounts, the methods it provides to access its
accounts, and its previous experiences with identity theft. The utility
identifies the following red flags, in each of the listed categories:
(1) Notifications and warnings from credit reporting agencies.
(A) Report of fraud accompanying a credit report;
(B) Notice or report from a credit agency of a credit freeze on a customer
or applicant;
(C) Notice or report from a credit agency of an active duty alert for
an applicant; and
(D) Indication from a credit report of activity that is inconsistent
with a customer’s usual pattern or activity.
(2) Suspicious documents.
(A) Identification document or card that appears to be forged, altered,
or inauthentic;
(B) Identification document or card on which a person’s photograph
or physical description is not consistent with the person presenting
the document;
(C) Other document with information that is not consistent with existing
customer information (such as if a person’s signature on a check
appears forged); and
(D) Application for service that appears to have been altered or forged.
(3) Suspicious personal identifying information.
(A) Identifying information presented that is inconsistent with other
information the customer provides (example: inconsistent birth dates);
(B) Identifying information presented that is inconsistent with other
sources of information (for instance, an address not matching an address
on a credit report);
(C) Identifying information presented that is the same as information
shown on other applications that were found to be fraudulent;
(D) Identifying information presented that is consistent with fraudulent
activity (such as an invalid phone number or fictitious billing address);
(E) Social security number presented that is the same as one given by
another customer (the city does not keep numbers on database to check
for such a match);
(F) An address or phone number presented that is the same as that of
another person;
(G) A person fails to provide complete personal identifying information
on an application when reminded to do so (however, by law, social
security numbers must not be required); and
(H) A person’s identifying information is not consistent with the
information that is on file for the customer.
(4) Suspicious account activity or unusual use of account.
(A) Change of address for an account followed by a request to change
the account holder’s name;
(B) Payments stop on an otherwise consistently up-to-date account;
(C) Account used in a way that is not consistent with prior use (example:
very high activity);
(D) Mail sent to the account holder is repeatedly returned as undeliverable;
(E) Notice to the utility that a customer is not receiving mail sent
by the utility;
(F) Notice to the utility that an account has unauthorized activity;
(G) Breach in the utility’s computer system security; and
(H) Unauthorized access to or use of customer account information.
(5) Alerts from others.
Notice to the utility from a customer,
identity theft victim, law enforcement or other person that it has
opened or is maintaining a fraudulent account for a person engaged
in identity theft.
(Ordinance adopted 11/17/09, sec.
III)
(a) New accounts.
In order to detect any of the red flags
identified above associated with the opening of a new account, utility
personnel will take the following steps to obtain and verify the identity
of the person opening the account:
(1) Require certain identifying information such as name, date of birth,
residential or business address, principal place of business for an
entity, driver’s license or other identification;
(2) Verify the customer’s identity (for instance, review a driver’s
license or other identification card);
(3) Review documentation showing the existence of a business entity;
and
(4) Independently contact the customer.
(b) Existing accounts.
In order to detect any of the red
flags identified above for an existing account, utility personnel
will take the following steps to monitor transactions with an account:
(1) Verify the identification of customers if they request information
(in person, via telephone, via facsimile, via email);
(2) Verify the validity of requests to change billing addresses; and
(3) Verify changes in banking information given for billing and payment
purposes.
(Ordinance adopted 11/17/09, sec.
IV)
(a) Prevent and mitigate.
In the event utility personnel
detect any identified red flags, such personnel shall take one or
more of the following steps, depending on the degree of risk posed
by the red flag:
(1) Continue to monitor an account for evidence of identity theft;
(3) Change any passwords or other security devices that permit access
to accounts;
(5) Close an existing account;
(6) Reopen an account with a new number;
(7) Notify the city manager or city secretary for determination of the
appropriate step(s) to take;
(8) Notify law enforcement; or
(9) Determine that no response is warranted under the particular circumstances.
(b) Protect customer identifying information.
In order to
further prevent the likelihood of identity theft occurring with respect
to utility accounts, the utility will take the following steps with
respect to its internal operating procedures to protect customer identifying
information:
(1) Ensure complete and secure destruction of paper documents and computer
files containing customer information according to the records destruction
period;
(2) Ensure that office computers are secured for office personnel only;
(3) Keep offices clear of papers containing customer information;
(4) Ensure computer virus protection is up to date; and
(5) Require and keep only the kinds of customer information that are
necessary for utility purposes.
(Ordinance adopted 11/17/09, sec.
V)
The city manager and/or city secretary will periodically review
and update this program to reflect changes in risks to customers and
the soundness of the utility from identity theft. In doing so, the
city manager and/or city secretary will consider the utility’s
experiences with identity theft situations, changes in identity theft
methods, changes in identity theft detection and prevention methods,
and changes in the utility’s business arrangements with other
entities. After considering these factors, the city manager and/or
city secretary will determine whether changes to the program, including
the listing of red flags, are warranted. If warranted, the city manager
and/or city secretary will update the program and then present the
city council with the changes and recommendations and the city council
will make a determination of whether to accept, modify or reject those
changes to the program.
(Ordinance adopted 11/17/09, sec.
VI)
(a) Oversight.
Responsibility for developing, implementing
and updating this program lies with the city manager and/or city secretary.
The city manager and the city secretary will be jointly responsible
for the program administration, for ensuring appropriate training
of utility staff on the program, and for reviewing any staff reports
regarding the detection of red flags and the steps for preventing
and mitigating identity theft, determining which steps of prevention
and mitigation should be taken in particular circumstances and considering
periodic changes to the program.
(b) Staff training and reports.
Utility staff responsible
for implementing the program shall be trained either by or under the
direction of the city manager and/or city secretary in the detection
of red flags, and the responsive steps to be taken when a red flag
is detected.
(c) Service provider arrangements.
In the event the utility
engages a service provider to perform an activity in connection with
one or more accounts, the utility will take the following steps to
ensure the service provider performs its activity in accordance with
reasonable policies and procedures designed to detect, prevent, and
mitigate the risk of identity theft:
(1) Require, by contract, that service providers have such policies and
procedures in place; and
(2) Require, by contract, that service providers review the utility’s
program and report any red flags to the city manager and/or city secretary.
(Ordinance adopted 11/17/09, sec.
VII)