The municipal utilities, referred to as the water, wastewater
and electric utility systems, hereinafter known as the “utility,”
developed this identity theft prevention program, hereinafter known
as the “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 and approval
of the city manager, also known as the program administrator, and
the city council. After consideration of the size and complexity of
the utility’s operations and account systems, and the nature
and scope of the utility’s activities, the city council determined
that this program was appropriate for the utility, and therefore approved
this program on October 14, 2008.
(Ordinance 442, ex. A, sec. I, adopted 10/14/08)
(a) Purpose.
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, practice, 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 442, ex. A, sec. II,
adopted 10/14/08)
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.
Red flags:
(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.
Red flags:
(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.
Red flags:
(A) Identifying information presented that is inconsistent with other
information the customer provides (example: inconsistent birthdates);
(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;
(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.
Red flags:
(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.
Red flag:
(A) 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 442, ex. A, sec. III,
adopted 10/14/08)
(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 e-mail);
(2) Verify the validity of requests to change billing addresses; and
(3) Verify changes in banking information given for billing and payment
purposes.
(Ordinance 442, ex. A, sec. IV,
adopted 10/14/08)
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) Prevent and mitigate.
(A) Continue to monitor an account for evidence of identity theft;
(C) Change any passwords or other security devices that permit access
to accounts;
(E) Close an existing account;
(F) Reopen an account with a new number;
(G) Notify the program administrator for determination of the appropriate
step(s) to take;
(H) Notify law enforcement; or
(I) Determine that no response is warranted under the particular circumstances.
(2) 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:
(A) Ensure that its website is secure or provide clear notice that the
website is not secure;
(B) Ensure complete and secure destruction of paper documents and computer
files containing customer information;
(C) Ensure that office computers are password protected and that computer
screens lock after a set period of time;
(D) Keep offices clear of papers containing customer information;
(E) Request only the last 4 digits of social security numbers (if any);
(F) Ensure computer virus protection is up to date; and
(G) Require and keep only the kinds of customer information that are
necessary for utility purposes.
(Ordinance 442, ex. A, sec. V, adopted 10/14/08)
This program will be periodically reviewed and updated to reflect
changes in risks to customers and the soundness of the utility from
identity theft. At least every year, the program administrator will
consider the utility’s experiences with the identity theft situation,
changes in identity theft methods, changes in identity theft detection
and prevention methods, changes in types of accounts the utility maintains
and changes in the utility’s business arrangements with other
entities. After considering these factors, the program administrator
will determine whether changes to the program, including the listing
of red flags, are warranted. If warranted, the program administrator
will update the program or present the city council with his or her
recommended changes and the city council will make a determination
of whether to accept, modify or reject those changes to the program.
(Ordinance 442, ex. A, sec. VI,
adopted 10/14/08)
(a) Oversight.
Responsibility for developing, implementing
and updating this program lies with an identity theft committee for
the utility. The committee is headed by the program administrator,
who may be the head of the utility or his or her appointee. Two or
more other individuals appointed by the head of the utility or the
program administrator comprise the remainder of the committee membership.
The program administrator will be responsible for the program administration,
ensuring appropriate training of utility staff on the program, 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 program administrator 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 program administrator.
(d) Specific program elements and confidentiality.
For the
effectiveness of identity theft prevention programs, the red flag
rule envisions a degree of confidentiality regarding the utility’s
specific practices relating to identity theft detection, prevention
and mitigation. Therefore, under this program, knowledge of such specific
practices is to be limited to the identity theft committee and those
employees who need to know them for purposes of preventing identity
theft. Because this program is to be adopted by a public body and
thus publicly available, it would be counterproductive to list these
specific practices here. Therefore, only the program’s general
red flag detection, implementation and prevention practices are listed
in this document.
(Ordinance 442, ex. A, sec. VII,
adopted 10/14/08)