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HomeMy WebLinkAboutO-1386ORDINANCE NO. 1386 AN ORDINANCE TO PROVIDE FOR AN IDENTITY THEFT PREVENTION PROGRAM; TO COMPLY WITH FEDERAL REGULATIONS RELATING TO ADDRESS DISCREPANCIES; AND TO COMPLY WITH FEDERAL REGULATIONS RELATING TO RED FLAGS AND IDENTITY THEFT. WHEREAS pursuant to federal law the Federal Trade Commission adopted Identity Theft Rules requiring the creation of certain policies relating to the use of consumer reports, address discrepancy and the detection, prevention and mitigation of identity theft; WHEREAS the Federal Trade Commission regulations, adopted as 16 CFR § 681.2 require creditors, as defined by 15 U.S.C. § 168la(r)(5) to adopt red flag policies to prevent and mitigate identity theft with respect to covered accounts; WHEREAS 15 U.S.C. § 1681a(r)(5) cites 15 U.S.C. § 1691a, which defines a creditor as a person that extends, renews or continues credit, and defines `credit' in part as the right to purchase property or services and defer payment therefore; WHEREAS the Federal Trade Commission regulations include utility companies in the definition of creditor; WHEREAS the City of Fairhope is a creditor with respect to 16 CFR § 681.2 by virtue of providing utility services or by otherwise accepting payment for municipal services in arrears; WHEREAS the Federal Trade Commission regulations define `covered account' in part as an account that a creditor provides for personal, family or household purposes that is designed to allow multiple payments or transactions and specifies that a utility account is a covered account; WHEREAS the Federal Trade Commission regulations require each creditor to adopt an Identity Theft Prevention Program which will use red flags to detect, prevent and mitigate identity theft related to information used in covered accounts; WHEREAS the City provides water, sewer, electric and natural gas services for which payment is made after the product is consumed or the service has otherwise been provided which by virtue of being utility accounts are covered accounts; WHEREAS customer accounts for garbage, business licenses, assessments, Municipal Court, and charges for miscellaneous services for which payment is made after the product is consumed or the service has otherwise been provided are covered accounts by virtue of being for household purposes and allowing for multiple payments or transactions; WHEREAS the Federal Trade Commission regulations, adopted as 16 CFR 681.1, require users of consumer credit reports to develop policies and procedures relating to address discrepancies between information provided by a consumer and information provided by a consumer credit company; WHEREAS the City of Fairhope uses consumer credit reports to establish various customer accounts; and WHEREAS the duly elected governing authority of the City of Fairhope is the City Council thereof, Now therefore be it ordained that the City of Fairhope adopts the following Identity Theft Prevention Program: Ordinance No. 1386 Page -2- SECTION 1. The Code of the City of Fairhope hereby amended by adding an Article to be numbered VIII in Chapter 21 Utilities and Services which said Article reads as follows: ARTICLE VIII. IDENTITY THEFT PREVENTION PROGRAM I. SHORT TITLE This article shall be known as the Identity Theft Prevention Program. IL PROGRAM PURPOSE AND DEFINITIONS A. Fulfilling requirements of the Red Flags Rule Under the Red Flag 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 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. The City is a user of consumer reports that are subject to administrative enforcement of the Fair Credit Reporting Act by the Federal Trade Commission pursuant to 15 U.S. Code §1681s(a)(1), subject to the Rule requirements. The City maintains covered accounts that are subject to the Rule requirements, i.e. utility accounts. In some programs, the City extends credit to individuals. The City also maintains customer accounts in revenue programs, in collection of garbage fees, in collection of fines and costs in Municipal Court, and in collections of charges for miscellaneous services. All the City's accounts that are individual garbage collection fee service accounts held by customers of the City are covered by the Rule. Under the Rule, a "covered account" is: 1. Any account offered or maintained primarily for personal, family or household purposes, that involves multiple payments or transactions; and 2. Any other account offered or maintained for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the City from Identity Theft. Ordinance No. 1386 Page -3- "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." III. IDENTIFICATION OF RED FLAGS. In order to identify relevant Red Flags, the City 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 City identifies the following red flags, in each of the listed categories: A. Notifications and Warnings from Credit Reporting Agencies 1. Report of fraud accompanying a credit report; 2. Notice or report from a credit agency of a credit freeze on a customer or applicant; 3. Notice or report from a credit agency of an active duty alert for an applicant; and 4. Indication from a credit report of activity that is inconsistent with a customer's usual pattern or activity. B. Suspicious Documents 1. Identification document or card that appears to be forged, altered or inauthentic; 2. Identification document or card on which a person's photograph or physical description is not consistent with the person presenting the document; 3. 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 4. Application for service that appears to have been altered or forged. C. Suspicious Personal Identifying Information 1. Identifying information presented that is inconsistent with other information the customer provides (example: inconsistent birth dates); 2. Identifying information presented that is inconsistent with other sources of information (for instance, an address not matching an address on a credit report); 3. Identifying information presented that is the same as information shown on other applications that were found to be fraudulent; 4. Identifying information presented that is consistent with fraudulent activity (such as an invalid phone number or fictitious billing address); 5. Social security number presented that is the same as one given by another customer; 6. An address or phone number presented that is the same as that of another person; 7. 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 8. A person's identifying information is not consistent with the information that is on file for the customer. Ordinance No. 1386 Page -4- D. Suspicious Account Activity or Unusual Use of Account 1. Change of address for an account followed by a request to change the account holder's name; 2. Payments stop on an otherwise consistently up-to-date account; 3. Account used in a way that is not consistent with prior use (example: very high activity); 4. Mail sent to the account holder is repeatedly returned as undeliverable; 5. Notice to the City that a customer is not receiving mail sent by the City; 6. Notice to the City that an account has unauthorized activity; 7. Breach in the City's computer system security; and 8. Unauthorized access to or use of customer account information. E. Alerts from Others 1. Notice to the City 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. IV. CREDIT CARD PAYMENTS. 1. In the event that credit card payments that are made over the Internet are processed through a third party service provider, such third party service provider shall certify that it has an adequate identity theft prevention program in place that is applicable to such payments. 2. All credit card payments made over the telephone or the city's website shall be entered directly into the customer's account information in the computer data base. 3. Account statements and receipts for covered accounts shall include only the last four digits of the credit or debit card or the bank account used for payment of the covered account. V. DETECTING RED FLAGS. A. New Accounts In order to detect any of the Red Flags identified above associated with the opening of a new account, City 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. Ordinance No. 1386 Page -5- B. Existing Accounts In order to detect any of the Red Flags identified above for an existing account, City 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. VI. PREVENTING AND MITIGATING IDENTITY THEFT. If City 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; 2. Contact the customer; 3. Change any passwords or other security devices that permit access to accounts; 4. Not open a new account; 5. Close an existing account; 6. Reopen an account with a new number; 7. Notify the Mayor 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. In order to further prevent the likelihood of identity theft occurring with respect to City accounts, the City will take the following steps with respect to its internal operating procedures to protect customer identifying information: 1. Ensure that its website is secure or provide clear notice that the website is not secure; 2. Ensure complete and secure destruction of paper documents and computer files containing customer information; 3. Ensure that office computers are password protected and that computer screens lock after a set period of time; 4. Keep offices clear of papers containing customer information; 5. Request only the last 4 digits of social security numbers (if any); 6. Ensure computer virus protection is up to date; and 7. Require and keep only the kinds of customer information that are necessary for City purposes. VII. PROGRAM UPDATES. This Program will be periodically reviewed and updated to reflect changes in risks to customers and the soundness of the City from Identity Theft. At least annually, the Mayor will consider the City's experiences with Identity Theft situation, changes in Identity Theft methods, changes in Identity Theft detection and prevention methods, changes in types of accounts the City maintains and changes in the City's business arrangements with other entities. After considering these factors, the Mayor will determine whether changes to the Program, including the listing of Red Flags, are warranted. If warranted, the Mayor will 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 No. 1386 Page -6- VIII. PROGRAM ADMINISTRATION. A. Oversight Responsibility for developing, implementing and updating this Program lies with an Identity Theft Committee for the City. The Committee is headed by the Mayor or his or her appointee. Two or more other individuals appointed by the Mayor comprise the remainder of the committee membership. The Mayor will be responsible for the Program administration, for ensuring appropriate training of City staff on the Program, 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 City staff responsible for implementing the Program shall be trained either by or under the direction of the Administrative Superintendent in the detection of Red Flags, and the responsive steps to be taken when a Red Flag is detected. Staff shall provide reports to the Mayor on incidents of Identity Theft, the City's compliance with the Program and the effectiveness of the Program. C. Service Provider Arrangements In the event the City engages a service provider to perform an activity in connection with one or more accounts, the City 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 City's Program and report any Red Flags to the Mayor. 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 City'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. SECTION 2. The preamble to this ordinance is hereby incorporated into this ordinance as if set out fully herein. Ordinance No. 1386 Page -7- SECTION 3. The sections, paragraphs, sentences, clauses and phrases of this ordinance are severable, and if any phrase, clause, sentence, paragraph or section of this ordinance shall be declared unconstitutional by a court of competent jurisdiction, then such ruling shall not affect any other paragraphs and sections, since the same would have been enacted by the municipality council without the incorporation of any such unconstitutional phrase, clause, sentence, paragraph or section. SECTION 4. This ordinance shall take effect immediately, and upon its due adoption and publication as required by law. ADOPTED AND APPROVED this 27th day of April, 2009 ATTEST: - 00" d- � '." Lisa A. auks, City Clerk C W Y t � .c� U U aw �a O cc o z w O 1=- o