R265RESOLUTION N0. 265
A RESOLUTION ADOPTING A CITY OF KENNEDALE IDENTITY
THEFT PREVENTION PROGRAM (ITPP)
WHEREAS, the Fair and Accurate Credit Transactions Act of 2003, Pub. L. 108-159,
("Red Flags Rule") requires certain financial institutions and creditors with "covered accounts"
to prepare, adopt, and implement an identity theft prevention program to identify, detect, respond
to and mitigate patterns, practices or specific activities which could indicate identity theft; and
WHEREAS, the City of Kennedale maintains certain continuing accounts with utility
service customers and for other purposes which involve multiple payments or transactions, and
such accounts are "covered accounts" within the meaning of the Red Flags Rule; and
WHEREAS, to comply with the Red Flags Rule which became effective November 1,
2008, Staff have prepared an Identity Theft Prevention Program (ITPP) and have recommended
that the ITPP now be approved and adopted by the City Council for implementation.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF KENNEDALE, TEXAS:
The City Council of the City of Kennedale, Texas hereby approves the Identity
Theft Prevention Program dated November 13, 2008, attached hereto as "Exhibit
A."
PASSED, ADOPTED AND APPROVED by the City Council of the City of Kennedale,
Texas, this the 13th day of November 2008.
APPROVED:
ayor, Bryan Lankhorst
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CITY OF KENNEDALE
IDENTITY THEFT PREVENTION PROGRAM
ADOPTED BY CITY COUNCIL: NOVEMBER 13, 2008
PREFACE
The Federal Trade Commission (FTC) recently adopted rules on identity theft "red
flags" (i.e., warning signs) pursuant to the Fair and Accurate Credit Transactions (FACT)
Act of 2003. The new rules, which mandate action by November 1, 2008 (recently
extended to May 1, 2009), require any business with a "covered account" to adopt
and implement an identity theft program. Most cities that operate a municipal utility
will be affected by these new rules.
A covered account is one where an entity (such as a municipal utility) provides a
service or good before the consumer pays for it. For example, most municipal water
utilities provide water to the customer, then the utility bills the customer later based on
consumption.
A city with such accounts must adopt and implement a written program that: (1)
identifies relevant identity theft "red flags" to the utility or other covered entity; (2)
provides for detection of those red flags; (3) provides for appropriate responses to any
red flags that are detected; and (4) ensures that the program is updated periodically
to address changing risks.
Red flags may include unusual account activity, altered identity documents that are
used to apply for an account, and a variety of other signs. Appropriate action in
response to a red flag might include, among other actions, verification of personal
information, contacting the customer, or other action that would prevent identity theft.
It is our intent to bring forth this ITPP to Council for review at least annually. In order to
demonstrate that review, it will be custom practice for the governing board of a
municipality to adopt a resolution to make the review an official public record.
SUBSEQUENT REVIEW 8 ADOPTION
N/A
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I. PROGRAM ADOPTION
The City of Kennedale ("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. § 681.2. This Program was developed for the Utility
Department of the City ("Utility") with oversight and approval of 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 City's Utility, and
therefore approved this Program on November 13, 2008.
II. PURPOSE AND DEFINITIONS
A. Establish an Identity Theft Prevention Program
To establish an Identity Theft Prevention Program designed to detect,
prevent and mitigate identity theft in connection with the opening of a
covered account or an existing covered account and to provide for
continued administration of the Program in compliance with Part 681 of
Title 16 of the Code of Federal Regulations implementing Sections 1 14 and
315 of the Fair and Accurate Credit Transactions Act (FACTA) of 2003
B. Establishing and Fulfilling Requirements of the Red Flags Rule
The Red Flags Rule ("Rule") defines "Identity Theft" as "fraud committed
using the identifying information of another person" and a "Red Flag"
("Red Flag") as a pattern, practice, or specific activity that indicates the
possible existence of Identity Theft.
Under the 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. The 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.
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C. Red Flags Rule Definitions Used In This Program
1) City: The City of Kennedale, Texas.
2) Covered Account: 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; or
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.
3) Creditors: The Rule defines creditors "to include finance
companies, automobile dealers, mortgage brokers, utility
companies, and telecommunications companies. Where non-profit
and government entities defer payment for goods or services, they,
too, are to be considered creditors."
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.
5) Program: The Identity Theft Prevention Program for the City.
6) Program Administrator: The Director of Finance is the Program
Administrator for the Program.
7) Utility: The Utility is the Utility Department for the City.
III. IDENTIFICATION OF RED FLAGS
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:
A. Notifications and Warnings From Consumer Credit Reporting Agencies
1) Red Flags
a) Report of fraud accompanying a consumer credit report;
b) Notice or report from a consumer credit agency of a credit
freeze on a customer or applicant;
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c) Notice or report from a consumer credit agency of an active
duty alert for an applicant; and
d) Indication from a consumer credit report of activity that is
inconsistent with a customer's usual pattern or activity,
including but not limited to:
• Recent and significant increase in volume of inquiries
• Unusual number of recent credit applications
• A material change in use of credit
• Accounts closed for cause or abuse
B. Suspicious Documents
1) 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.
C. Suspicious Personal Identifying Information
1) Red Flags
a) Identifying information presented that is inconsistent with
other information the customer provides (example:
inconsistent birth dates, lack of correlation between Social
Security number range and date of birth);
b) Identifying information presented that is inconsistent with
other sources of information (for instance, Social Security
number or 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);
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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) or an applicant cannot provide information
requested beyond what could commonly be found in a
purse or wallet; and
h) A person's identifying information is not consistent with the
information that is on file for the customer.
D. Suspicious Account Activity or Unusual Use of Account
1) 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.
E. Alerts from Others
1) Red Flag
a) Notice to the Utility from a customer, identity theft victim,
fraud detection service, law enforcement or other person
that it has opened or is maintaining a fraudulent account for
a person engaged in Identity Theft.
IV. DETECTING RED FLAGS
A. New Accounts
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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) Detect
a) 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;
b) Verify the customer's identity (for instance, review a driver's
license or other identification card);
c) Review documentation showing the existence of a business
entity;
d) Request additional documentation to establish identity; and
e) Independently contact the customer or business.
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:
2) Detect
a) Verify the identification of customers if they request
information (in person, via telephone, via facsimile, via email);
b) Verify the validity of requests to close accounts or change
billing addresses; and
c) Verify changes in banking information given for billing and
payment purposes.
V. PREVENTING AND MITIGATING IDENTITY THEFT
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:
A. Prevent and Mitigate
1) Continue to monitor an account for evidence of Identity Theft;
2) Contact the customer, sometimes through multiple methods;
3) Change any passwords or other security devices that permit access
to accounts;
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4) Not open a new account;
5) Close an existing account;
6) Do not close the account, but monitor or contact authorities;
7) Reopen an account with a new number;
8) Notify the Program Administrator for determination of the
appropriate step(s) to take;
9) Notify law enforcement; or
10) 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 that its website is secure or provide clear notice that the
website is not secure;
2) Where and when allowed, 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) Change passwords on office computers on a regular basis;
5) Ensure all computers are backed up properly and any backup
information is secured;
6) Keep offices clear of papers containing customer information;
7) Request only the last 4 digits of social security numbers (if any);
8) Ensure computer virus protection is up to date; and
9) Require and keep only the kinds of customer information that are
necessary for utility purposes.
VI. PROGRAM UPDATES
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
annually, the Program Administrator will consider the Utility'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
Utility maintains and changes in the Utility's business arrangements with other
entities, consult with law enforcement authorities, and consult with other City
personnel. After considering these factors, the Program Administrator will
determine whether changes to the Program, including the listing of Red Flags,
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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.
VII. PROGRAM ADMINISTRATION
A. Oversight
Responsibility for developing, implementing and updating this Program lies
with an Identity Theft Committee for the Utility. The Committee is headed
by a 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, for ensuring appropriate training of Utility 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
Initially, all Utility staff 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. Thereafter, all
Utility staff shall undergo update training not less than annually.
Additionally, all new Utility employees shall undergo training.
All Utility staff shall submit reports as needed concerning the Utility's
compliance with the program, the training that has been given and the
effectiveness of the policies and procedures in addressing the risk of
Identity Theft, including recommendations for changes to the Program.
While incidents of Identity Theft are to be reported immediately to the
Program Administrator, the reports shall contain a recap of the incident
and include the steps taken to assist with resolution of the incident.
C. Service Provider Arrangements
In the event the Utility engages a service provider to perform an activity in
connection with one or more accounts, including but not limited to
franchise utility providers, the Utility will take the following steps to ensure
the service provider performs its activity in accordance with reasonable
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policies and procedures designed to detect, prevent, and mitigate the
risk of Identity Theft.
1 ~ Require, by contract or contract amendment, that service providers
have such policies and procedures in place; and
Require, by contract or contract amendment, 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.
VIII. ANNUAL REVIEW
It is recommended that The Director of Finance shall, at a minimum, submit
proposed amendments of this policy to the City Council annually.
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