16 Fiscal managementCITY COUNCIL AGENDA ITEM BRIEFING SHEET
Submittal Date:
Originating Department:
Presented By:
Agenda Item No.:
3-20-2009
Council Date:
4-13-2009
Finance
Gene Anderson
16.
RECOMMENDED MOTION:
Motion to approve resolution adopting an identity theft prevention program.
POLICY ISSUE(S):
Fiscal Management
See the attached staff report, resolution, and identity theft prevention program.
BOARD/COMMISSION RECOMMENDATION:
NONE
EXHIBITS:
Resolution, staff report, and identity theft program
ACTION:
BUDGET INFO:
❑ Financial Report ❑ Minute Order
Expense
$NA
❑ Department Report Z Resolution
Budgeted Amt.
$NA
❑ Presentation ❑ Ordinance
y'I'D Actual
$NA
❑ Public Hearing ❑ Other
Acct. Name
NA
Acct. Number
NA
FISCAL NOTES:
None
REVIEWED AND APPROVED BY:
Z Administration Z City Clerk ❑ Community Development ❑ EMS/IT Z Finance ❑ Fire
❑ Municipal Court Z Legal ❑ Library ❑ Police ❑ Eng./Public Works ❑ Utilities
City of Paris Revised 2/04/08
OUOU4C~
DRAFT
attorney\reswork\current\FACTA - Identity Theft Policy Res 2009
RESOLUTION NO.
A RESOLUTION OF THE CITY COUIIICIL OF THE CITY OF PARIS, TEXAS,
ADOPTING AN IDENTITY THEFT POLICY IN ACCORDANCE WITH
RECEIVT AMENDMENTS TO THE FAIR A1VD ACCURATE CREDIT
TRANSACTION ACT OF 2003; MAKING OTHER FINDINGS AND
PROVSIIONS RELATED TO THE SUBJECT; PROVIDING A
SEVERABILITY CLAUSE; AND DECLARING AN EFFECTIVE DATE.
WHEREAS, a recent amendment to the Fair and Accurate Credit Transactions
Act of 2003 requires all creditors (including Municipal Utilities) to develop an Identity
Theft Prevention Program; and
WHEREAS, the new rules are scheduled to become effective May 1, 2009 and
requires municipal utilities and other departments to implement an identity theft
program and red flags rule as required by federal law; and
WHEREAS, this Resolution is being passed in full accordance with all
requirements of State law, including but not limited to the Open Meeting Act; and
WHEREAS, the City Council of the City of Paris hereby determines that the
passage of this Resolution is in the best interest of the City and its citizens.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
PARIS, TEXAS:
Section 1. That the findings set out in the preamble to this resolution are hereby
in all things approved.
Section 2. That all matters set forth herewith are found to be true and correct,
are incorporated herein by reference as if copied in their entirety, and are adopted by
the City.
Section 3. That the City Council hereby adopts the Identity Theft Prevention
Program ("Program") attached to this Resolution as Exhibit "A" and incorporated by
reference herein to be the City's Identity Theft Protection Policy.
Section 4. That the Director of Finance is hereby designated as the Program
Administrator for the Program and he shall appoint an Identity Theft Committee of at
least two (2) additional persons to assist him at implementation of the Program.
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.
Section 5. That it is hereby declared to be the intention of the City, that sections,
paragraphs, clauses, and phrases of this Resolution are severable, and if any phrase,
clause, sentence or section of this Resolution shall be declared unconstitutional or illegal
by the valid judgment or decree of any court of competent jurisdiction, such
unconstitutionality or illegality shall not affect any of the remaining phrases, clauses,
sentences, paragraphs or sections of this Resolution since the same would have been
enacted by the City without the incorporation in this Resolution of any such
unconstitutional or illegal phrase, clause, sentence, paragraph or section.
Section 5. That this Resolution shall be in full force and effect from and after the
date of its passage.
APPROVED BY A VOTE OF AYES, NAYS AND ABSTENTIONS ON
THIS THE 13th DAY OF APRIL, 2009.
CITY OF PARIS
Jesse James Freelen, Mayor
ATTEST:
Janice Ellis, City Clerk
APPROVED AS TO FORM:
W. Kent McIlyar
.
City of Paris
Identity Theft Prevention Program
Effective beginning May 1, 2009
EXHIBIT
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PROGRAM ADOPTION
The City of Paris ("Utility") 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 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 of Paris,
and therefore approved this Program on April 13, 2009.
II.
PROGRAM PURPOSE AND DEFINITIONS
A. Fulfillina requirements of the Red Flaqs Rule (16 C.F.R.4-681.2)
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 Flaqs Rule definitions used in this Proqram
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."
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 non-profit and government entities defer payment for goods or services, they,
too, are to be considered creditors."
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:
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1. Any account the Utility offers or maintains primarily for personal, family or
household purposes, that involves multiple payments or transactions; and
2. 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.
"Identifying information" is defined u
be used, alone or in conjunction %
person," including: name, address,
of birth, government issued driver's
number, government passport num
unique electronic identification nui
routing code.
nder the Rule as "any name or number that may
vith any other information, to identify a specific
telephone number, social security number, date
license or identification number, alien registration
ber, employer or taxpayer identification number,
nber, computer's Internet Protocol address, or
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. Suspicious Documents
Red Flaas
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.
B. Suspicious Personal Identifvinq Information
Red Flaas
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;
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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.
C. Suspicious Account Activitv or Unusual Use of Account
Red Ftaas
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 Utility that a customer is not receiving mail sent by the Utility;
6. Notice to the Utility that an account has unauthorized activity;
7. Breach in the Utility's computer system security; and
8. Unauthorized access to or use of customer account information.
D. Alerts from Others
Red Flag
1. Notice to the Utility from a customer, identity theft victim, law enforcement or
other person that the utility has opened or is maintaining a fraudulent account
for a person engaged in Identity Theft.
IV.
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, Utility personnel will take the following steps to obtain
and verify the identity of the person opening the account:
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Detect
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, if available, showing the existence of a business
entity; and
4. Independently contact the customer if there is reason to question information
provided by the person seeking to open a new account.
B. Existinq 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:
Detect
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.
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:
Prevent and Mitiqate
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 Program Administrator 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.
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Protect customer identifvinq 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. 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. Ensure computer virus protection is up to date; and
6. Require and keep only the kinds of customer information that are necessary
for utility purposes.
VI.
PROGRAM UPDATES
The Program Administrator 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 Program Administrator 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 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.
VII.
PROGRAM ADMINISTRATION.
A. Oversiqht
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. Two or more other individuals appointed by 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 Traininq 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.
Staff will provide reports to the Program Administrator on incidents of Identity
Theft, the Utility's compliance with the Program and the effectiveness of the Program.
C. Service Provider Arranqements
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.
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Staff Report on adoption of an Identitv Theft Prevention Pro4ram
The City needs to adopt a policy preventing identity theft in order to comply with a
recent amendment to the Fair and Accurate Credit Transactions Act of 2003 aka
FACTA. FACTA requires cities and utilities to adopt an Identity Theft Prevention
Program ("Program") pursuant to the Federal Trade Commission's Red Flags Rule
("Rule").' 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.
1. FACTA Definitions
The 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."
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 non-profit and government entities defer payment for goods or services, they,
too, are to be considered creditors."
All the City'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:
1. Any account the City offers or maintains primarily for personal, family or
household purposes, that involves multiple payments or transactions; and
2. Any other account the City offers or maintains for which there is a reasonably
foreseeable risk to customers or to the safety and soundness of the City from
Identity Theft.
"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.
' 16 C.F.R. § 681.2.
2. Identifying 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 red flags in each of the following categories: (1)
Suspicious Documents; (2) Suspicious Personal Identifying Information; (3)
Suspicious Account Activity or Unusual Use of Account; and (4) Alerts From Others.
3. Other Steps That a City Must Take
Cities must also take the following steps: (1) Detect Red Flags-for new
accounts and existing accounts; (2) Prevent and Mitigate Identity Theft-includes
protecting customers' identifying information; (3) Program Updates; and (4) Program
Administration-includes oversight, staff training and reports, service provider
arrangements, and non-disclosure of specific practices.
B. Identity Theft Prevention Program for the City
FACTA requires that the City adopt an Identity Theft Prevention Program
before May 1, 2009. The Program being recommended for the City to adopt covers
all the necessary actions that the City must take in order to be in compliance with
FACTA. It addresses each of the legal points referenced above and describes
specific steps that the City must take in order to implement a successful and effective
program.
Conclusion
The City is covered by the new amendment to the Fair and Accurate Credit
Transactions Act and should adopt a policy by May 1, 2009 in order to be in
compliance with the requirements of that Act.
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