(a) Potential indicators of fraud. In maintaining or creating covered accounts, employees who observe the following red flags, suspicious documents, suspicious personal identifying information, or suspicious activity should take the steps set out in division (b) below of this section. Employees should use common sense judgment in being vigilant for fraudulent activity.
(1) Red flags. The following red flags are potential indicators of fraud.
A. Alerts, notifications, or warnings from a consumer reporting agency;
B. A fraud or active duty alert included with a consumer report;
C. A notice of credit freeze from a consumer reporting agency in response to a request for a consumer report; or
D. A notice of address discrepancy from a consumer reporting agency as defined in § 334.82(b) of the Fairness and Accuracy in Credit Transactions Act; and
E. Consumer reports that indicate a pattern of activity inconsistent with the history and usual pattern of activity of an applicant or customer, such as
1. A recent and significant increase in the volume of inquiries;
2. An unusual number of recently established credit relationships;
3. A material change in the use of credit, especially with respect to recently established credit relationships; or
4. An account that was closed for cause or identified for abuse of account privileges by a financial institution or creditor.
(2) Suspicious documents. The following suspicious documents are potential indicators of fraud.
A. Documents provided for identification that appear to have been altered or forged.
B. The photograph or physical description on the document is not constituent with the appearance of the applicant or customer presenting the document.
C. Other information on the document is inconsistent with information provided by the person opening a new covered account or customer presenting the identification.
D. Other information on the document is inconsistent with readily accessible information that is on file with the village, such as a signature card or a recent check
E. A document appears to have been altered or forged, or gives the appearance of having been destroyed or reassembled.
(3) Suspicious personal identifying information. A person providing the following suspicious personal identifying information is a potential indicator of fraud.
A. Personal information provided is inconsistent when compared against external information sources used by the city. For example:
1. The address does not match any address in the consumer report.
2. The Social Security Number (SSN) has not been issued or is listed on the Social Security Administration's Death Master File; or
3. Personal identifying information provided by the customer is not consistent with other personal identifying information provided by the customer. For example, there is a lack of correlation between the SSN range and the date of birth.
B. Personal identifying information provided is associated with known fraudulent activity as indicated by internal or third-party sources used by the village. For example, the address on the application is the same as the address provided on a fraudulent application.
C. Personal identifying information provided is of a type commonly associated with fraudulent activity as indicated by internal or third-party sources used by the village. For example:
1. The address on an application is fictitious, a mail drop, or a prison; or
2. The phone number is invalid or is associated with a pager or answering service.
D. The SSN provided is the same as that submitted by other persons opening an account or other customers.
E. The address or telephone number provided is the same as or similar to the address or telephone number submitted by an unusually large number of other customers or other persons opening accounts.
F. The customer or the person opening the covered account fails to provide all required personal identifying information on an application or in response to notification that the application is incomplete.
G. Personal identifying information provided is not consistent with personal identifying information that is on file with the village.
H. When using security questions (mother's maiden name, pet's name, etc.), the person opening the covered account or the customer cannot provide authenticating information beyond that which generally would be available from a wallet or consumer report.
(4) Suspicious activity. The following suspicious activities are potential indicators of fraud:
A. Shortly following the notice of a change of address for a covered account, the village receives a request for new, additional, or replacement goods or services, or for the addition of authorized users on the account.
B. A new revolving credit account is used in a manner commonly associated with known patterns of fraud. For example, the customer fails to make the first payment or makes an initial payment but no subsequent payments.
C. A covered account is used in a manner that is not consistent with established patterns of activity on the account. There is, for example:
1. Nonpayment when there is no history of late or missed payments;
2. A material change in purchasing or usage patterns;
D. A covered account that has been inactive for a reasonably lengthy period of time is used (taking into consideration the type of account, the expected pattern of usage, and other relevant factors).
E. Mail sent to the customer is returned repeatedly as undeliverable although transactions continue to be conducted in connection with the customer's covered account.
F. The village is notified that the customer is not receiving paper account statements.
G. The village is notified of unauthorized charges or transactions in connection with a customer's covered account.
H. The village receives notice from customers, victims of identity theft, law enforcement authorities, or other persons regarding possible identity theft in connection with covered accounts held by the village.
I. The village is notified by a customer, a victim of identity theft, a law enforcement authority, or any other person that it has opened a fraudulent account for a person engaged in identity theft.
(b) Responding to red flags.
(1) Once potentially fraudulent activity is detected, an employee must act quickly as a rapid appropriate response can protect customers and the village from damages and loss. Using common sense, employees should be vigilant for fraudulent activity. When detected, an employee should gather all related documentation and write a description of the situation. The employee then should present this information to the designated authority for determination.
(2) The designated authority will complete additional authentication to determine whether the attempted transaction was fraudulent or authentic.
(3) If a transaction is determined to be fraudulent, appropriate actions must be taken immediately. Actions may include cancelling the transaction, notifying and cooperating with appropriate law enforcement, determining the extent of liability of the village, and notifying the actual customer that fraud has been attempted.
(Res. 2009-R-12, passed 10-20-2009)