If the city maintains certain covered accounts pursuant to federal legislation, the city may include the additional program details. The red flags in division (B) below may be tailored to the specific company’s needs.
(A) Covered accounts. Every new and existing customer account that meets the following criteria is covered by this program.
(1) Business, personal and household accounts for which there is a reasonably foreseeable risk of identity theft.
(2) Business, personal and household accounts for which there is a reasonably foreseeable risk to the safety and/or soundness of the city from identity theft, including financial, operational, compliance, reputation or litigation risks.
(B) Red flags. The following “red flags” are potential indicators of fraud and any time when a red flag, or a situation closely resembling a red flag, is apparent, it should be investigated for verification.
(1) Alerts. Alerts, notifications or warnings from a consumer reporting agency:
(a) A fraud or active duty alert is included with a consumer report;
(b) A consumer reporting agency provides a notice of credit freeze in response to a request for a consumer report;
(c) A consumer reporting agency provides a notice of address discrepancy, as defined in § 334.82(b) of this part; and
(d) A consumer report indicates a pattern of activity that is 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; and
4. An account that was closed for cause or identified for abuse of account privileges by a financial institution or creditor.
(2) Suspicious documents.
(a) Documents provided for identification appear to have been altered or forged;
(b) The photograph or physical description on the identification is not consistent with the appearance of the applicant or customer presenting the identification;
(c) Other information on the identification is not consistent with information provided by the person opening a new covered account or customer presenting the identification;
(d) Other information on the identification is not consistent with readily accessible information that is on file with the financial institution or creditor, such as a signature card or a recent check; and
(e) An application appears to have been altered or forged, or gives the appearance of having been destroyed and reassembled.
(3) Suspicious personal identifying information.
(a) Personal identifying information provided is inconsistent when compared against external information sources used by the financial institution or creditor. For example:
1. The address does not match any address in the consumer report; and
2. The Social Security Number (SSN) has not been issued, or is listed on the Social Security Administration’s Death Master File.
(b) 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 date of birth.
(c) Personal identifying information provided is associated with known fraudulent activity as indicated by internal or third-party sources used by the financial institution or creditor. For example: The address on an application is the same as the address provided on a fraudulent application.
(d) Personal identifying information provided is of a type commonly associated with fraudulent activity as indicated by internal or third-party sources used by the financial institution or creditor. For example:
1. The address on an application is fictitious, a mail drop or prison; and
2. The phone number is invalid, or is associated with a pager or answering service.
(e) The SSN provided is the same as that submitted by other persons opening an account or other customers.
(f) The address or telephone number provided is the same as or similar to the account number or telephone number submitted by an unusually large number of other persons opening accounts or other customers.
(g) The person opening the covered account or the customer fails to provide all required personal identifying information on an application or in response to notification that the application is incomplete.
(h) Personal identifying information provided is not consistent with personal identifying information that is on file with the financial institution or creditor.
(i) For financial institutions and creditors that use challenge questions, 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) Unusual use of, or suspicious activity related to, the covered account.
(a) Shortly following the notice of a change of address for a covered account, the institution or creditor receives a request for new, additional or replacement cards or a cell phone, 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 patterns. For example:
1. The majority of available credit is used for cash advances or merchandise that is easily convertible to cash (e.g., electronics equipment or jewelry); and
2. 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 increase in the use of available credit;
3. A material change in purchasing or spending patterns;
4. A material change in electronic fund transfer patterns in connection with a deposit account; and
5. A material change in telephone call patterns in connection with a cellular phone account.
(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 financial institution or creditor is notified that the customer is not receiving paper account statements.
(g) The financial institution or creditor is notified of unauthorized charges or transactions in connection with a customer’s covered account.
(5) Notice.
(a) 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 financial institution or creditor.
(b) The financial institution or creditor 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.
(C) Responding to red flags. Once potentially fraudulent activity is detected, it is essential to act quickly as a rapid appropriate response can protect customers and the city from damages and loss.
(1) Once potentially fraudulent activity is detected, gather all related documentation and write a description of the situation. Take this information and present it to the designated authority for determination.
(2) The designated program representative 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:
(a) Cancel the transaction;
(b) Notify and cooperate with appropriate law enforcement;
(c) Determine extent of liability to company; and
(d) Notify actual customer that fraud has been attempted.
(D) Periodic updates to plan.
(1) At periodic intervals established in the program, or as required, the program will be re-evaluated to determine whether all aspects of the program are up to date and applicable in the current business environment.
(2) Periodic reviews will include an assessment of which accounts are covered by the program.
(3) As part of the review, red flags may be revised, replaced or eliminated. New red flags may also be appropriate actions to take in the event that fraudulent activity is discovered.
(4) May also require revision to reduce damage to the city and its customers.
(E) Program administration.
(1) Involvement of senior management.
(a) The Identity Theft Prevention Program shall not be operated as an extension to existing fraud prevention programs and its importance warrants the highest level of attention.
(b) The Identity Theft Prevention Program is the responsibility of the City Council. Approval of the initial plan must be appropriately documented and maintained.
(c) Operational responsibility of the program can be delegated to a designated employee.
(2) Staff training.
(a) Staff training shall be conducted for all employees, contractors for whom it is reasonably foreseeable that they may come into contact with accounts or personally identifiable information which may constitute a risk to the city or its customers.
(b) Staff members shall continue to receive training as required as changes to the program are made to ensure maximum effectiveness of the program.
(3) Oversight of service provider arrangements.
(a) It is the responsibility of the city to ensure that the activities of all service providers are conducted in accordance with reasonable policies and procedures designed to detect, prevent and mitigate the risk of identity theft.
(b) A service provider that maintains its own Identity Theft Prevention Program, consistent with the guidance of the red flag rules and validated by appropriate due diligence, may be considered to be meeting these requirements.
(c) Any specific requirements should be specifically addressed in the appropriate contract arrangements.
(Ord. 1400, passed 4-21-09)