HomeMy WebLinkAbout08-82 - Establishing an Identity Theft Policy & Prevention ProgramRESOLUTION NO. 08-82
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF COSTA MESA, CALIFORNIA, ESTABLISHING AN
IDENTITY THEFT POLICY AND PREVENTION
PROGRAM AND TO COMPLY WITH FEDERAL
REGULATIONS REGARDING ADDRESS
DISCREPANCIES.
THE CITY COUNCIL OF THE CITY OF COSTA MESA HEREBY RESOLVES AS
FOLLOWS:
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; and
WHEREAS, the Federal Trade Commission regulations, adopted as 16
CFR § 681.2 require creditors, as defined by 15 U.S.C. § 1681 a(r)(5) to adopt
red flag policies to prevent and mitigate identity theft with respect to covered
accounts; and
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; and
WHEREAS, the City of Costa Mesa is a creditor with respect to 16 CFR §
681.2 by virtue of accepting payment for municipal services and fees in arrears;
and
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
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; and
WHERAS, 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
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City
of Costa Mesa, 'California, does hereby adopt the following Identity Theft
Prevention Program ("ITPP"):
SECTION 1.
1. Purpose. The purpose of the ITPP is to comply with 16 CFR § 681.2 in order to
detect, prevent and mitigate identity theft by identifying and detecting identity theft red
flags and by responding to such red flags in a manner that will prevent identity theft.
2. Definitions. For purposes of the ITPP, the following definitions apply:
(1) `City' means the City of Costa Mesa.
(2) `Covered account' means (i) An account that a financial institution or creditor
offers or maintains, primarily for personal, family, or household purposes, that involves
or is designed to permit multiple payments or transactions, such as a credit card
account, mortgage loan, automobile loan, margin account, cell phone account, utility
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account, checking account, or savings account; and (ii) Any other account that the . - .
financial institution or creditor offers or maintains for which there is a reasonably
foreseeablerisk to customers or to"the safety and soundness of the financial institution,,
or creditor from identity theft, including financial, operational, compliance, reputation, or
litigation risks.
(3) `Credit' means the right granted by a creditor to a debtor to defer payment of debt
or to incur debts and defer its payment or to purchase property or services and defer
payment therefore.
(4) `Creditor' means any person who regularly extends, renews, or continues credit;
any person who regularly arranges for the extension, renewal, or continuation of credit;
or any assignee of an original creditor who participates in the decision to extend, renew,
or continue credit and includes utility companies and telecommunications companies.
(5) `Customer' means a person that has a covered account with a creditor.
(6) `Identity theft' means a fraud committed or attempted using identifying
information of another person without authority.
(7) 'Person' means a natural person, a corporation, government or governmental
subdivision or agency, trust, estate, partnership, cooperative, or association.
(8) `Personal Identifying Information' means a person's credit card account
information, debit card information, bank account information and drivers' license
information and for a natural person includes their social security number, mother's birth
name, and date of birth.
(9) 'Red flag' means a pattern, practice, or specific activity that indicates the possible
existence of identity theft.
(10) . -'Service provider.' :means a person that provides a service directly.to;.the.city. .
3. Findings.
(1) The city is: -a creditorpursuant to 16:.CFR §681.2 due to its provision or. .c.
maintenance of covered. accounts for which payment is made in arrears.
(2} Covered accounts offered to customers for the provision of city services include
acceptance of credit cards for city.programs and fees and payment of,debts, such as
parking tickets.
(3) The City has had no previous experience with identity theft related to covered
accounts.
(4) The processes of opening a new covered account, restoring an existing covered.
account, making payments on such accounts, and have been identified as potential
processes in which identity theft could occur.
(5) The city limits access to personal identifying information to those employees
responsible for or otherwise involved in opening or restoring covered accounts or .
accepting payment for use of covered accounts. Information provided to such
employees is entered directly into the city's computer system and hard copies thereof
are kept in a secure file that is locked up.
(6) The city determines that there is a low risk of identity theft occurring in the
following ways (if any):
a. Use by an applicant of another person's personal identifying information to
establish a new covered account;
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b. Use of another person's credit.card, .bank account, or other method. of
payment by a customer to pay such customer's covered account or
accounts;
C. Use by a customer desiring to restore such customer's covered account of
another person's credit card, bank account, or other method of payment:
4. Process of Establishing a Covered Account.
(1) As a precondition to opening a covered account in the city, each applicant shall
provide the city with personal identifying information of the customer as follows; driver's
license, Social Security number and employment information. Such: information shall be
kept in a file located in a secure area that is locked up.
(2) Each account shall be assigned an account number and a reference number
which shall be unique to that account.
5. Access to Covered Account Information.
(1) Access to customer accounts shall be password protected and shall be limited to
authorized city personnel.
(2) Such password(s) shall be changed by the director of information technology on
a regular basis, shall be at least 8 characters in length and shall contain letters,
numbers and symbols.
(3) Any unauthorized access to or other breach of customer accounts is to be
reported immediately to the Finance Director and City Manager and the password
changed immediately.
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(4) Personal_. identifying. information -included in customer accounts is considered .
confidential and any request or demand for such information shall be immediately
forwarded to the City Manager and the City Attorney.
6. Credit Card Payments:
(1) All credit card payments. made over -the telephone shall be entered directly. into
the customer's, account information in the computer data base.
(2) 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.
7. Sources and Types of Red Flags. All employees responsible for or.involved in the
process of opening a covered account, restoring a covered account or accepting
payment for a covered account shall check for red flags as indicators of possible identity
theft and such red flags may include:
(1) Alerts from consumer reporting agencies, fraud detection agencies or service
providers. Examples of alerts include but are not limited to:
a. A fraud or active duty alert .that is included with a consumer report;
b. A notice of credit freeze in response to a request for a consumer report;
C. A notice of address discrepancy provided by a consumer reporting
agency;
d. Indications of a pattern of activity in a consumer report that is inconsistent
with the history and usual pattern of activity.of an applicant or customer,
such as:
i. A recent and significant increase in the volume of inquiries;
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ii. An unusual number of recently established credit relationships;
iii.. A material change in the use of credit, especially with respect to
recently established credit relationships; or
iv. An account that was closed for'cause or identified for abuse of.
account privileges by a financial institution or creditor.
(2) Suspicious documents. Examples of suspicious documents include:
a.. Documents provided for identification that appear to be altered or forged;
b. Identification on which the photograph or physical description is
inconsistent with the appearance of the applicant or customer;
c. Identification on which the information is inconsistent with information-
provided by the applicant or customer;
d. Identification on which the information is inconsistent with readily
accessible information that is on file with the financial institution or
creditor, such as a signature card or a recent check; or
e. An application that appears to have been altered or forged, or appears to
`have been destroyed and reassembled.
(3) Suspicious personal identification, such as suspicious address change.
Examples of suspicious identifying information include:
a. Personal identifying information that is inconsistent with external
information sources used by the financial institution or creditor. For
example:
L The address does not match any address in the consumer report;
or
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ii: 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, such
o as a lack:of correlation between the SSN range and date.of birth.
c. Personal identifying information'or a phone number or address, is
associated with known fraudulent applications or activities as indicated by
internal or third -party sources used by the financial institution or creditor.
d. Other information provided, such as fictitious mailing address, mail drop
addresses, jail addresses, invalid phone numbers, pager numbers or
answering services, is associated with fraudulent activity.
e. The SSN provided is the same as that submitted by other applicants or
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 applicants or customers.
g. The applicant or customer fails to provide all required personal identifying
informationon an application or in response to notification that the
application is incomplete.
h. Personal identifying information is not consistent with personal identifying
information that is on file with the financial institution or creditor.
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L . The: applicant or 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 relating to a covered account. Examples of..
suspicious acfiivity include:
a. Shortly following the notice of a change of address for an account, city:
receives a request 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:
i. The customer fails to make the first payment or makes an initial
payment but no subsequent payments.
C. An account .is used in a manner that is not consistent with established
patterns of activity on the account. There is, for example:
i. Nonpayment when there is no history of late or missed payments;
ii. A material change in purchasing or spending patterns;
d. An account that has been inactive for a long 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
account.
f. The city is notified that the customer is not receiving paper account
statements.
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g. The city is notified of unauthorized: charges or transactions in connection
with a customer's account:
h. The city is notified by a customer, law enforcement or another person that
it has opened a fraudulent account fora person engaged in identity theft.
(5) Notice from customers, law enforcement, victims or other reliable sources
regarding possible identity theft or phishing relating to covered accounts
8: Prevention and Mitigation of Identity Theft.
(1) In the event that any city employee responsible for or involved in restoring an
existing covered account or accepting payment for a covered account becomes aware
of red flags indicating possible identity theft with respect to existing covered accounts,
such employee shall use his or her discretion to determine whether such red flag or
combination of red flags suggests a threat of identity theft. If, in his.or her discretion,
such employee determines that identity theft or attempted identity theft is likely or
probable, such employee shall immediately report such red flags to the Revenue
Supervisor and the Finance Director. If, in his or her discretion, such employee deems
that identity theft is unlikely or that reliable information is available to reconcile red flags,
the employee shall convey this information to the Revenue Supervisor and Finance
Director, who may in his or her discretion determine that no further action is necessary.
If the Finance Director, in his or her discretion, determines that further action is
necessary, a city employee shall perform one or more of the following responses, as
determined to be appropriate by the Finance Director:
a. Contact the customer;
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b. Make the following changes to the account if, after contacting the
customer, it is apparent that someone other than the customer has
accessed the customer's covered account:
L. change any account: numbers, passwords, security codes,. or. other
securitydevices that permit access to an account; or
ii. "close the account;
C. Cease attempts to collect additional charges from the customer and
decline to sell the customer's account to a debt collector in the event that
the customer's account has been accessed without authorization and such
access has caused additional charges to accrue;
d. Notify a debt collector within 24 hours of the discovery of likely or probable . 11
identity theft relating to a customer account that has been sold or assigned
to such debt collector in the event that a customer's account has been
sold or assigned o a debt collector prior to the discovery of the likelihood
or probability of identity theft relating to such account;
e. Notify law enforcement; in the event that someone other than the
customer has accessed the customer's account causing additional
charges to accrue or accessing personal identifying information; or
f. Take other appropriate action to prevent or mitigate identity theft. ' .
(2) In the event that any city employee responsible for or involved in opening a new
covered account becomes aware of red flags indicating possible identity theft with
respect to an application for a new account, such employee shall use his or her
discretion to determine whether such red flag or combination of red flags suggests a
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threat of identity theft.. If, in his or her discretion, such employee determines thatAdentity.
theft or attempted identity theft is likely or probable, such employee shall. immediately
report such red flags to the Revenue Supervisor and Finance Director. If, in .his or her -
discretion,.: such employee deems that identity theft is unlikely or that reliable information
is available to reconcile, red flags, the employee shall convey this information to the
Revenue Supervisor and Finance Director, who may in his or her discretion determine
that no further action is necessary. If the Finance Director, in his or. her discretion,
determines that further action is necessary, a city employee shall perform one or more
of the following responses, as determined to be appropriate by Finance Director:
a. . Request additional identifying information from the applicant;
b. Deny the application for the new account;
c. Notify law enforcement of possible identity theft; or
d. Take other appropriate action to prevent or mitigate identity theft.
9. Updating the Program. The city council shall annually review and, as deemed
necessary by the council, update the Identity Theft Prevention Program along with any
relevant red flags in order to reflect changes in risks to customers or to the safety and
soundness of the city and its covered accounts from identity theft. In so doing, the city
council shall consider the. following factors and exercise its discretion. in amending the
program:
(1) The city's experiences with identity theft;
(2) Updates in methods of identity theft;
(3) Updates in customary methods used to detect, prevent, and mitigate identity
theft;
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(4) Updates in the types of accounts that the city offers or maintains; and
(5) Updates in service provider arrangements.
10. Program Administration: The Finance Director is. responsible for oversight of the
program and for program implementation. The City.Manager is responsible for
reviewing reports prepared by'staff regarding compliance with red flag requirements and
with recommending material changes to the program, as necessary in the opinion of -the
City Manager, to address changing identity theft risks and to identify new or
discontinued types of covered accounts. Any recommended material changes to the
program shall be submitted to the city council for consideration by the council.
(1) The Finance Director will report to the City Manager at least annually, on
compliance with the red flag requirements. The report will address material matters
related to the program and evaluate issues such as:
a. The effectiveness of the policies and procedures of city in addressing the
risk of identity theft in connection with the opening of covered accounts
and with.respect to existing covered accounts;
b. Service provider arrangements;
C. Significant incidents involving identity theft and management's response;
and
d. Recommendations for material changes to the Program
(2) The Finance Director, in conjunction with the City Attorney, is responsible for
providing training to all employees responsible for or involved in opening a new covered
account, restoring an existing covered account or accepting payment for a covered
account with respect to the implementation and requirements of the Identity Theft
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Prevention Program. The Finance Director and City Attorney shall exercise. their..
discretion in determining the amount and substance of training necessary'.
.11.*- Outside Service Providers.
In the event that the city engages a service provider to perform an activity in connection .
with one .or more ,covered accounts the Finance Director shall exercise his .or her .
discretion in reviewing such arrangements in order to ensure, to the best. of his or her
ability, that the service provider's activities are conducted in accordance with policies
and procedures, agreed upon by contract, that are designed to detect any red flags that
may arise in the performance of the service provider's activities and take appropriate
steps to prevent or mitigate identity theft.
SECTION 2. The City of Costa Mesa adopts the following Treatment of Address
Discrepancies Program ("TADP"):
1. Purpose. Pursuant to 16 CFR § 681.1, the purpose of the TADP is to establish .a
process by which the city will be able to form a reasonable belief that a consumer report
relates to the consumer about whom it has requested a consumer credit report when
the city has received a notice of address discrepancy.
2. Definitions. For purposes of this article, the following definitions apply:
(1) `Notice of address discrepancy' means a notice sent to a user by a consumer
reporting agency pursuant to 15 U.S.C. § 1681(c)(h)(1), that informs the user of a
substantial difference between the address for the consumer that the user provided to
request the consumer report and the address(es) in the agency's file for the consumer.
(2) 'City' means City of Costa Mesa.
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3. Policy. In the.event.that the city receives.a notice.of address discrepancy, the city
employee responsible for verifying consumer addresses for the purpose of providing the
municipal service or account sought by the consumer.shall perform one or more of the
following activities, as determined to be appropriate by such employee:
(1) Compare the information in the consumer report. with:
a. Information the,city obtains and uses to verify a consumer's identity in
accordance with the requirements of the Customer Information Program
rules implementing 31 U.S.C. § 5318(l);
b. Information the city maintains in its -own records, such as applications for
service, change of address notices, other customer account records or tax
records; or
C. Information the city obtains from third -party sources that are deemed
reliable by the relevant city employee; or
(2) Verify the information in the consumer report with the consumer.
4. Furnishing Consumer's Address to Consumer Reporting Agency.
(1) In the event that the city reasonably confirms that an address provided by a
consumer to the city is accurate, the city is required to provide such address to the
consumer reporting agency from which the city received a notice of address
discrepancy with respect to such consumer. This information is required to be provided
to the consumer reporting agency when:
a. The city is able to form a reasonable belief that the consumer report
relates to the consumer about whom the city requested the. report;
b. The city establishes a continuing relation with the consumer; and
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c.: The, city regularlyand in- the ordinary course of business provides
information tothe consumer reporting agency from which it received the
notice of address discrepancy.
(2) Such information shall be provided to the consumer reporting agency as part of
the information regularly provided by the city to such agency for the reporting period in
which the city establishes a relationship with, the customer.
5. Methods of Confirming Consumer°Addresses. The city employee charged with
confirming consumer addresses may, in his or her discretion, confirm the accuracy of an
address through one or more of the following methods:
(1) Verifying the address -with the consumer;
(2) Reviewing the city's records to verify the consumer's address;
(3) Verifying the address through third party sources; or
(4) Using other reasonable processes.
SECTION 3. The City Clerk:of the City of Costa Mesa shall certify to the
passage and adoption of this resolution and its approval by the City Council and shall
cause the same to be listed in the records of the City.
PASSED AND ADOPTED this 21St day of October, 2008.
ATTEST:
/L� wip,
,PRol 0 RK41 I R1 IM�
-
Eric R. Bever, Mayor
APPROVED AS TO FORM:
Ki berly HaqI Barlow, City Attorney
IET
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss
CITY OF COSTA MESA )
I, JULIE FOLCIK, City Clerk of the City of Costa Mesa, DO HEREBY CERTIFY
that the above and foregoing is the original of Resolution No. 08-82 and was duly
passed and adopted by the City Council of the City of Costa Mesa at a regular meeting
held on the 21 st day of October, 2008, by the following roll call vote, to wit:
AYES: COUNCIL MEMBERS: BEVER, MANSOOR, DIXON, FOLEY, LEECE.
NOES: COUNCIL MEMBERS: NONE.
ABSENT: COUNCIL MEMBERS: NONE.
IN WITNESS WHEREOF, I have hereby set my hand and affixed the seal of the
City of Costa Mesa this 22nd day of October, 2008.
(SEA1 )-
JULLV FOLCIK, CITY CLERK
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