City of Des Plaines. %SJ Miner Street. consent Agenda Items #6 & 6a. Finance Department MEMORANDUM. Date: May2,201l

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1 MEMORANDUM Fax: ILLINOIS Tel: DES PLANES Des Plaines, IL %SJ Miner Street Finance Department City of Des Plaines accounts develop and implement a written Identity Theft Prevention Program that helps protect The FTC rules mandate that creditors (like municipal utilities) that offer or maintain covered consumer identity by responding to possible signals of identity theft known as Flags. activity that indicates the possible existence of identity theft, Examples of Flags include customer identifying information, as well as many other examples set forth in the FTC rules. alerts, notifications or warnings from a consumer reporting agency, forged or inconsistent Flags are warnings of identity theft and are defined in the rules as a pattern, practice or speci tic service for which payment is deferred until a future date. For example, when water, sewer or electricity is provided by a city and then paid for by the consumer at the end of a billing cycle, or transactions, such as a... utility the city has extended credit for the purpose of the FTC rules. The definition of a creditor in the rules includes utility companies and a covered account (those accounts to which the rules personal, family or household purposes, that involves or is designed to permit multiple payments account. apply) is defined to include an account that a creditor offers or maintains, primarily for In particular, the new rules apply to all municipal utility and other operations that provide a Analysis: In order to combat the growing problem of identity theft, the FTC issued Flag rules which apply to all municipalities that have utility accounts, such as water, sewer or now require that municipalities have in place written programs to identify, detect and respond to electricity, and other operations that defer payment for services on a recurring basis. The rules theft. patterns, practices or specific activities - lcnown as Flags - that could indicate identity to approve and implement which assist in identifying identity theft and fraud. Issue: Based on the Federal Trade Commission (FTC) mandate, the City of Des Plaines is required Subj: From: Dorothy Wisniews, Finance irector To: Jason Slowinski, City M ger ( cting) Date: May2,201l consent Agenda Items #6 & 6a

2 2 FTC. to the City s operations. Flag with Appendix B of the Finance Policy Manual which covers the as required by the Recommendation: Staff recommends that the City Council approve the attached Resolution along According to the FTC, each Identity Theft Prevention Program should be tailored to the needs of Attachments: Resolution approving the the municipality creating the program, taking into account such issues as its size and complexity, as well as the nature of its operations. Appendix B- Rules which will he included as Appendix B of the Finance Policy Manual that has been tailored Attached to this memorandum is the standard

3 The City of Des Plaines ( City ) developed an Identity Theft Policy and Program pursuant B.1. Program Adoption DES PLAINES covered account is: City whether residential, commercial or industial are covered by the Rule. Under the Rule, a 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. According to the Rule, a municipal utility is a creditor subject to the Rule requirements. The indicates the possible existence of identity theft. The Flags Rule defines identity theft as fraud committed using the identifying information of another person and a Flag as a pattern, practice, or specific activity that to the safety and soundness of the creditor from identity theft Ensure the Program is updated periodically, to reflect changes in risks to customers or those Flags into the Program identity theft Identify relevant Flags for new and existing covered accounts and incorporate Detect Flags that have been incorporated into the Program Respond appropriately to any Flags that are detected to prevent and mitigate Under the Flag Rule, every financial institution and creditor is required to establish an operation. Each program must contain reasonable policies and procedures to: Identity Theft Prevention Program tailored to its size, complexity and the nature of its A. Fulfilling requirements of the Flags Rule B.2. Program Purpose and Definitions Office. After consideration of the size and complexity of the City s operations and account with oversight and approval of the City of Des Plaines Council and the City Manager s systems, and the nature and scope of the City s activities, the Council determined that this Program was appropriate for the City of Des Plaines, and therefore approved this Program on May 16, of the Fair and Accurate Credit Transactions Act of This Program was developed to the Federal Trade Commission s Flags Rule ( Rule ), which implements Section 114 Finance Policy Manual Appendix B. Flags Rule definitions used in this Program All the City s accounts that are individual utility service accounts held by customers of the A AflIIL3 B- I B

4 lie Finance Policy Manual Appendix B Any account the City offers or maintains primarily for personal, family or household purposes, that involves multiple payments or transactions 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. B.3. Identification of Flags In order to identify relevant 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 following red flags, in each of the listed categories: A. Notifications and Warnings from Credit Reporting Agencies Notice or report from a credit agency or service provider of a credit freeze on a customer or applicant Notice or report from a credit agency or service provider of an active duty alert for an applicant Notice or report from a credit agency or service provider of an address discrepancy. B. Suspicious Documents Identification document or card that appears to be forged, altered or inauthentic Identification document or card on which a person s photograph or physical description is not consistent with the person presenting the document Other document with information that is not consistent with existing customer information (such as if a person s signature on a check appears forged) Application for service that appears to have been altered or forged or gives the appearance of having been destroyed or reassembled A person s signature does not match the signature on file in the City or Service Provider s records B-2

5 DES PLAINES Finance Policy Manual Appendix B Identity Theft Prevention Program C. Suspicious Personal Identifying Information Identi cying information presented that is inconsistent with other information the customer provides Identifying information presented that is inconsistent with other sources of information (for instance, an address not matching an address on additional documents submitted) Identifying infonnation presented that is the same as information shown on other applications that were found to be fraudulent Identifying information presented that is consistent with fraudulent activity (example: invalid phone number or fictitious billing address) An address or phone number presented that is the same as that of another person or does not exist A person fails to provide complete personal identifying infornmation on an application when reminded to do so (however, by law, social security numbers must not be required) A person s identifying information is not consistent with the information that is on file for the customer Social security number presented that is the same as one given by another customer or the number has not been issued, is listed on the Social Security Administration s Death Master File, or is otherwise invalid. The following numbers are always invalid: a) the first three digits are in the 800, 900, or 000 range, or in the 700 range above 772, or are 666, b) the fourth and fifth digits are 00, or c) the last four digits are D. Suspicious Account Activity or Unusual Use of Account Change address for an account followed by a request to change the account holder s name Payments stop on an otherwise consistently up-to-date account Account used in a way that is not consistent with prior use (example: very high activity) Mail sent to the account holder is repeatedly returned as undeliverable Notice to the City that a customer is not receiving mail sent by the City Notice to the City that an account has unauthorized activity Unauthorized access to or use of customer account information Breach in the City s computer system security Account established for a residential address under a business name Bill payment made under a name other than the name on the Covered Account Use of an account that has been inactive for an unreasonably lengthy period of time of B-3

6 DES PLAINES Finance Policy Manual Appendix B E. Alerts from Others Notice to the City from a customer, identity theft victim, law enforcement or other person that it has opened or is maintaining a fraudulent account for a person engaged in identity theft. B.4. Procedures for Detecting Flags A. New Accounts In order to detect any of the Flags identified above associated with the opening of a new account, City personnel will take the following steps to obtain and verify the identity of the person opening the account: Require certain identifying information, i.e. the name and address of the purchaser of any property, from the City of Des Plains Real Estate Transfer Tax form submitted by the seller of the property Verify the customer s identity by comparing it to the information presented on the Illinois Real Estate Transfer Declaration (form PTAX 203), or, in the case of an exempt transaction, from the deed submitted with the City s Transfer Tax Form Review documentation showing the existence of a business entity with the City s Business License database Independently contact the customer in case of inconsistencies. B. Existing Accounts In order to detect any of the Flags identified above for an existing account, City personnel will take the following steps to monitor transactions with an account: Verify the identification of customers if they request information whether it be in person or by telephone, facsimile or Verify the validity of requests to change billing addresses (such requests must be made in writing) Verify changes in banking information given for billing and payment purposes B.5. Preventing and Mitigating Identity Theft In the event City personnel detect any identified Flags, such personnel shall take one or more of the following steps, depending on the degree of risk posed by the Flag: Gather all related documentation and present this information to his/her supervisor The designated authority will complete additional authentication to detemiine whether the attempted transaction was fraudulent or authentic. B-4

7 DES PLAINES Finance Policy Manual Appendix B If a transaction is deterrriined 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 City of Des Plaines Notifying the actual customer that fiaud has been attempted Change any passwords or other security codes and devices that permit access to a covered account Discontinue service Close an existing covered account Not open a new covered account Reopen a covered account with a new number Place an alert on all customer care reports and financial accounts that may have inaccurate information as a result of identity theft In order to further prevent the likelihood of identity theft occurring with respect to City accounts, the City will take the following steps with respect to its internal operating procedures to protect customer identifying infonuation: Ensure that its website is secure or provide clear notice that the website is not secure Ensure complete and secure destruction of paper documents and computer files containing customer information Keep offices clear of papers containing customer information Ensure that office computers are password protected and users are expected to log out or lock the screen when leaving a workstation foi- an extended period Users are expected to log off the computer every day at the close of the workday Ensure computer virus protection is up to date Require and keep only the kinds of customer information that are necessary for City purposes B6. Program Updates This Proarn will he periodically reviewed and updated to reflect changes in risk to customers and to the safety and soundness of the City from identity theft. The Finance Director shall at least annually consider the City s experiences with identity theft, changes in identity theft methods, changes in identity theft detection and prevention methods, changes in types of accounts that the City maintains, and changes in the City s business arrangements with other entities and service providers, After considering these caetors, the Finance Director shall determine whether changes to the Identity Theft Prevention program, including the listing of Flags, are warranted. If warranted, the Finance Department will B-5

8 Finance Policy Manual Appendix B update the Progi-am or present the City Council and City Manager s Office with recommended changes and the City Council or City Manager will make a determination of whether to accept, modify or reject those changes to the Program. B.7. Pro2ram Administration A. Oversight Responsibility for developing, implementing and updating this Program lies with the Finance Department. The Finance Director will be responsible for the Program administration, for ensuring appropriate training of City staff on the Program, for reviewing any staff reports regarding the detection of 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 City staff responsible for implementing the Program shall be trained either by or under the direction of the Finance Director in the detection of Flags, and the responsive steps to be taken when a Flag is detected. The City staff shall provide reports to the Finance Director on incidents of identity theft, the City s compliance with the identity theft prevention program, and the effectiveness of the Identity Theft Prevention Program C. Service Provider Arrangements In the event the City engages a service provider to perfonri an activity in connection with one or more accounts, the City 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: Require, by contract, that service providers have such policies and procedures in place Require, by contract, that service providers acknowledge receipt and review the City s Program, and report to the Program Administrator in writing any actual or attempted identity theft or if the service provider is unable to resolve any Flags D. SpecifIc Program Elements and Confidentiality For the effectiveness of the Program, the Flag Rule envisions a degree of confidentiality regarding the City s specific practices relating to identity theft detection, prevention and mitigation. Therefiwe, under this Program, knowledge of such specific practices is to he limited to 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 B-6

9 general Flag detection, implementation and prevention practices are listed in this document. be counterproductive to list these specific practices here. Therefore, only the Program s Finance Policy Manual B-7 Appendix B

10 Program Flag A RESOLUTION AUTHORIZING THE ADOPTION OF CITY OF DES PLAINES THE IDENTITY THEFT PROTECTION PROGRAM FLAG RULES AS APPENDIX B IN THE FINANCE RED RESOLUTION R POLICY MANUAL OF THE CITY OF DES PLAINES. utility accounts or other operations that defer payment for services on a recurring basis are required to approve and implement, which assist in identifying identity theft and fraud, by June 1, 2011; and Rules, which will be implemented in the City s Finance Policy Manual; and program to help identify, detect and respond to patterns, practices or specific activities, known as Flags that could indicate identity theft; and Plaines to assist in identifying identity theft and fraud; passage and approval according to law. Plaines, Cook County, Illinois in the exercise of its home rule powers, as follows: as the factual basis for this transaction. Identity Theft Protection Program part hereof as Exhibit A. Finance Policy Manual of the City of Des Plaines, a copy of which is attached hereto and made a WHEREAS, based on a Federal Trade Commission mandate, all municipalities that have WHEREAS, Staff has developed the Identity Theft Protection Program WHEREAS, the Identity Theft Protection Program WHEREAS, it is in the best interest of the City to adopt the Identity Theft Protection NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Des SECTION 1: That the recitals set forth herein above are incorporated herein by reference SECTION 2: That in the best interest of the City, the City Council hereby adopts the SECTION 3: That this Resolution shall be in full force and effect from and after its as Appendix B in the Finance Policy Manual of the City of Des to be included as Appendix B within the is a written

11 PASSED this day of, APPROVED this day of, VOTE: AYES NAYS ABSENT MAYOR ATTEST: CITY CLERK Approved as to form: IC. David R. Wiltse, City Attorney Legal\Res\201 1\Adopt Policy 2