City adopts program to deter identity theft

[October 07, 2009]  To comply with federal requirements and a November deadline, the city of Lincoln needed to adopt guidelines for identify theft protection. Accordingly, the city council approved the necessary resolution this week.

The federal requirements were issued as part of the Fair and Accurate Credit Transactions Act, passed in November 2003. The act made creditors responsible for doing their part to prevent identity theft.

In the law the term "creditor" was defined as "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."

The act also identified a "covered account" as "an account used mostly for personal, family or household purposes, and that involves multiple payments or transactions." It further explained: "Covered accounts include credit card accounts, mortgage loans, automobile loans, margin accounts, cell phone accounts, utility accounts, checking accounts and savings accounts."

In the act, all creditors were given until November of 2008 to establish a set of what would later be nicknamed "red flag" guidelines for detecting and preventing identity theft. In 2008 legislators extended the deadline for having the guidelines in place but did not set a specific date for the new deadline.

At the Sept. 29 committee-of-the-whole meeting, city attorney Bill Bates advised the council that he had learned at the Illinois Municipalities League conference in Chicago that the new deadline is to be Nov. 1. He said he had written the necessary resolution for the city over a year ago, filed it away when the deadline was extended, but now it was time to get it back out again.

After distributing copies of the proposed resolution, he suggested that due to the length and complexity of the document it not be read aloud, but that each member should read it independently and vote on a motion that would include the language "as presented" instead of "as read."

At the Monday night voting meeting, Alderwoman Marty Neitzel made a motion that a resolution approving a program for identity theft prevention relating to covered accounts be approved as presented. The motion passed with a vote of 9-0, with Alderman David Wilmert being absent for the evening.

In the resolution a partial list of "red flags" that could indicate identity theft were identified as follows:

• Alerts, notifications or warnings from a consumer reporting agency.

• A fraud or active-duty alert included with a consumer report.

• A notice of credit freeze from a consumer reporting agency in response to a request for a consumer report.

• Consumer reports that indicate a pattern of activity inconsistent with the history and usual pattern of activity of an applicant or customer, such as:

• A recent and significant increase in the volume of inquiries.

• An unusual number of recently established credit relationships.

• A material change in the use of credit, especially with respect to recently established credit relationships.

Additional red flags may include:

• Documents provided for identification that appear to have been altered or forged.

• The photograph or physical description on the identification is not consistent with the appearance of the applicant or customer presenting the identification.

• Other information on the identification is not consistent with information provided by the person opening a new covered account or customer presenting the identification.

• An application appears to have been altered or forged, or gives the appearance of having been destroyed and reassembled.

• The Social Security number has not been issued or is listed on the Social Security Administration's Death Master File.

• 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 Social Security number range and the date of birth.

• The municipality is notified that the customer is not receiving paper account statements.

All city personnel who regularly establish and maintain covered accounts will be trained to recognize and act on these red flags as well as others and will receive annual refresher training.

When these staff members encounter suspicious documentation or notice an abrupt change in payment history or patterns, they are to report this to the city clerk, who is responsible for the daily enforcement of the program.

From there, actions may include:

• Canceling the transaction.

• Notifying and cooperating with appropriate law enforcement.

• Determining the extent of liability of the municipality.

• Notifying the actual customer that fraud has been attempted.

In addition to establishing the red flag rules, the Fair and Accurate Credit Transactions Act entitles all consumers to receive an annual credit report free of charge from each of the three major consumer credit reporting services: TransUnion, Experian and Equifax.

To learn more about obtaining your free credit report, visit https://www.annualcreditreport.com/
cra/index.jsp. 

[By NILA SMITH]