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HomeMy WebLinkAboutAgenda - 04-21-2009 - 4nORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 21, 2009 Action Agenda Item No. ~ - n SUBJECT: Fair and Accurate Credit Transactions Act of 2003 ("FACTA") Red Flags Rules DEPARTMENT: Human Resources PUBLIC HEARING: (Y/N) No ATTACHMENT(S): Draft Orange County Identity Theft Prevention Program Policy INFORMATION CONTACT: Annette Moore, Staff Attorney 245-2317 PURPOSE: To consider adopting an Identity Theft Prevention Program Policy to comply with the federal Fair and Accurate Credit Transactions Act of 2003 ("FACTA") Red Flags Rules. BACKGROUND: On' November 9, 2007, the federal government published the "Red Flags Rule," pursuant to the Fair and Accurate Credit Transactions Act of 2003 ("FACTA"). Red Flags are patterns, practices or specific activities indicating the. possible existence of identity theft.' Examples of red flags include: suspicious documents, suspicious personal identifying information, unusual .use of or suspicious activity related to an account and notices to customers of possible identity theft. The Red Flags Rule, while primarily targeted at financial institutions maintaining large amounts of sensitive consumer information, require both financial institutions and "other creditors" with covered accounts to develop and implement written "identity theft prevention programs." The Federal Trade Commission has identified governments as creditors under the Red Flags Regulations. An Identity Theft Prevention Program provides methods to detect when accounts are fraudulent; procedures to prevent establishment of false accounts; procedures to ensure existing accounts are not being manipulated; and procedures to respond to identity theft. The Red Flags Rule became effective January 2008. However, compliance by covered entities such as local governments was expected in November 2008 but extended to May 1, 2009. The Red Flags Rule applies to departments within Orange County that are "creditors" and have "covered accounts." A "creditor" is any entity which regularly extends, renews or continues credit or arranges for the extension, renewal or continuation of credit. Orange County Departments allowing clients to receive services and defer payments are "creditors" under the Rule. In order to develop an Identity Theft Prevention Program the County was required to: • Assess the existing identity theft risk for new and existing accounts. ' i6 c.F.x. § 6gi.z(b)(9) 2 • Use the risk assessment to select measures (red flags) that may be used to detect attempts to create fraudulent accounts. • Identify procedures for employees to prevent the establishment of false accounts and procedures for employees to implement if existing accounts are being manipulated. • Obtain program approval of the program by the BOCC or senior designated management by May 1, 2009. • Train appropriate employees on the policies and procedures in the program. • Provide an annual report to the BOCC or designated senior management. The annual report should provide any material matters related to the effectiveness of the programs policies and procedures, the oversight and effectiveness of any third party billing and account establishment entities, a summary of any identity theft incidents and the response to those incidents, and recommendations for any substantial changes to the program, if any. In February 2009, department covered by the Red Flags Rule reviewed their accounts to determine whether or not they were covered by Red Flags Rule. A task force, made up of covered departments, the staff attorney and Information Technology Department, was formed to assess the risk and develop a policy that detected, mitigated and prevented identity theft. The task force conducted an initial risk assessment of covered accounts and found there was some risk of identity theft. The task force then identified red flags that could be used to detect attempts to create fraudulent accounts and identified procedures to prevent and mitigate incidents of identity theft. The proposed policy also provides for training of staff and an annual review of the policy by an Identity Theft Prevention Task Force. A draft policy was reviewed by the County Manager, the County Attorney and staff covered by the Red Flags Rules. The attached recommended Identity Theft Prevention Program Policy complies with the Red Flags Rule. Some North Carolina Counties have enacted ordinances to comply with the FACTA's Red Flags Rule. FACTA, and its implementing regulations, are federal not state requirements. Since Counties in North Carolina have no inherent legislative power and possess only those powers conferred upon them by the General Assembly, staff is recommending the Red Flags Rules be implemented through an Identity Theft Prevention Program Policy instead of an ordinance. FINANCIAL IMPACT: There is no current financial impact. However, there may be some financial impact in the future. RECOMMENDATION(S): The Manager recommends the Board adopt the Identity Theft Prevention Program Policy. z See Five C's, Inc. v. Pasquotank, 672 S.E.2d 737, 740 (2009) J DRAFT Orange County Identity Theft Prevention Program Policy L Purpose. The purpose of this program is to establish an Identity Theft Prevention Program ("the Program") designed to detect, prevent, and mitigate identity theft in connection with opening a covered or existing covered account; responding to such red flags (pattern, practice, or specific activity that indicates the possible existence of identity theft in a manner that will prevent identity theft) and to provide for continued administration of the Program in compliance with Part 681 of Title 16 of the Code of Federal Regulations implementing Section 114 and 315 of the Fair and Accurate Credit Transactions Act (FACTA) of 2003. II. Adoption. This Policy was developed by the Identity Theft Prevention Program Committee ("the Committee") with oversight by the Orange County Manager and was approved by the Orange County Board of Commissioners. The Committee, after conducting a risk assessment and considering the size and complexity of the County's operations and account systems, and the nature and scope of the County's activities with respect to identity theft, forwarded this Program to the County Manager for review. The County Manager determined this Program was appropriate for Orange County and recommended adoption of this Program to the Board of County Commissioners. The Board of County Commissioners approved adoption of this program on April , 2009. III. Program. Orange County is establishing an Identity Theft Prevention Program to detect, prevent, and mitigate identity theft. The Program is tailored to Orange County's size, complexity and the nature of operations and includes reasonable policies and procedures to: A. Identify relevant red flags for covered accounts it offers or maintains and incorporate those red flags into the program; B. Detect red flags that have been incorporated into the Program; C. Respond appropriately to any red flags that are detected to prevent and mitigate identity theft; and D. Ensure the Program is updated periodically to reflect changes in risks to customers and to the safety and soundness of the creditor from identity theft. The Program incorporates, as appropriate, existing policies and procedures that control reasonably foreseeable risks of identity theft. IV. Definitions. For purposes of this Policy, the following definitions shall applyl A. "County" means the County of Orange. ' Other than "county, personal identifying information and identity theft prevention committee", definitions provided in this section are based on the definitions provided in 16 CFR § 681.2. B. "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, covered financial institution or creditor offers or maintains for which there is a reasonable foreseeable risk 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; and (ii) any other account that the financial institute or creditor offers or maintains for which there is a reasonably foreseeable risk to customers or the safety or soundness of the financial institution or creditor from identity theft, including financial, operational, compliance, reputation, or litigation risk. C. "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. D. "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. E. "Customer" includes a person that has a covered account with a creditor. F. "Identity Theft" means a fraud committed or attempted using identifying information of another person without authority. G. "Person" means a natural person, a corporation, government or governmental subdivision or agency, trust, estate, partnership, cooperative, or association. H. "Personal Identifying Information" means any name or number that may be used, alone, or in conjunction with any other that may be used to identify a specific person, including any name, address, telephone number, social security number, date of birth, government issued driver's license number or identification number, alien registration. number, government passport number, employer or taxpayer identification number, unique electronic identification number, computer's Internet Protocol (IP) address, routing number, credit card account information, debit card information, bank account information and mother's birth name. I. "Red Flag" means any pattern, practice, or specific activity that indicates the possible existence of identity theft. J. "Service Provider" means a person that provides a service directly to Orange County. K. "Identity Theft Prevention Committee" shall include one member of each department with covered accounts as well as the County Attorney or their designee. The departments with covered accounts and shall be represented on the Committee include the departments of, but are not limited to: Aging, Financial Services, Health Department, Solid Waste, Revenue, Emergency Services, Parks and Recreation, Animal Services and Housing and Community Development. Draft Identity Theft Prevention Program Policy Page 2 of 8 V. Identification of Red Flags. In order to identify relevant Red Flags, the County 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. All County 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 include, but are not limited to: A. Notifications and Warnings from Credit Reporting Agencies Red Flags 1. .Report of fraud accompanying a credit report; 2. Notice or report from a credit agency of a credit freeze on a customer or applicant; 3. Notice or report from a credit agency of an active duty alert for an applicant; and 4. Indication from a credit report of activity that is inconsistent with a customer's usual pattern or activity. 5. Checks returned marked "Refer to Maker." B. Suspicious Documents Red Flags 1. Identification document or card that appears to be forged, altered or inauthentic; 2. Identification document or card on which a person's photograph or physical description is not consistent with the person presenting the document; 3. Other document with information that is not consistent with existing customer information (such as if a person's signature on a check appears forged); and 4. Application for service that appears to have been altered or forged. C. Suspicious Personal Identifying Information Red Flags I. Identifying information presented that is inconsistent with other information the customer provides (example: inconsistent birth dates); 2. Identifying information presented that is inconsistent with other sources of information (for instance, an address not matching an address on a credit report); 3. Identifying information presented that is the same as information shown on other applications that were found to be fraudulent; 4. Identifying information presented that is consistent with fraudulent activity (such as an invalid phone number or fictitious billing address); 5. Social security number presented that is the same as one given by another customer; Draft Identity Theft Prevention Program Policy Page 3 of 8 6. An address or phone number presented that is the same as that of another person; 7. A person fails to provide complete personal identifying information on an application when reminded to do so (however, by law social security numbers may be required); and 8. A person's identifying information is not consistent with the information that is on file for the customer. D. Suspicious Account Activity or Unusual Use of Account Red Flags 1. Change of address for an account followed by a request to change the account holder's name; 2. Payments stop on an otherwise consistently up-to-date account; 3. Account used in a way that is not consistent with prior use (example: very high activity); 4. Mail sent to the account holder is repeatedly returned as undeliverable; 5. Notice to the County that a customer is not receiving mail sent by the County; 6. Notice to the County an account has unauthorized activity; 7. Breach in the County's computer system security; and 8. Unauthorized access to or use of customer account information. 9. Two or more returned checks received within a 30 day period from the same customer. E. Alerts from Others Red Flags 1. Notice to the County 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. VI. Detection of Red Flags: A. New Accounts: In order to detect any of the Red Flags identified above associated with the opening of a new account, County personnel will take the following steps to obtain and verify the identity of the person opening the account: I. As a precondition to opening a covered account in the County, each applicant shall provide certain personal identifying information such as name, date of birth, residential or business address, principal place of business for an entity, driver's license or other identification; 2. County Staff shall verify the customer's identity (for instance, review a driver's license or other identification card) or review documentation showing the existence of a business entity; 3. Each account shall be assigned an account number or customer identification number (CIN) which shall be unique to that account. The Draft Identity Theft Prevention Program Policy Page 4 of 8 County may utilize computer software to randomly generate assigned C1Ns or to encrypt account numbers and CINs. B. Existing Accounts. In order to detect any of the Red Flags identified above for an existing account, County personnel will take the following steps to monitor transactions with an account: 1. Verify the identification of customers if they request information (in person, via telephone, via facsimile, via email); 2. Verify the validity of requests to change billing addresses; and 3. Verify changes in banking information given for billing and payment purposes. 4. In the event that credit card payments are made over the Internet or processed through a third party service provider, such third party service provider shall certify that its Identity Theft Prevention Policy is adequate and is in compliance with FACTA and it's implementing Regulations. 5. All credit card payments made over the telephone or the County's website shall be entered directly into the customer's account information in the computer database. 6. 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. When receiving credit card payments over the telephone get the 3 or 4 digit card certification code from the customer. VII. Preventing and Mitigating Identity Theft. In the event County personnel detect any identified Red Flags, such personnel must notify the Department Director, or their designee. The Department Director or their designee shall take one or more of the following steps, depending on the degree of risk posed by the Red Flag: A. Prevent and Mitigate 1. Continue to monitor an account for evidence of Identity Theft; 2. Contact the customer; 3. Change any passwords or other security devices that permit access to accounts; 4. Not open a new account; 5. Close an existing account; 6. Reopen an account with a new number; 7. Notify law enforcement, in the event someone other than the customer has accessed the customer's account causing additional charges to accrue or accessing personal identifying information; or 8. Determine that no response is warranted under the particular circumstances. Draft Identity Theft Prevention Program Policy Page S of 8 B. Protect customer identifying information. In order to further prevent the likelihood of identity theft occurring with respect to customer accounts, the County will take the following steps with respect to its internal operating procedures to protect customer identifying information: 1. Ensure that its website is secure or provide clear notice that the website is not secure; 2. Access to customer accounts shall be password protected and shall be limited to authorized county personnel; 3. Password(s) shall be changed on a regular basis using the County's Network Password Policy (IT.NP.02) in effect at the time of the detection of the red flag; 4. Ensure complete and secure destruction of paper documents and computer files containing customer information; 5. Ensure that office computers are password protected and that computer screens lock after a set period of time; 6. Keep offices clear of papers containing customer information; 7. Request only the last 4 digits of social security numbers (if any); 8. Ensure computer virus protection is up to date; and 9. Require and keep only the kinds of customer information that are necessary for County purposes; 10. Any unauthorized access to or other breach of customer accounts is to be reported immediately to the County Manager and any password involved changed immediately; and 11. Personal identifying information included in customer accounts is considered confidential; any requests or demands out of the ordinary course of business for such information by someone other than the customer shall be immediately forwarded to the Department Director and the County Attorney. VIII. Updating the Program. The County Manager shall annually review and, as deemed necessary by the County Manager, direct the Identity Theft Prevention Committee 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 County and its covered accounts from identity theft. In updating the Identity Theft Prevention Program, the Committee shall consider the following factors and exercise its discretion in amending the program: A. The County's experience with identity theft; B. Updates in methods of identity theft; C. Updates in customary methods used to detect, prevent, and mitigate identity theft; D. Updates in the types of accounts that the County offers or maintains; E. Updates in service provider arrangements. Draft Identity Theft Prevention Program Policy Page 6 of 8 "I IX. Administration of Program A. Oversight. The Identity Theft Prevention Program Committee is responsible for oversight of the program and program implementation. The Committee is responsible for reviewing red flags rules compliance reports prepared by Departments, addressing changing identity theft risks and identifying new or discontinued covered accounts within the County. Recommendation for material changes to the program shall be forwarded to the County Manager for consideration. The Committee shall report to the County Manager at least annually, on compliance with the red flag requirements. The County Manager will then provide a report to the Board of County Commissioners and present to the board any changes to the policy. The report will address material matters related to the program and evaluate issues such as: 1. The effectiveness of the policies and procedures of the County in addressing the risk of identity theft in connection with the opening of covered accounts and with respect to existing covered accounts; 2. Service provider arrangements; 3. Significant incidents involving identity theft and management's response; and 4. Recommendation for material changes to the Program. B. Staff Training and Reports. County staff responsible for implementing the Program shall be trained either by or under the direction of the Identity Theft Prevention Program Committee in the detection of Red Flags, and the responsive steps to be taken when a Red Flag is detected. Initial training will be mandated for all employees who are responsible for opening 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 Prevention Program. The Committee will exercise its discretion in determining the amount and the substance of the training necessary; however, periodic updates will be conducted as material program changes occur. C. Service Provider Arrangements. In the event the County engages a service provider to perform an activity in connection with one or more accounts, the County 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. 1. Require, by contract, that service providers have such policies and procedures in place; and 2. Require, by contract, that service providers review the County's Program and report any Red Flags to the Committee. Draft Identity Theft Prevention Program Policy Page 7 of 8 1D D. Specific Program Elements and Confidentiality. For the effectiveness of Identity Theft prevention Programs, the Red Flag Rule envisions a degree of confidentiality regarding the County's specific practices relating to Identity Theft detection, prevention and mitigation. Therefore, under this Program, knowledge of some of the specific practices are limited to the Identity Theft Committee and those employees who need to know them for purposes of preventing Identity Theft. Therefore, only the Program's general red flag detection, implementation and prevention practices are listed in this document. Draft Identity Theft Prevention Program Policy Page 8 of 8