In order to combat the growing problem of identity theft, the Federal Trade Commission (FTC) has issued new “Red Flag” rules which apply to all municipalities that have utility accounts, such as water, sewer or electricity, and other operations that defer payment for services on a recurring basis. In accordance a decision by the FTC to delay enforcement of these new rules for six months, the rules now require that by May 1, 2009 such municipalities have in place written programs to identify, detect and respond to patterns, practices or specific activities - known as “Red Flags” - that could indicate identity theft.
New “Red Flag” Requirements for Municipalities MAY 1, 2009
(Model Policy and Resolution is available on the League Website www.wvml.org members section)
In order to combat the growing problem of identity theft, the Federal
Trade Commission (FTC) has issued new “Red Flag” rules which apply to
all municipalities that have utility accounts, such as water, sewer or
electricity, and other operations that defer payment for services on a
recurring basis. In accordance a decision by the FTC to delay
enforcement of these new rules for six months, the rules now require
that by May 1, 2009 such municipalities have in place written programs
to identify, detect and respond to patterns, practices or specific
activities - known as “Red Flags” - that could indicate identity theft.
The rules can be found at
http://www.ftc.gov/os/fedreg/2007/november/071109redflags.pdf.
Information on the enforcement delay can be found at
http://ftc.gov/opa/2008/10/redflags.shtm.
In particular, the new rules apply to all municipal utility and other
services operations that provide a 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, 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 apply) is defined to include an account that a 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 … utility account.”
