MEMORANDUM

TO: Mayor Lawrence and Members of the Town Council

FROM: Scott E. Hildebran, Town Manager

SUBJECT: Identity Theft Policy (Resolution #2008-10)

DATE: October 14, 2008

______________________________________________________________________

Attached please find Resolution #2008-10 which creates an Identity Theft Policy for the Town of Blowing Rock for your consideration.

Background

Identify theft is a serious problem in the United States today. To combat the problem, as part of the Fair and Accurate Credit Transactions Act of 2003 (the FACT Act), the Federal Trade Commission and several other federal agencies have issued rules requiring creditors (including municipalities under certain circumstances) to develop, adopt and implement written Identity Theft Prevention Programs (“Programs”). The Programs must be in place by November 1, 2008. The rules are often referred to as “Red Flag” requirements and also apply to financial institutions. In addition, the provisions place certain duties relating to address discrepancies upon the users of consumer reports. The address discrepancy rules may also apply. The FTC requirements associated with the adoption of the Programs and the address discrepancy provisions for users of consumer reports may be found in the Federal Register at 72 Fed. Reg. 63771 (codified at 16 C.F.R. Part 681). A copy of the pages of the Federal Register containing Part 681 is enclosed.

The new rules apply to all municipal utility and other 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 Rules. The definition of “creditor” in the Rules specifically 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.” Note that “covered accounts” also include “any other account that the . . . creditor offers or maintains for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the . . . creditor from identity theft.”

The attached draft policy helps protect consumer identity and fight theft of customer account information, and provides procedures that identify, detect and respond to possible signals of identity theft known as Red Flags.

Should you have questions, Finance Officer Nicole Norman will be available at the meeting.