MOUNT VERNON — Although the city of Mount Vernon would hardly be thought of in the same category as an automobile dealer or mortgage broker, the three do have something in common: All three are subject to new legislation under the Federal Trade Commission. Called “Red Flag” legislation, it is designed to prevent identity theft.
“Anybody that you extend credit to is included in the provision,” said City Auditor Terry Scott. “We have one public utility. We bill customers for three months, then issue them a bill. That’s extending them credit, and that means we have to comply with the regulations.”
The legislation requires entities which extend credit to create a policy which states how sensitive information will be protected, and the steps to be followed if sensitive information is somehow released.
“We need to evaluate the services we provide, and in that evaluation we have to assign a risk value to it,” said Scott. “If it’s a high risk, the policy needs to include what procedures will be followed should a breach occur.”
The policy will be reviewed on an annual basis, and staff members will undergo annual training to help alert them to potential “red flags.”
Scott cited as an example a scenario where service is extended to an address on Pleasant Street, but someone calls in and asks that the bill be sent to North Main Street. The staff member’s response would be to ask if North Main Street is the landlord’s address, or where the owner lives. Receiving a no response should raise a red flag, and the staff member would then take steps to verify why the request was made and who made it.
“Most of it is plain common sense,” said Scott. “If it doesn’t sound quite right, it probably isn’t.”
Scott said that in order to comply with the legislation, the city will probably need to change some of its procedures. Such changes may include no longer taking verbal orders; transferring a utility from one person to another may need to be done in writing or in person. Another possible change may be showing a photo or some form of identification when requesting service.
“Something that would be issued that we could verify you are who you say you are,” explained Scott. “That way you’ve verified on the front end who that person is.
“I think we will probably see some changes in the landlord practices,” he added. “I would prefer that landlords tell us when someone is moving in or moving out.”
Originally required to be in effect Nov. 1, the FTC has extended the deadline for having a policy in place to May 1, 2009. Scott said that after the first of the year, city officials will get together with members of the utility department to look at its procedures and determine what is needed to comply with the regulations.
