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I,ii 11144 Minnesota Municipal Utilities Association • "IDENTITY THEFT" AND MUNICIPAL UTILITIES Identity Theft and Red Flags Rule requirements The Red Flags Rule implements portions of the Fair and Accurate Credit Transactions Act of 2003 (FACTA). Section 111 of FACTA defines"Identity Theft" as "fraud committed using the identifying information of another person." Under the Red Flags Rule, every financial institution and "creditor"(defined below) is required to establish an Identity Theft Prevention Program tailored to its size, complexity and the nature of its operation. The program must contain reasonable policies and procedures to: • Identify relevant Red Flags for new and existing "covered accounts" (defined below) and incorporate those Red Flags into the Program; • Detect Red Flags that have been incorporated into the Program; • Respond appropriately to any Red Flags that are detected to prevent and mitigate Identity Theft; and • Ensure the Program is updated periodically to reflect changes in risks to customers or to the safety and soundness of the creditor from Identity Theft. The Rule requires the Program to be approved by "a designated employee at the level of senior management." Definitions related to municipal utilities According to the Rule, a municipal utility is a creditor subject to the Rule requirements. Accounts maintained by a municipal utility that are covered by the Rule are all the individual utility service accounts held by customers of the utility whether residential, commercial or industrial. The Rule defines creditors to "include finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies. Where non-profit and government entities defer payment for goods or services, they,too, are to be considered creditors." • 3025 Harbor Lane North•Suite 400•Plymouth, MN 55447-5142•763.551.1230.800.422.0119(MN)•Fax 763.551.0459•www.mmua.org