Federal Law > Handbooks - Policies > FACTA Sample Policy - Identity Theft Prevention Program

FACTA Sample Policy - Identity Theft Prevention Program

 

Purpose



To establish an Identity Theft Prevention Program designed to detect, prevent and
mitigate identity theft in connection with the opening of a covered account or an existing covered account and to provide for continued administration of the Program in
compliance with Part 681 of Title 16 of the Code of Federal Regulations implementing
Sections 114 and 315 of the Fair and Accurate Credit Transactions Act (FACTA) of
2003.

Definitions

Identify theft means fraud committed or attempted using the identifying information of another person without authority.

A
covered account means:

1. 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. Covered accounts

include credit card accounts, mortgage loans, automobile loans, margin

accounts, cell phone accounts, utility accounts, checking accounts and savings

accounts; and

2. Any other account that the financial institution or creditor offers or maintains

for which there is a reasonably 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.


A
red flag means a pattern, practice or specific activity that indicates the possible
existence of identity theft.

The Program
___________________________ establishes an Identity Theft
Prevention Program to detect, prevent and mitigate identity theft. The Program shall
include reasonable policies and procedures to:

1. Identify relevant red flags for covered accounts it offers or maintains and

incorporate those red flags into the program;

2. Detect red flags that have been incorporated into the Program;

3. Respond appropriately to any red flags that are detected to prevent and

mitigate identity theft; and

4. 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 shall, as appropriate, incorporate existing policies and procedures that

control reasonably foreseeable risks.


Administration of Program

1. ______________________________ (the organization’s governing body, an

appropriate committee of the governing body or a designated employee

at the level of senior management) shall be responsible for the development,

implementation, oversight and continued administration of the Program.

2. The Program shall train staff, as necessary, to effectively implement the

Program; and

3. The Program shall exercise appropriate and effective oversight of service

provider arrangements.


Identification of Relevant Red Flags

1. The Program shall include relevant red flags from the following categories as
appropriate:

a. Alerts, notifications, or other warnings received from consumer reporting

agencies or service providers, such as fraud detection services;

b. The presentation of suspicious documents;

c. The presentation of suspicious personal identifying information;

d. The unusual use of, or other suspicious activity related to, a covered

account; and

e. Notice from customers, victims of identity theft, law enforcement

authorities, or other persons regarding possible identity theft in connection

with covered accounts.


2. The Program shall consider the following risk factors in identifying relevant
red flags for covered accounts as appropriate:

a. The types of covered accounts offered or maintained;

b. The methods provided to open covered accounts;

c. The methods provided to access covered accounts; and

d. Its previous experience with identity theft.


3. The Program shall incorporate relevant red flags from sources such as:

a. Incidents of identity theft previously experienced;

b. Methods of identity theft that reflect changes in risk; and

c. Applicable supervisory guidance.


Detection of Red Flags

The Program shall address the detection of red flags in connection with the opening of
covered accounts and existing covered accounts, such as by:

1. Obtaining identifying information about, and verifying the identity of, a

person opening a covered account; and

2. Authenticating customers, monitoring transactions, and verifying the validity

of change of address requests in the case of existing covered accounts.


Response

The Program shall provide for appropriate responses to detected red flags to prevent and mitigate identity theft. The response shall be commensurate with the degree of risk posed. Appropriate responses may include:

1. Monitor a covered account for evidence of identity theft;

2. Contact the customer;

3. Change any passwords, security codes or other security devices that permit

access to a covered account;

4. Reopen a covered account with a new account number;

5. Not open a new covered account;

6. Close an existing covered account;

7. Notify law enforcement; or

8. Determine no response is warranted under the particular circumstances.


Updating the Program

The Program shall be updated periodically to reflect changes in risks to customers or to the safety and soundness of the organization from identity theft based on factors such as:

1. The experiences of the organization with identity theft;

2. Changes in methods of identity theft;

3. Changes in methods to detect, prevent and mitigate identity theft;

4. Changes in the types of accounts that the organization offers or maintains;

5. Changes in the business arrangements of the organization, including mergers, 

acquisitions, alliances, joint ventures and service provider arrangements.


Oversight of the Program

1. Oversight of the Program shall include:

a. Assignment of specific responsibility for implementation of the Program;

b. Review of reports prepared by staff regarding compliance; and

c. Approval of material changes to the Program as necessary to address

changing risks of identity theft.

2. Reports shall be prepared as follows:

a. Staff responsible for development, implementation and administration of the

Program shall report to ____________________________ (the organization’s

governing body, an appropriate committee of the governing body or a

designated employee at the level of senior management) at least annually on

compliance by the organization with the Program.

b. The report shall address material matters related to the Program and evaluate 

issues such as:

i. The effectiveness of the policies and procedures in addressing the risk of 

identity theft in connection with the opening of covered accounts and with 

respect to existing covered accounts;

ii. Service provider agreements;

iii. Significant incidents involving identity theft and management’s response;

and

iv. Recommendations for material changes to the Program.


Oversight of Service Provider Arrangements

The organization shall take steps to ensure that the activity of a service provider
is conducted in accordance with reasonable policies and procedures designed to detect, prevent and mitigate the risk of identity theft whenever the organization engages a service provider to perform an activity in connection with one or more covered accounts.

Duties Regarding Address Discrepancies

The organization shall develop policies and procedures designed to enable the
organization to form a reasonable belief that a credit report relates to the consumer for whom it was requested if the organization receives a notice of address discrepancy from a nationwide consumer reporting agency indicating the address given by the consumer differs from the address contained in the consumer report.

The organization may reasonably confirm that an address is accurate by any of
the following means:

1. Verification of the address with the consumer;

2. Review of the organization’s records;

3. Verification of the address through third-party sources; or

4. Other reasonable means.

If an accurate address is confirmed, the organization shall furnish the consumer’s
address to the nationwide consumer reporting agency from which it received the notice of address discrepancy if:

1. The organization establishes a continuing relationship with the consumer; and

2. The organization, regularly and in the ordinary course of business, furnishes

information to the consumer reporting agency.

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