Privacy and Security
Identity Theft Policies, Identity Theft Red Flags and Address Discrepancy Policy
Identity Theft Policies
Current Effective Date:
Original Effective Date:
The purpose of the Identity Theft Red Flags and Address Discrepancy Policy is to require that divisions and offices within the North Carolina (NC) Department of Health and Human Services (DHHS) assess whether they must comply with the Identity Theft Red Flags and Address Discrepancies Under the Fair and Accurate Credit Transactions Act of 2003 (Red Flags and Address Discrepancy Rules). If compliance is necessary, then divisions and offices must develop and implement specific procedures to support the department’s Identity Theft Prevention Program.
NOTE: This policy is applicable to all DHHS divisions and offices.
In response to the growing identity theft trends, industry regulators amended the Fair and Accurate Transactions Act of 2003 to include identity theft red flags and address discrepancy requirements. The Red Flags and Address Discrepancy Rules require financial institutions, creditors which own or maintain covered accounts, and debit or credit card issuers (debit/credit card issuers) to develop and implement the following program and/or procedures:
Initially, the mandatory compliance date for the Red Flags and the Address Discrepancy Rules was November 1, 2008. However, on October 22, 2008, the Federal Trade Commission (FTC) suspended Red Flag Rule enforcement until May 1, 2009, to give creditors and financial institutions additional time in which to develop and implement written identity theft prevention programs. On April 30, 2009, the FTC suspended enforcement of the Red Flag Rule a second time until August 1, 2009. On July 29, 2009, suspended enforcement again until November 1, 2009 and further delay could be forthcoming. The compliance date for the Notice of Address Discrepancy Rule remains November 1, 2008.
DHHS is already committed to ensuring that its divisions and offices protect social security numbers (SSNs) and other identifying information of its clients from identity theft, in compliance with the department’s Identity Theft and Security Breach Notification Policy. The Identity Theft Red Flags and Address Discrepancy Policy goes further to require that DHHS divisions and offices (divisions and offices) identify, prevent and mitigate any evidence of identity theft that arises in the course of their business.
The Red Flags and Address Discrepancy Rules apply broadly. Although one would not ordinarily think of divisions or offices operating as a financial institution, a creditor, or a debit/credit card issuer within the meaning of the Rules, divisions and offices do offer services and programs that can meet one or more of these categories. Accordingly, the Red Flags and Address Discrepancy Policy requires that DHHS establish a written Identity Theft Prevention Program and also develop and implement reasonable policies to respond to the notification of address changes, to the extent that a division or office issues debit/credit cards or utilizes consumer reports when extending credit.
In order for a division or office to officially determine whether it must comply with the Red Flags and Address Discrepancy Policy requirements, it must first assess whether it operates as a financial institution, a creditor that offers or maintains covered accounts and/or a debit/credit card issuer. If the division or office determines that it meets the definition of either of these three (3) categories, it must perform a risk assessment and develop the required procedure(s).
An account is a continuing relationship established by a person with a financial institution or creditor to obtain a product or service for personal, family, household or business purposes. Account includes: An extension of credit, such as during the purchase of property or services involving deferred payment.
A cardholder is a [client] who has been issued a debit or credit card.
The term clear and conspicuous means reasonably understandable and designed to call attention to the nature and significance of the information presented.
A client is an individual that receives services from programs offered by NC DHHS divisions and offices. For the purposes of this policy, a client can be considered a consumer who acquires services for direct use.
A consumer reporting agency is defined under the Fair Credit Reporting Act (FCRA) as any entity “which for monetary fees, dues or on a cooperative, non-profit basis regularly engages . . . in the practice of assembling or evaluating consumer credit information or other information on consumers.” It does not include governmental agencies or public law enforcement authorities. The extremely broad definition does include, however, private security firms hired by employers to conduct background checks and obtain information about employees and applicants. The Federal Trade Commission (the “FTC”), which enforces the FCRA, indicated in an opinion letter that this definition includes agencies retained by employers to investigate employees with respect to workers' compensation claims and other private entities and organizations hired by employers to investigate workplace misconduct such as sexual harassment allegations, fraud and employee violence. This expansive definition has not been confirmed in any court, as it is uncertain whether the FTC's broad interpretation will be adopted.
A creditor is any entity that regularly extends, renews, or continues credit; any entity that regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who is involved in the decision to extend, renew, or continue credit. Accepting credit cards as a form of payment does not in and of itself make an entity a creditor. Where non-profit and government entities accept deferred payment for goods or services, they, too, are to be considered creditors. Most creditors, except for those regulated by the Federal bank regulatory agencies and the National Credit Union Administration (NCUA), come under the jurisdiction of the Federal Trade Commission (FTC).
A covered account is: (i) 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 such as a credit card account, mortgage loan, automobile loan, margin account, cell phone account, utility account, checking account, or savings account; and (ii) 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 financial institution is defined as a state or national bank, a state or federal savings and loan association, a mutual savings bank, a state or federal credit union, or any other entity that, directly or indirectly, holds a “transaction account” belonging to a consumer. Most of these institutions are regulated by the Federal bank regulatory agencies and the NCUA. Financial institutions under the FTC’s jurisdiction include state-chartered credit unions and certain other entities that hold consumer transaction accounts.
Identifying Information includes all of the items listed below (N.C.G.S. § 14-113.20(b)).
Identity Theft is a fraud committed or attempted using the identifying information of another person without authority. (16 CFR 603.2(a))
Issue means to send out; put into circulation; or deliver for use.
A notice of address discrepancy is a notice sent to a user of a consumer report by a consumer reporting agency pursuant to 15 U.S.C. 1681c(h)(1), that informs the user of a substantial difference between the address for the consumer provided by the user in requesting the consumer report and the address or addresses the consumer reporting agency has in the consumer’s file.
A person is any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.
A Red Flag is a pattern, practice, or specific activity that indicates the possible existence of identity theft.
A service provider is a person that provides a service directly to the financial institution, creditor, or debit/credit card issuer that deals with covered accounts.
A transaction account is a deposit or other account from which the owner makes payments or transfers. Transaction accounts include checking accounts, negotiable order of withdrawal accounts, savings deposits subject to automatic transfers, and share draft accounts.
DHHS shall develop and implement an Identity Theft Prevention Program. As part of its program, divisions and offices shall assess whether they operate as a financial institution, a creditor that offers or maintains covered accounts and/or a debit/credit card issuer. If the division or office operates as either of these three, it is subject to this policy and must develop and implement the following procedure(s):
Financial Institution or a Creditor That Owns or Maintains Covered Accounts:
If the division or office determines that it operates as a financial institution or a creditor that owns or maintains covered accounts, the division or office must develop and implement reasonable procedures to detect, prevent and mitigate identity theft as part of the department’s Identity Theft Prevention Program.
Debit/Credit Card Issuer:
If the division or office determines that it issues debit or credit cards, it must develop procedures to assess the validity of a request for a change of address that is followed closely by a request for an additional or replacement card. These procedures will be incorporated into the department’s Identity Theft Prevention Program.
User of a Consumer Report:
If the division or office determines that it uses consumer reports as part of its business operations, it must develop procedures to respond to a notice of address discrepancy received from a consumer reporting agency. These procedures will be incorporated into the department’s Identity Theft Prevention Program.
The Red Flags Rule sets out how certain businesses and organizations must develop, implement, administer and oversee their Identity Theft Prevention Program. The Program must include four basic elements, which together create a framework to address the threat of identity theft.
Identity Theft Prevention Program Requirements
The Secretary of DHHS shall be responsible for designating an employee at the level of senior management to oversee the DHHS Identity Theft Program and assigning specific responsibility for the Program’s implementation within the department.
In order for a division or office to determine whether the Red Flag and Address Discrepancy Policy applies to its business operations, the division or office should perform a risk assessment (See Appendix A) by asking itself the following preliminary questions:
Those divisions and offices that are subject to the Red Flag and Address Discrepancy Rules will be required to perform the following functions as part of the DHHS Identity Theft Prevention Program:
Guidelines for Formulating and Maintaining an Identity Theft Prevention Program:
Identity Theft Red Flags and Address Discrepancies Under the Fair and Accurate Credit Transactions Act of 2003, 16 CFR Part 681.
Identity Theft and Security Breach Notification Policy, DHHS Policy and Procedures Manual, Section VIII. Privacy and Security, Privacy Manuals, Identity Theft Policies.
Customer Information Program (CIP), 31 U.S.C. 5318(l).
DHHS Red Flag and Address Discrepancy Policy
Per the Identity Theft Red Flags and Address Discrepancies Under the Fair and Accurate Credit Transactions Act of 2003, 16 CFR Part 681, the Red Flag and Address Discrepancy Policy has been approved for implementation within the NC Department of Health and Human Services (DHHS).
|Secretary of DHHS or designee||Date|
DHHS Red Flag and Address Discrepancy Assessment Questionnaire
In order for a North Carolina (NC) Department of Health and Human Services (DHHS) division or office to determine whether the Red Flag Rule applies to its business operations and if Identity Theft Prevention Program procedures must be developed, the division or office must ask itself the following questions:
Question 1: Is your division or office a creditor or a financial institution?
If NO, Go to Question 3.
If YES, Go to Question 2.
Question 2: Does your division or office offer or maintain covered accounts?
If NO, Go to Question 3.
If YES, Develop procedures as part of DHHS Identity Theft Prevention Program. Go to Question 3.
Question 3: Does your division or office order credit reports on consumers from a Consumer Reporting Agency?
If NO, Go to Question 4.
If YES, Develop procedures on how you will determine if your client’s address has changed, after receiving a notice of address discrepancy from the consumer reporting agency. Go to Question 4.
Question 4: Does your division or office issue debit or credit cards?
If NO, Go to Question 5.
If YES, Develop procedures on how you will assess the validity of a change of address if you receive notification of a change of address for a debit/credit card account and within a short period of time afterwards, you receive a request for an additional or replacement card for the same account. Go to Question 5.
Question 5: Is your division or office a service provider for a DHHS division or office that is subject to the Red Flag and Address Discrepancy Rules?
If NO, .
If YES, Go to Question 6.
Question 7: Is the service your division or office provides to the DHHS division or office covered by the Red Flag and/or Address Discrepancy Rules?
If NO, .
If YES, Develop the applicable procedures based upon the service provided to the DHHS division or office.
from a Consumer Reporting Agency
1. A fraud or active duty alert is included with a consumer report.
2. A consumer reporting agency provides a notice of credit freeze in response to a request for a consumer report.
3. A consumer reporting agency provides a notice of address discrepancy, as defined in § 334.82(b) of Part 681.
4. A consumer report indicates a pattern of activity that is inconsistent with the history and usual pattern of activity of an applicant or customer, such as:
a. A recent and significant increase in the volume of inquiries;
b. An unusual number of recently established credit relationships;
c. A material change in the use of credit, especially with respect to recently established credit relationships; or
d. An account that was closed for cause or identified for abuse of account privileges by a financial institution or creditor.
5. Documents provided for identification appear to have been altered or forged.
6. The photograph or physical description on the identification document is not consistent with the appearance of the applicant or customer presenting the identification.
7. Other information on the identification document is not consistent with information provided by the person opening a new covered account or customer presenting the identification.
8. Other information on the identification document is not consistent with readily accessible information that is on file with the financial institution or creditor, such as a signature card or a recent check.
9. An application appears to have been altered or forged, or gives the appearance of having been destroyed and reassembled.
Suspicious Personal Identifying Information
10. Personal identifying information provided is inconsistent when compared against external information sources used by the financial institution or creditor. For example:
a. The address does not match any address in the consumer report; or
b. The Social Security Number (SSN) has not been issued, or is listed on the Social Security Administration’s Death Master File.
11. Personal identifying information provided by the customer is not consistent with other personal identifying information provided by the customer. For example, there is a lack of correlation between the SSN range and date of birth.
12. Personal identifying information provided is associated with known fraudulent activity as indicated by internal or third-party sources used by the financial institution or creditor. For example:
a. The address on an application is the same as the address provided on a fraudulent application; or
b. The phone number on an application is the same as the number provided on a fraudulent application.
13. Personal identifying information provided is of a type commonly associated with fraudulent activity as indicated by internal or third-party sources used by the financial institution or creditor. For example:
a. The address on an application is fictitious, a mail drop, or prison; or
b. The phone number is invalid, or is associated with a pager or answering service.
14. The SSN provided is the same as that submitted by another person opening an account or another customer.
15. The address or telephone number provided is the same as or similar to the address or telephone number submitted by an unusually large number of other persons opening accounts or other customers.
16. The person opening the covered account or the customer fails to provide all required personal identifying information on an application or in response to notification that the application is incomplete.
17. Personal identifying information provided is not consistent with personal identifying information that is on file with the financial institution or creditor.
18. For financial institutions and creditors that use challenge questions, the person opening the covered account or the customer cannot provide authenticating information beyond that which generally would be available from a wallet or consumer report.
Unusual Use of, or Suspicious Activity Related to, the Covered Account
19. Shortly following the notice of a change of address for a covered account, the institution or creditor receives a request for new, additional, or replacement cards or a cell phone, or for the addition of authorized users on the account.
20. A new revolving credit account is used in a manner commonly associated with known patterns of fraud patterns. For example:
a. The majority of available credit is used for cash advances or merchandise that is easily convertible to cash (e.g., electronics equipment or jewelry); or
b. The customer fails to make the first payment or makes an initial payment but no subsequent payments.
21. A covered account is used in a manner that is not consistent with established patterns of activity on the account. There is, for example
a. Nonpayment when there is no history of late or missed payments;
b. A material increase in the use of available credit;
c. A material change in purchasing or spending patterns;
d. A material change in electronic fund transfer patterns in connection with a deposit account; or
e. A material change in telephone call patterns in connection with a cellular phone account.
22. A covered account that has been inactive for a reasonably lengthy period of time is used (taking into consideration the type of account, the expected pattern of usage and other relevant factors).
23. Mail sent to the customer is returned repeatedly as undeliverable although transactions continue to be conducted in connection with the customer’s covered account.
24. The financial institution or creditor is notified that the customer is not receiving paper account statements.
25. The financial institution or creditor is notified of unauthorized charges or transactions in connection with a customer’s covered account.
Notice from Customers, Victims of Identity Theft, Law Enforcement Authorities, or Other Persons Regarding Possible Identity Theft in Connection with Covered Accounts Held by the Financial Institution or Creditor
26. The financial institution or creditor is notified by a customer, a victim of identity theft, a law enforcement authority, or any other person that it has opened a fraudulent account for a person engaged in identity theft.
Situations that could alert a creditor that an identity theft incident may be in progress or has already occurred in a health care setting
For questions or clarification on any of the information contained in this policy, please contact DHHS Privacy Officer. For general questions about department-wide policies and procedures, contact the DHHS Policy Coordinator.