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1603 Red Flags Policy
Office of the General Counsel
May 1, 2009
August 13, 2013
This policy applies to all units of the University that offer or maintain Covered Accounts, engage a vendor to offer or maintain Covered Accounts, or use Consumer Reports.
Reason for the Policy
This Policy is designed to comply with the Federal Trade Commission’s (FTC) Red Flags Rule implementing sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003. This Policy was developed with approval of the Yale Corporation, after consideration of the scope and complexity of the University’s operations and activities.
Consumer Report means any communication of information by a Consumer Reporting Agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, reputation, personal characteristics, or mode of living, which is used as a factor in establishing the consumer’s eligibility for (i) credit to be used primarily for personal, family, or household purposes, or (ii) employment purposes.
Consumer Reporting Agency means a person or entity that, for monetary fees or on a cooperative nonprofit basis, regularly collects, evaluates, and disseminates credit information about consumers to be used for credit evaluation and related purposes.
Covered Account means (i) an account offered or maintained by the University primarily for personal, family and household purposes that involves or is designed to permit multiple payments or transactions, and (ii) any other account offered or maintained by the University for which there is a reasonably foreseeable risk of Identity Theft that may have an impact on the holders of Covered Accounts or on the safety and soundness of the University or a vendor, including financial, operational, compliance, reputation, or litigation risks.
Department means a unit of the University that offers or maintains Covered Accounts, engages a vendor to offer or maintain Covered Accounts, or uses Consumer Reports IN CONNECTION WITH CREDIT TRANSACTIONS.
Identifying Information means any name or number that may be used, alone or in conjunction with any other information, to identify a specific person.
Identity Theft means a fraud committed or attempted using the Identifying Information of another person without authority.
Policy Administrators means the University’s Vice President & General Counsel, Vice President for Finance & Business Operations, Associate Vice President for Student Financial & Administrative Services, Director of Financial Aid, and Director of Information Technology Services, or their respective designees
Red Flag means a pattern, practice, or specific activity that indicates the possible unauthorized use of personal Identifying Information.
The Policy Administrators are responsible for implementing this Policy.
Annually, on or before June 30, the Policy Administrators shall meet to:
- identify all Covered Accounts maintained by or for the University and all Departments that offer or maintain Covered Accounts, engage vendors to offer or maintain Covered Accounts, or make use of Consumer Reports IN CONNECTION WITH CREDIT TRANSACTIONS;
- instruct any newly identified Department to implement the procedures required by this Policy; and
- review the annual reports required by Section 1603.3 and, if necessary, instruct Departments to modify their existing procedures under this Policy.
The Policy Administrators shall also, on a continuing basis, advise Departments on how to respond to specific Red Flag incidents.
The power to modify this Policy is delegated in full by the Yale Corporation to the Policy Administrators.
Each Department is responsible for the following:
1. Creating a Red Flags List: Each Department shall develop a written list of Red Flags appropriate to its Covered Accounts. In developing this list, the Department shall consider:
a. the types of accounts that it offers and maintains;
b. the methods it provides to open and access its accounts;
c. methods it provides to access its accounts;
d. its previous experiences with Identity Theft; and
e. evolving methods of Identity Theft that reflect changes in the University’s risk of experiencing Identity Theft.
The FTC provides examples of Red Flags in Supplement A to Appendix A to Part 681 of Title 16 of the Code of Federal Regulations. Those example are attached and incorporated into this Policy as Appendix A and should be used by Departments in developing lists of relevant Red Flags.
2. Detecting Red Flags: Departments shall develop written procedures to detect the Red Flags they have listed, including:
a. methods to verify the identity of:
- persons applying for a Covered Account;
- persons requesting information about an existing Covered Account (including, as applicable, methods specific to requests made in person, by telephone, by facsimile, by e-mail, or otherwise); and
- persons initiating Covered Account transactions;
b. methods to verify the validity of change-of-address requests for Covered Accounts (including, as applicable, methods specific to requests made in person, by telephone, by facsimile, by e-mail, or otherwise); and
c. methods to train Department staff, as necessary, to detect the Department’s listed Red Flags.
3. Responding to Red Flags: As soon as practicable after detecting a Red Flag, a Department shall gather all relevant documentation, write a description of the incident, present the description to a Policy Administrator, and seek the advice of the Policy Administrator in responding to the incident in a manner commensurate with the risk posed.
4. Responding to Consumer Reporting Agency Notices of Address Discrepancies: If a Department requests a Consumer Report about an individual and, in turn, receives a notice of address discrepancy from a Consumer Reporting Agency, the Department shall take steps to verify that the Consumer Report relates to the individual at issue. These steps shall include:
a. comparing the information in the Consumer Report with information the Department maintains in its own records or obtains from third-party sources or directly from the individual; and
b.furnishing a confirmed address for the individual to the Consumer Reporting Agency.
5. Training: Departments shall train staff to detect and respond to Red Flags and Consumer Report address discrepancies in accordance with the procedures described above.
6. Overseeing Vendors: Departments shall ensure that vendors engaged to offer or maintain Covered Accounts follow reasonable policies and procedures to prevent Identity Theft.
Annually, on or before June 30, each Department shall issue a written report to the Policy Administrators, including the following information:
a. its list of Red Flags;
b. its procedures to detect Red Flags;
c. a description of each incident during the prior year in which a Red Flag was detected and the response taken by the Department;
d. a description of any incidents of Identity Theft relating to its Covered Accounts during the prior year;
e. a description of each notice of address discrepancy the Department received during the prior year and its response; and
f. any recommendations for changes to this Policy.
Appendix A to Policy 1603: Examples of Red Flags Provided by the FTC
Alerts, Notifications or Warnings 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.
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 is not consistent with the appearance of the applicant or customer presenting the identification.
7. Other information on the identification 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 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 a 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 other persons opening an account or other customers.
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 by 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 a new, additional, or replacement card 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. 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.