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April 30, 2009

Re:  Identity Theft Protection Plan Requirements (Red Flag Rules)

Dear Mayor:

In accordance with Federal regulatory requirements, and pursuant to Federal law, municipalities that operate utilities that bill for services must come into compliance with identity theft protection provisions of new Federal Trade Commission rules that take effect on May 1, 2009.   The federal rules implement sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act).

Yesterday, the Division of Local Government Services released a Local Finance Notice (LFN 2009-9), which fully explains the requirements and offers guidance on compliance. It says:“ (T)his Local Finance Notice requires the immediate attention of any local unit that operates a utility or other activity that extends credit (i.e. bills consumers for utility services after they are received).  This guidance does not affect the property tax billing and collection process or fiscal activities where users are billed in advance, and credit is not provided.” 

Joint rules and guidelines were issued by the U.S. Department of the Treasury's Office of the Comptroller of the Currency (OCC) and Office of Thrift Supervision (OTS), the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Federal Trade Commission (FTC or Commission).  They implement sections 114 and 315 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act).

You, your chief financial officer, municipal manager or administrator, your municipal clerk, technology coordinator, and your municipal attorney should review the LFN at If you have any questions, please contact Deborah M. Kole, Staff Attorney, at the League, ex. 137, or at

Very truly yours,


William G. Dressel, Jr.
Executive Director


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