The gas company wanted me to give them my SSN to start service. Naturally, I refused. I was told that they were required by law to verify my identity, and offered me the alternative of submitting a notarized form.

I asked which law specifically mandated this identity verification, and I was told that it was the Federal Trade Commission Act of 2006. I have searched through the text of the act, and I can't find anything that references identity verification requirements, or utility companies.

Is this actually a legal requirement, as a consequence of the FTC Act or otherwise?

up vote 3 down vote accepted

The first issue is to understand that opening up an account with a utility to provide natural gas services is considered an extension of credit.

This matters because the FTC requires, under the fair credit reporting act and its general power to issue regulations targeted at preventing fraud, that people who open up new credit accounts to verify the identity of the applicant in an effort to prevent identity theft by fake applicants in some cases. Potential creditors must use “reasonable policies and procedures” to verify the identity of an applicant before issuing credit in the consumer's name. This regulatory stance is supported by Fair Credit Reporting Act § 605A(h)(1)(B) a.k.a. 15 U.S.C. § 1681c-1 (h)(1)(B).

The pertinent part of the statute states:

(B) Limitation on users (i) In general No prospective user of a consumer report that includes an initial fraud alert or an active duty alert in accordance with this section may establish a new credit plan or extension of credit, other than under an open-end credit plan (as defined in section 1602(i) 1 of this title), in the name of the consumer, or issue an additional card on an existing credit account requested by a consumer, or grant any increase in credit limit on an existing credit account requested by a consumer, unless the user utilizes reasonable policies and procedures to form a reasonable belief that the user knows the identity of the person making the request.

(ii) Verification If a consumer requesting the alert has specified a telephone number to be used for identity verification purposes, before authorizing any new credit plan or extension described in clause (i) in the name of such consumer, a user of such consumer report shall contact the consumer using that telephone number or take reasonable steps to verify the consumer’s identity and confirm that the application for a new credit plan is not the result of identity theft.

The FTC in issuing its regulations and the utility company, as a matter of policy and expediency, have decided that it the utility company must do credit checks on all prospective customers and will speed up the application process for people who have "fraud alerts" or "active duty alerts" on their credit reports by requiring verification from everyone instead of finding out that they can't get a credit report for a particular customer without verification and then having to go back to the customer to get it.

  • But this law seems to specifically exclude open-ended credit, as it says "other than under an open-end credit plan". No? – alexw Apr 11 at 21:42
  • 1
    @alexw Sloppy and incorrect language in my answer corrected. – ohwilleke Apr 11 at 23:57

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