With two business reviews I recently completed, both utilities required new applicants for service to show photo ID, but neither required a copy of the rental agreement or closing documents.

Let’s take a look at why that is a poor business practice.

Avoiding identity theft

By requiring new customers to present either a rental agreement or closing documents, you are able to verify that they are the legitimate occupants of the property. By doing so, you are in compliance with the Red Flags Rule and taking an important step in preventing identity theft.

Why is this important?

In many cases, a utility bill can be used as proof of identity. Assume an applicant for service presents a fake ID, and you don’t verify their ID with their lease or closing documents. As soon as they receive their first utility bill in the mail, they now have two forms of ID confirming their fake identity!

Best practices

There are several best practices regarding the application process for new service, but requiring a copy of the rental agreement or closing documents is one of the most important. Doing so ensures that you have taken the necessary steps to confirm the identity of your new customer. This could save you from having to write off a bad debt account if the applicant used a stolen identity and you are unable to track them down after they skip town.

Are your business practices up to date?

Are you sure your business practices are up to date? If you’re not, please call me at 919-673-4050 or email me at gary@utilityinformationpipeline.com to learn how a business review could help you update them.

© 2025 Gary Sanders