Congress Moves to Protect Social Security Numbers

Congress, trying to curb a rash of “identity thefts,” is moving to ban states and companies from trafficking in one of the most ubiquitous forms of American identification: the Social Security number.

If a bill making its way through the House becomes law as expected, stores no longer would be able to require a customer writing a check to give his or her Social Security number. States no longer could make public driver’s license files with Social Security numbers. And both governments and private businesses would be banned from selling Social Security numbers of their citizens or customers.

The bill, approved by a House subcommittee Thursday, is aimed at slowing the fastest-growing financial crime in the country. More than 500,000 people a year are victims of identity theft, when crooks use a legitimate Social Security number to obtain credit cards, checks, loans and telephone or utility services.

An innocent victim might not realize his Social Security number has been stolen until the bills come flooding in. The legislation aims to slow what has become an epidemic and restore some sense of security to millions of Americans who worry about their privacy.

“The horse is out of the barn, but we just don’t want him to gallop another 40 acres,” said Rep. E. Clay Shaw Jr. (R-Fla.), chairman of the House Ways and Means subcommittee on Social Security.

The challenge facing Congress is astounding in scale. Since Social Security was created in 1935, more than 400 million numbers have been issued. The original purpose of the number was simple: keeping track of payroll taxes and wages so workers could get retirement benefits.

But the number has become a unique label for every American. He or she is tracked in government computers, listed in business databases and identified in school records by the Social Security number.

Conservatives and liberals, Republicans and Democrats all are telling horror stories about the misuse of Social Security numbers:

* Rep. Mark Foley (R-Fla.) spent a year and countless phone calls fighting collection agencies who refused to believe that someone else had used his number to open a credit account and run up a $700 bill.

* A woman writing a check to pay for her mother’s burial declined to give the funeral director her Social Security number. He refused to accept her check and canceled the funeral.

* A father and his daughter went to a Girl Scout meeting to pick up boxes of cookies to sell. The cookies already had been paid for. But the Scout leader would not let them take the boxes because the father refused to give his Social Security number.

Financial losses from identity theft jumped 169% in just two years, rising from $442 million in 1995 to $745 million in 1997. The typical identity theft victim spent two years trying to get $18,000 in fraudulent charges removed from his or her financial record.

The bill proposing remedies has a long way to go before it gets to President Clinton’s desk. But it has momentum rarely seen in a fractious political season.

The bill “strengthens privacy protections and empowers Americans whose rights have been violated,” said Rep. Robert T. Matsui (D-Sacramento), ranking Democrat on the subcommittee. “Social Security numbers are increasingly used as the key to unlock individuals’ most private personal and financial information.”

Under current law, a Social Security number can be required for tax documents, loan applications and driver’s licenses. No federal law regulates use of the number.

The bill adopted Thursday, if it becomes law, would forbid federal, state or local governments from selling Social Security numbers. Public access to the numbers also would be forbidden. Now, for example, many states routinely sell drivers’ records to anyone willing to pay--from private detectives to market researchers.

Under the bill, if a driver’s license uses a Social Security number, it could no longer be sold or posted on the Internet. This would take effect two years after the bill is passed, giving states time to substitute other numbers. For new licenses, states could no longer use Social Security numbers.

In addition, Social Security numbers no longer could be required on military ID cards or business ID tags and would be removed from all government benefit checks.

It would become illegal for all businesses, from department stores to mortgage lenders, to insist that a Social Security number be given.

With so many Social Security numbers already in circulation, the proposed law might make only modest progress toward curbing identity theft. But the bill does have teeth. Violations would bring tough civil and criminal penalties--up to five years in prison and a $250,000 fine for illegal sale or misuse of a Social Security number.

Americans deserve to have their privacy respected, insisted James G. Huse Jr., inspector general of the Social Security Administration, who attended Thursday’s subcommittee hearing. “Why do I need to give my Social Security number to put in a new air conditioner?” wondered Huse, who admitted that he meekly supplied his number so a contractor would accept his check.