[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
PROTECTING THE PRIVACY OF THE SOCIAL
SECURITY NUMBER FROM IDENTITY THEFT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JUNE 21, 2007
__________
Serial No. 111-33
__________
Printed for the use of the Committee on Ways and Means
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PRINTING OFFICE
63-017 WASHINGTON : 2011
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
20402-0001
COMMITTEE ON WAYS AND MEANS
CHARLES B. RANGEL, New York, Chairman
FORTNEY PETE STARK, California JIM McCRERY, Louisiana
SANDER M. LEVIN, Michigan WALLY HERGER, California
JIM McDERMOTT, Washington DAVE CAMP, Michigan
JOHN LEWIS, Georgia JIM RAMSTAD, Minnesota
RICHARD E. NEAL, Massachusetts SAM JOHNSON, Texas
MICHAEL R. McNULTY, New York PHIL ENGLISH, Pennsylvania
JOHN S. TANNER, Tennessee JERRY WELLER, Illinois
XAVIER BECERRA, California KENNY HULSHOF, Missouri
LLOYD DOGGETT, Texas RON LEWIS, Kentucky
EARL POMEROY, North Dakota KEVIN BRADY, Texas
STEPHANIE TUBBS JONES, Ohio THOMAS M. REYNOLDS, New York
MIKE THOMPSON, California PAUL RYAN, Wisconsin
JOHN B. LARSON, Connecticut ERIC CANTOR, Virginia
RAHM EMANUEL, Illinois JOHN LINDER, Georgia
EARL BLUMENAUER, Oregon DEVIN NUNES, California
RON KIND, Wisconsin PAT TIBERI, Ohio
BILL PASCRELL JR., New Jersey JON PORTER, Nevada
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
CHRIS VAN HOLLEN, Maryland
KENDRICK MEEK, Florida
ALLYSON Y. SCHWARTZ, Pennsylvania
ARTUR DAVIS, Alabama
Janice Mays, Chief Counsel and Staff Director
Brett Loper, Minority Staff Director
Subcommittee on Social Security
MICHAEL R. MCNULTY, New York, Chairman
SANDER M. LEVIN, Michigan SAM JOHNSON, Texas
EARL POMEROY, North Dakota RON LEWIS, Kentucky
ALLYSON Y. SCHWARTZ, Pennsylvania KEVIN BRADY, Texas
ARTUR DAVIS, Alabama PAUL RYAN, Wisconsin
XAVIER BECERRA, California DEVIN NUNES, California
LLOYD DOGGETT, Texas
STEPHANIE TUBBS JONES, Ohio
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also, published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisory of June 14, 2007, announcing the hearing................ 2
WITNESSES
Hon. Charles E. Schumer, a Senator from New York................. 6
Hon. Ed Markey, a Representative in Congress from Massachusetts.. 59
Hon. Joe Barton, a Representative in Congress from Texas......... 68
______
Hon. Patrick O'Carroll, Inspector General, Social Security
Administration................................................. 63
Joel Winston, Director, Division of Privacy and Information
Protection, Federal Trade Commission........................... 74
Dan Bertoni, Associate Director, Education, Workforce, and Income
Security, Government Accountability Office..................... 96
______
Justin Yurek, President, ID Watchdog, Denver, Colorado........... 118
Stuart Pratt, President, Consumer Data Industry Association...... 123
James D. Gingerich, Director, Administrative Office of the
Courts, Supreme Court of Arkansas, on behalf of the Conference
of State Court Administrators, Williamsburg, Virginia.......... 131
Annie I. Anton, Associate Professor of Software Engineering,
North Carolina State University, Raleigh, North Carolina, on
behalf of the Association for Computing Machinery.............. 138
Marc Rotenberg, Executive Director, Electronic Privacy
Information Center............................................. 158
Gilbert T. Schwartz, Partner, Schwartz & Ballen LLP, on behalf of
the Financial Services Coordinating Council.................... 169
SUBMISSIONS FOR THE RECORD
LexisNexis, letter............................................... 183
Bruce Hulme, Legislative Director, National Council of
Investigation and Security Services, statement................. 187
National Organization of Social Security Claimants'
Representatives, statement..................................... 188
Property Records Industry Association, statement................. 190
PROTECTING THE PRIVACY OF THE SOCIAL SECURITY NUMBER FROM IDENTITY
THEFT
----------
THURSDAY, JUNE 21, 2007
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
[The advisory announcing of the hearing follows:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
McNulty Announces a Hearing on Protecting the Privacy of the Social
Security Number from Identity Theft
June 21, 2007
By (202) 225-9263
Congressman Michael R. McNulty (D-NY), Chairman, Subcommittee on
Social Security of the Committee on Ways and Means, today announced
that the Subcommittee will hold a hearing to examine the role of Social
Security numbers (SSNs) in identity theft and options to enhance their
protection. The hearing will take place on Thursday, June 21, in room
B-318 Rayburn House Office Building, beginning at 10 a.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Subcommittee and
for inclusion in the printed record of the hearing.
BACKGROUND
As many as ten million Americans fall victim to identity theft
every year. The effects of identity theft can be catastrophic to the
lives of affected individuals. The reported costs are significant--
according to the Federal Trade Commission, businesses lose $50 billion
and consumers expend another $5 billion annually to recover from
identity theft. The SSN is a critical tool for identity thieves looking
to establish a credit account in someone else's name. And it is often
the key that identity thieves use to gain access to other personal
information such as bank accounts.
Because it is a unique piece of personal information that does not
change over time, the SSN provides a convenient way to track
individuals throughout public and private records. As a result, SSNs
have become ubiquitous in these records, and they are being used for
purposes far beyond their original role of tracking earnings in order
to compute Social Security benefits. While the widespread use of SSNs
can be advantageous to business and government, it is also useful for
identity thieves and other criminals. Moreover, records containing the
SSN are increasingly available in electronic form, and easily
accessible over the Internet. Thus, the need for streamlined business
processes and openness of public records must be balanced against the
increasing risks of identity theft and other crimes.
Despite its widespread usage, there is no Federal law that requires
comprehensive confidentiality protection for the SSN. An SSN may be
found on display to the general public on employee badges and in court
documents, or offered for sale on the Internet. Some limited protection
of SSN confidentiality is provided by the Fair Credit Reporting Act
(P.L. 91-508) and the Gramm-Leach-Bliley Act (P.L. 106-102), which
restrict the use and disclosure of SSNs by financial institutions.
Also, many states have enacted legislation to restrict the use,
disclosure or display of SSNs. Still most private sector use of the
number remains unregulated.
In the 108th Congress, the Committee on Ways and Means approved
comprehensive legislation to enhance SSN privacy to protect against
identity theft (H.R. 2971; H. Rept. 108-685). Among other provisions,
the bill would restrict the use, sale, purchase or display of SSNs.
Members of Congress concerned about the magnitude of identity theft and
its devastating effects on victims have introduced similar legislation
this year.
In announcing the hearing, Chairman McNulty stated ``there is no
question that we need stronger protections for Social Security numbers
to combat the growing crime of identity theft. Identity theft can
destroy an individual's or family's financial well-being with a touch
of a button. We must begin to place some common-sense limits on the use
of the SSN by government and business in order to ensure the privacy of
the information and prevent theft.''
FOCUS OF THE HEARING:
The Subcommittee will examine what role the SSN plays in identity
theft, and the steps that can be taken to increase SSN privacy and
thereby limit its availability to identity thieves and other criminals.
The hearing will examine how SSNs are currently used, what risks to
individuals and businesses arise from its widespread use and options to
restrict its use in the public and private sectors.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Any person(s) and/or organization(s) wishing to submit
for the hearing record must follow the appropriate link on the hearing
page of the Committee website and complete the informational forms.
From the Committee homepage, http://democrats.waysandmeans.house.gov,
select ``110th Congress'' from the menu entitled, ``Committee
Hearings'' (http://democrats.waysandmeans.house.gov/
Hearings.asp?congress=18). Select the hearing for which you would like
to submit, and click on the link entitled, ``Click here to provide a
submission for the record.'' Once you have followed the online
instructions, completing all informational forms and clicking
``submit'' on the final page, an email will be sent to the address
which you supply confirming your interest in providing a submission for
the record. You MUST REPLY to the email and ATTACH your submission as a
Word or WordPerfect document, in compliance with the formatting
requirements listed below, by close of business Thursday, July, 5,
2007. Finally, please note that due to the change in House mail policy,
the U.S. Capitol Police will refuse sealed-package deliveries to all
House Office Buildings. For questions, or if you encounter technical
problems, please call (202)225-1721.
FORMATTING REQUIREMENTS:
The Committee relies on electronic submissions for printing the
official hearing record. As always, submissions will be included in the
record according to the discretion of the Committee. The Committee will
not alter the content of your submission, but we reserve the right to
format it according to our guidelines. Any submission provided to the
Committee by a witness, any supplementary materials submitted for the
printed record, and any written comments in response to a request for
written comments must conform to the guidelines listed below. Any
submission or supplementary item not in compliance with these
guidelines will not be printed, but will be maintained in the Committee
files for review and use by the Committee.
1. All submissions and supplementary materials must be provided in
Word or WordPerfect format and MUST NOT exceed a total of 10 pages,
including attachments. Witnesses and submitters are advised that the
Committee relies on electronic submissions for printing the official
hearing record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. All submissions must include a list of all clients, persons,
and/or organizations on whose behalf the witness appears. A
supplemental sheet must accompany each submission listing the name,
company, address, telephone and fax numbers of each witness.
Note: All Committee advisories and news releases are available on
the World Wide Web at http://democrats.waysandmeans.house.gov.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
accommodation needs in general (including availability of Committee
materials in alternative formats) may be directed to the Committee as
noted above.
The Subcommittee met, pursuant to notice, at 10:00 a.m., in
room B-318 Rayburn House Office Building, Hon. Michael R.
McNulty (Chairman of the Subcommittee) presiding.
Chairman MCNULTY. The hearing will come to order. I want to
welcome all of our witnesses and all of our guests. You will
notice on the list of witnesses that we have three Members of
Congress scheduled to be here today, Senator Schumer,
Congressman Markey and Congressman Barton. They are involved in
markups today so we do not know exactly what time they will
arrive, but as they arrive, we will ask the indulgence of the
other witnesses to accommodate their statements so that they
can come in, make their statement, if they have time, answer a
couple of questions and then get back to their markup.
Our hearing today will focus on the role that the Social
Security number plays in the crime of identity theft and
options to enhance the privacy and security of the Social
Security number so that it is not as useful a tool for identity
thieves.
Stealing or obtaining Social Security numbers through
illegitimate means is a key part of identity fraud. Our
Subcommittee is deeply concerned about identity theft and how
to better protect the Social Security number. In fact, this is
the 16th hearing on this topic we have held in the past 7
years. Identify theft is one of the fastest growing crimes in
the United States. Research by the Federal Trade Commission
suggests that almost 5 percent of the adult population of the
United States, some 10 million people, were victims of some
kind of identity theft in just a single 12-month period.
Through its Web site and toll free hotline, the FTC receives
between 15,000 and 20,000 contacts each week from those who
have been victimized by identify thieves, as well as people
seeking information about how to protect themselves from
identity theft. Identity theft ruins individuals' good names
and destroys their credit ratings. Identity thieves have stolen
the homes of elderly retirees and have caused innocent persons
to be arrested when crimes are committed under a falsified
identity. It has even ruined the future credit ratings of young
children.
The FTC reports that individuals spend $5 billion a year
attempting to recover their good names and credit histories.
Annual surveys find that businesses lose more than $50 billion
per year to identity theft-related fraud. Victims also spend
years cleaning up the damage done by such thieves. In fact, we
have learned that a victim who testified before this
Subcommittee in the previous Congress, Nicole Robinson, still
has not been able to correct her credit record. Even though she
testified before Congress and our staff intervened with the
credit bureaus, she continues to experience problems relating
from the theft of her identity 7 years after her identity was
first stolen.
The Social Security Administration and its inspector
general have worked diligently to increase the integrity and
security of the Social Security number and the procedures used
in issuing it. But SSA has essentially no control over how the
Social Security number is used by other governmental agencies
or the private sector.
Today, we will hear about the problem of identity theft
from Government agencies who have studied it and
representatives of those who suffer from it. We will hear from
businesses and Government agencies that use the Social Security
and we will hear suggestions on how to better protect the
Social Security number by limiting its use by Government and
the private sector. I am committed to moving forward with
legislation and of making it more difficult for thieves and
other wrongdoers to obtain a Social Security number and use it
to commit identity theft or other crimes. I welcome the
testimony we will receive today that will help us better
understand the nature of the problem and the potential
solutions.
I am now pleased to yield to the Ranking Member of the
Committee, a distinguished veteran and one of my heroes in
life, Mr. Johnson.
Mr. JOHNSON. Thank you, Mr. Chairman. I appreciate Chairman
McNulty for holding this hearing on protecting the privacy of
Social Security numbers from identity theft. You know Americans
are rightly worried about the security of their personal
information, including their Social Security number. We hear
reports on a daily basis about another data breach in the
private or public sector where hundreds, if not thousands, of
people's personal identity information is stolen.
According to the Privacy Rights Clearinghouse, the total
number of known records that have been compromised due to
security breaches beginning in January 2005 through last week
was over 155 million. The fact is that even though Social
Security numbers were created to track earnings for determining
eligibility and benefit amounts under Social Security, these
numbers are widely used as personal identifiers.
As we will hear today, Social Security numbers are vital to
many commercial and Government transactions to verify identity
and prevent fraud. Examples include enforcing child support,
aiding law enforcement, compiling information from many sources
to help ensure the accuracy of credit reports. Unfortunately,
as pointed out by the GAO in testimony before this
Subcommittee, Social Security numbers have become the
identifier of choice and are used for everyday business
transactions. In fact, in their April 2007 report, the
President's Identity Theft Task Force identified the Social
Security number as the most valuable commodity for an identity
thief. So, it is no wonder that concerns about identity theft
remain high.
According to the Federal Trade Commission, identity theft
is the number one consumer complaint, amounting to 36 percent
of complaints received in 2006. Americans are right to be
concerned. According to the latest data provided by the FTC,
over a 1-year period, nearly 10 million, or about 5 percent of
the adult population, discovered they were victims of identity
theft. Even worse, the true number of victims in this
devastating crime is unknown since most victims do not report
it. Losses due to these thefts were estimated to exceed $50
billion. Also, it has been reported that ID theft victims spend
roughly 300 million hours a year trying to resolve the negative
effects of ID theft, including re-establishing their hard-
earned good credit and clearing their good name. Even worse,
identity theft continues to threaten our national security. As
said in the 9/11 Commission Report, and this is a quote,
``Fraud in identification documents is no longer just a problem
of theft. At many entry points to vulnerable facilities,
including gates for board aircraft, sources of identification
are the last opportunity to ensure that people are who they say
they are and to check whether or not they are terrorists.''
Our Subcommittee has been working on a bipartisan basis to
protect the privacy of Social Security numbers and prevent
identity theft since the 106th Congress when it first approved
the Social Security number Privacy and Identity Theft
Prevention Act to restrict the sale and public display of
Social Security numbers. This legislation was introduced on a
bipartisan basis by then Subcommittee Chairman Clay Shaw and
then Ranking Member, the late Bob Matsui. We know that
providing for uses of Social Security numbers that benefit the
public while protecting their privacy is a complex balancing
act. However, I believe we must act and with your help, Mr.
Chairman, we will act to stop rampant abuse of Social Security
numbers, help prevent ID theft and further protect American
privacy.
I look forward to hearing from each of our witnesses and
thank them in advance for sharing with us their experiences and
recommendations. Thank you, sir.
Chairman MCNULTY. I thank the Ranking Member. Other Members
will be allowed to insert opening statements for the record. We
are pleased at this time to be joined by Senator Schumer, who
is involved in another markup, and we are going to go to him
right away. He is the senior Senator from the State of New
York. He has a long history on this subject of trying to
protect our constituents across the country from identity
theft. He is a dear friend of mine and before he leaves, I am
going to give him a little editorial from one of the local
newspapers in my district because when he was first elected to
the Senate back in 1998, many people in upstate New York were
wondering how much they would see of the new Senator, and he
made a pledge that he would visit each of the 62 counties in
the State of New York every single year that he was in office.
The editorial from the newspaper cites the fact that you have
kept that pledge every single year that you have served in the
Senate. Thank you for going over and visiting my friend John
Redcliffe and the farmers over there, they deeply appreciate
it.
Senator Schumer.
STATEMENT OF CHARLES E. SCHUMER, A U.S. SENATOR FROM THE STATE
OF NEW YORK
Senator SCHUMER. Well, thank you, Mr. Chairman. I very much
appreciate the introduction. I am so glad to be here for a
whole lot of reasons. First, it is great to call you ``Mr.
Chairman,'' my good friend Mike McNulty, who does such a
wonderful job both in the capital region and down here. Second,
for the 18 years in the House, or at least the first 9 and 10,
I really wanted to be on this Committee, and I never got on so
I am glad to get here at least on this side of the table. I am
now on Senate Finance. Things work a little faster in the
Senate in terms of seniority.
I thought I might just tell a quick story in reference to
the Chairman's mention. It is true I visit every county every
year, so I am pretty diligent. I go to the little counties and
big counties. In 2004, when I ran for re-election, I carried 61
of the 62 counties. I did not carry one, Hamilton County, not
that far from where you are. Hamilton is a beautiful county. It
is as large as Rhode Island. It is in the middle of
Adirondacks, great forests and rivers and mountains, great
hunting, great fishing, but it is our smallest county
population-wise. It has a little bit fewer than 5,000 people. I
had visited it six times since re-election, which was a lot. I
asked my chief of staff, ``Why do you think I lost Hamilton
County,'' Martin Brennan. Martin Brennan said, ``It is easy,
Chuck, it is the only county where you actually met every
single voter.''
Anyway, it is good to be here. I want to thank all of my
friends, so many of whom I served with in the House, and my
friend, Eddy Markey, who was senior to me then and senior to me
now, and I thank you for your leadership on this issue, Mr.
Chairman. Let me thank Congressman Rangel, our colleague from
New York as well.
We all know when it comes to identity theft, the Social
Security number is the golden key that opens all doors. If you
can get a person's Social Security number, you can impersonate
him, steal his money, ruin his credit and literally devastate
his life. In my testimony, I am going to focus on one
particular risk of identity theft and what Congress can do
about it. I am pleased that today the GAO, the Government
Accountability Office, prepared at my request a report which
focuses on the insidious problem of Social Security numbers
displayed online in public records, and that report is being
release coincident with this hearing.
Now, it used to be that when your tax lien or your divorce
decree was filed as a public record, it sat in an office
building. You had to go there in person to track down a record
but in recent years, more and more Government agencies are
putting public records on the Internet. In fact, the GAO found
that in 40 out of 50 States, one or more offices are displaying
people's public records right on the Internet. Anyone with a
computer can now view these online records, often for free. The
recordkeepers who put files online probably just want to
provide more transparency and access to information and those
are important values I think we all support, but we need to
have public access in a way that does not expose people to
identity theft.
In the words of the GAO, these online records provide
``potentially unlimited access'' to personal information,
including Social Security numbers. It is not surprising that
there are known cases where identity thieves use online public
records to prey on their victims. Yet, the GAO reports that
online display of public records is on the rise. We cannot let
this practice continue unchecked. The report shows that online
public records may be doing more harm than good. The world has
changed but our laws are lagging far behind.
Here is what we can do about it, Mr. Chairman, and I look
forward to working with you and Chairman Rangel to try and
accomplish some good changes here. First, we need to have
uniform standards for protecting Social Security numbers by
hiding either the first five digits or the last four digits.
The good news is that Federal agencies have started hiding the
first five digits of Social Security numbers in public record
documents. The very bad news is that data brokers and other
entities are going in the opposite direction and hiding the
last four digits. So, it is a classic case of the Federal
Government where one hand does not know what the other is
doing. It makes it very easy to use public sources to get the
whole nine numbers. It is sort of a little bit like an Abbott
and Costello routine.
You get the first five from the Social Security records--
you get the last four from the Social Security records, the
first five from the others, the data brokers and others, and
you sort of have straight flush for identity theft. It is like
a slap stick routine, each group points the finger at the other
but it is not a joke when ordinary citizens are paying the
price. The GAO was able to piece together people's full nine
digit numbers even though they were always hidden, one half or
the second half, in just one hour from their desks. An identity
thief could do this anywhere in the world. So, I am proposing
legislation that would require the Social Security
Administration to set standards, telling public agencies and
private businesses what method of truncation to use so everyone
will be protected. It is sort of a tragedy of errors, everyone
is trying to help by masking part of the number but no one is
paying attention to the big picture and that is where they need
a Federal role.
Congress should act now because the numbers of records
involved are growing everyday, a little coordination in this
area will go a long way toward stopping identity theft and it
seems to me that this simple bill should pass by a wide margin.
I do not know who would oppose it.
Second, we need to make sure that state and local
recordkeepers are never displaying full Social Security numbers
on the Internet. I will be re-introducing my bill from the last
Congress to ban these recordkeepers from showing complete
numbers on the Internet. Again, I hope this bill can be passed
quickly given the evidence of the report. The legislation is
feasible and practical given the advanced technology we have
today, like software to help find and hide Social Security
numbers. County clerks and other public recordkeepers are
public servants and they should be taking steps to protect
people. They cannot say, ``Well, it is not my problem.''
So, if recordkeepers want to put documents online, they
should but they should hide all or part of the Social Security
number that appears in those documents. Under this bill, the
Department of Justice will be able to enforce the ban by
imposing fines on any office that ignores the law. It will also
help recordkeepers by authorizing grants to their offices if
they want to redact Social Security numbers from the older
records because that takes a job to go back and do it, and we
do not think that the local taxpayer should have to foot the
entire bill for that.
Finally, the GAO reports that private businesses have been
buying public records in bulk for years. We need to know more
about this practice, and I have asked the GAO to investigate
it. Currently, we have no idea how frequently our records are
being sold or why or where they go. This report reveals there
may be large sets of records that are overseas and that these
Social Security numbers may be beyond the protections of
American law. When the GAO reports back on their investigation,
we should try to work together to close any loopholes. The
buying and selling of our private information is not the kind
of thing that should be happening in the dark of night without
any oversight even from people who are 10,000 miles away.
With the great power of today's technology, Mr. Chairman,
in conclusion, comes a great responsibility to regulate that
technology and avoid unintended harms. The measures I have
mentioned today will address the risks uncovered in today's
report, excellent report by the Government Accountability
Office, great job, and I hope that my colleagues will join me
in moving these measures forward to protect Americans from
identity theft.
In conclusion, finally, I want to thank the Subcommittee
and your leadership, Mr. Chairman, and the Ranking Member, Mr.
Johnson, so that we can--this is an important step, this
hearing, on rising to the challenge of protecting our Social
Security numbers. I very much thank you for allowing me to be
here today.
[The prepared statement of Senator Schumer follows:]
Prepared Statement of the Honorable Charles E. Schumer
a Senator from New York
Good morning, Chairman McNulty and Ranking Member Johnson. Thank
you for inviting me to testify.
I want to commend Subcommittee Chairman McNulty and Committee
Chairman Rangel, my esteemed colleagues from the New York delegation,
for holding this important hearing on protecting Social Security
numbers.
We all know that when it comes to identity theft, the Social
Security number is the golden key that opens all doors. If you can get
a person's Social Security number, you can impersonate him, steal his
money, ruin his credit, and literally devastate his life.
In my testimony, I'm going to focus on one particular risk of
identity theft, and what Congress can do about it. I am pleased to
announce today's release of a new report, prepared at my request by the
Government Accountability Office, that focuses on the insidious problem
of Social Security numbers displayed online in public records.
It used to be that when your tax lien or your divorce decree was
filed as a public record, it sat in an office building. You had to go
there in person to track down a record. But in recent years, more and
more government agencies are putting public records on the Internet.
In fact, the GAO found that in 40 out of 50 states, one or more
offices are displaying people's public records right on the Internet.
Anyone with a computer can now view these online records, often for
free.
The record-keepers who put files online probably just want to
provide more transparency and access to information, which are
important values that I support.
But we need to have public access in a way that doesn't expose
people to identity theft.
In the words of the GAO, these online records provide ``potentially
unlimited access'' to personal information, including Social Security
numbers.
It's not surprising that there are known cases where identity
thieves used online public records to prey on their victims.
And yet the GAO reports that online display of public records is on
the rise. We cannot let this practice continue unchecked.
This report shows that online public records may be doing more harm
than good. The world has changed, but our laws are lagging far behind.
Here's what Congress can do about it, and I hope that my good
colleagues here on the House side will lend their support to these
measures.
First, we need to have uniform standards for protecting Social
Security numbers by hiding either the first five digits or the last
four digits.
The good news is that federal agencies have started hiding the
first five digits of Social Security numbers in public record
documents. The very bad news is that data brokers and other entities
are going in the opposite direction of hiding the last four digits.
This is a case of classic Federal Government where one hand doesn't
know what the other is doing.
This makes it very easy to use public sources to piece together a
full nine-digit Social Security number that could be used for identity
theft. The GAO was able to do this in just one hour, from their desks.
An identity thief could do the exact same thing--from anywhere in the
world.
It's almost like a slapstick routine--each group is pointing the
finger at the other. But it's not a joke when ordinary citizens are
paying the price.
That's why I am proposing new legislation that will require the
Social Security Administration to set standards telling public agencies
and private businesses exactly what method of truncation to use.
It's a tragedy of errors--everyone is trying to help by masking
part of the number, but no one is paying attention to the big picture.
It's time for a federal role.
Congress should act now, because the numbers of records involved
are growing every day. Just a little coordination here will go a long
way toward stopping identity theft, and it seems to me that this simple
bill should pass by a wide margin.
Second, we need to make sure that state and local record-keepers
are never displaying full Social Security numbers on the Internet. I
will be reintroducing my bill from the last Congress to ban these
record-keepers from showing complete numbers on the Internet.
I hope that my bill can be passed quickly, given the new evidence
in this report. This legislation is both feasible and practical given
the advanced technology we have today, like software to help find and
hide Social Security numbers.
County clerks and other record-keepers are public servants--they
should be taking steps to protect people. If record-keepers want to put
documents online, they are welcome to do so, but they should hide all
or part of any Social Security number that appears in those documents.
Under this bill, the Department of Justice will be able to enforce
the ban by imposing fines on any office that ignores the law. My
legislation will also help record-keepers by authorizing grants to
offices that want to redact Social Security numbers from older records,
but need more resources.
Finally, the GAO reports that private businesses have been buying
public records in bulk for years. We need to know more about this
practice, and I have already asked the GAO to investigate it.
Currently, we have no idea how frequently our records are being
sold, or why, or where they go. This report reveals that there may be
large sets of records that are overseas, and that these Social Security
numbers may be beyond the protections of American law.
When the GAO reports back on their investigation, the Congress
should move quickly to close any loopholes. The buying and selling of
our private information is not the kind of thing that should be
happening in the dark of night, without any oversight.
With the great power of today's technology comes a great
responsibility to regulate that technology and to avoid unintended
harms. The measures that I've highlighted will address the risks
uncovered in today's report, and I hope that my colleagues will join me
in moving these measures forward to protect Americans from identity
theft.
In closing, let me say that I appreciate the excellent work of the
Government Accountability Office in preparing this study.
Again, I thank the Subcommittee for recognizing that we must rise
to the challenge of protecting our Social Security numbers, and thank
you for having me here today.
Chairman MCNULTY. Thank you very much, Senator Schumer. I
know you are on the run but I just wanted to thank you for your
testimony, to assure you that we will work together with you on
legislation. I also want to thank you for a statement you made
in another trip upstate recently about properly funding the
Social Security agency so that we can start to cut back on this
tremendous backlog that we have with regard to disability
claims, which is not only a tremendous hardship on many of our
constituents, it is a national embarrassment to every Member of
Congress when someone comes in with a legitimate claim for a
government benefit, and we tell them they have to wait a year
and a half or 2 years before they even get an answer, so we
really need to do something about that.
I want to thank you for your commitment in that regard. On
the House side, we have taken some steps in moving toward that.
We have got $100 million over the President's request out of
the Appropriations Committee, I asked for more than that but we
got that far anyway. In recent years, the President's request
has been under-funded, we are $100 million over. I am hoping
that on the Senate side you can help us get to at least that
number, or hopefully higher, so that we can begin to make a
serious dent in this backlog. I do not know if you have time,
do you have time to take a couple of questions? Then we will
get immediately to Ed Markey after that. Does any Member wish
to pose a question to the Senator? Yes, Lloyd?
Mr. DOGGETT. Chuck, thanks so much for what you have been
doing on this. Can you update us on where this legislation is
in the Senate and how you think it is moving over there?
Senator SCHUMER. I think it is moving very well. We are
just going to update it because of the GAO report, particularly
the first thing I mentioned, but it seems to have support. The
one place where there was objection, the old or the local
officials who used and put these things online, we have dealt
with their objections, and I think the new legislation should
have smooth sailing. Thank you, Lloyd.
Chairman MCNULTY. I also want to ask unanimous consent that
we insert into the record the new GAO report, which the Senator
referenced in his testimony. Mr. Levin.
[The provided material follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. LEVIN. Welcome.
Senator SCHUMER. Glad to be here, Sandy.
Mr. LEVIN. Both of you and everybody else. Just quickly,
and I will ask the same of Ed Markey, what is the source of the
hesitation or the resistance?
Senator SCHUMER. The only resistance, it is a good
question, was from the local officials who said, ``Look, we
have an obligation to put it online, you do something about
it.'' So, the fact that we are both mandating that in the
future they treat things one way, that is not too hard for them
to do. There is software that does that easily. For past
records that are on display, which of course an identity thief
anywhere in the world could go back to, we help give them some
funding to cover those up because that is a little harder. You
have got to go back in the records and re-enter them. I think
now most of the opposition is gone.
Mr. LEVIN. By the way, I am not sure, as I look around, if
everybody is old enough to remember Abbott and Costello.
Your reference to them--they are going into different
doors.
Senator SCHUMER. Right.
Mr. LEVIN. But it sounds very much like these actions would
be attributed to Abbott and Costello.
Senator SCHUMER. I find with my staff, and I am blessed, I
have a great, great staff, but most of them are half of my age
and I mention all these cultural things, and they look at me
like I am from another planet. Now, I know how it feels, how my
parents felt when we mentioned things like the Beatles or Elvis
Presley or something like that.
Mr. LEVIN. Thank you.
Chairman MCNULTY. Well, I think most of them have seen the
clips of ``Who's on first.''
[Laughter.]
Chairman MCNULTY. If there are no further questions, I want
to thank the senior Senator from New York.
Senator SCHUMER. I thank you, Mr. Chairman, and all my
colleagues. It is great to finally make it to the Committee on
Ways and Means after all these years.
[Laughter.]
Chairman MCNULTY. Your staff has that editorial, Chuck.
Senator SCHUMER. Great, thanks.
Chairman MCNULTY. We would now like to go to our colleague
from Massachusetts from Malden, Massachusetts, 7th District,
the Honorable Ed Markey, who has been a real leader on this
issue for a number of years.
STATEMENT OF HON. ED MARKEY, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF MASSACHUSETTS
Mr. MARKEY. Thank you, Mr. Chairman, very much and thank
Mr. Johnson, and I thank each of you for inviting me here
today. This is a very important issue. Mr. Barton of Texas and
I have introduced legislation, the Social Security number
Protection Act, in order to bring a halt to unregulated
commerce in Social Security numbers. It does not establish an
absolute prohibition on all commercial use of the number but it
would make it a crime for a person to sell or purchase Social
Security numbers in violation of rules promulgated the Federal
Trade Commission. The Federal Trade Commission would be given
the power to restrict the sale of Social Security numbers,
determine appropriate exemptions, and to enforce civil
compliance with the bill's restrictions.
Why is this legislation necessary? Let me share with you
just one story. Several years ago, a man named Liam Youens was
stalking a 21-year-old New Hampshire named Amy Boyer. Youens
reportedly purchased Amy Boyer's Social Security number from an
Internet Web site for $45. Using this information, he was able
to track her down, a process that he chillingly detailed on an
Internet Web site that he named after his target. Finally, this
demented stalker fatally shot Amy Boyer in front of the dental
office where she worked. Afterward, he turned the gun on
himself.
The terrible tragedy of Amy Boyer's murder underscores the
fact that while the Social Security number was originally
intended to be used only for the purposes of collecting Social
Security taxes and administering the program's benefit, it has
over the years evolved into a ubiquitous national personal
identification number, which is subject to misuse and abuse.
The unregulated sale and purchase of these numbers is a
significant factor in a growing range of illegal activities,
including fraud, identity theft, stalkings and tragically even
murders. If you do the simple Internet search in which you
enter the words ``Social Security numbers,'' you will turn up
links to dozens of Web sites that offer to provide you for a
fee Social Security numbers for other citizens or to link up a
Social Security number that you might have with a name, address
and telephone number.
Where are the data mining firms and private detection
agencies obtaining these numbers? In all likelihood, they are
accessing information from the databases of credit bureaus,
financial service companies, data brokers or other commercial
firms. Unfortunately, this has become a business. The privacy
of all Americans has become a business. It becomes valuable
information, all of these secrets about American families.
While there is a purpose to which all of that information can
be placed, it just should not be a commodity that can be used
by anyone that feels that if they can combine enough of it, it
becomes a product valuable to someone who wishes to purchase
it.
If someone actually obtains a Social Security number from
one of these sites, they have a critically important piece of
information that can be used to locate the individual, get
access to information about the individual's personal finances
or engage in a variety of illegal activities. By bringing to a
halt, unregulated commerce in Social Security numbers, this
bill, and what you are doing, Mr. Chairman, will help to reduce
the incidence of pretext in crimes, identity thefts, and other
frauds or crimes involving misuse of a person's Social Security
number. We need to take action now if we are going to fully
protect the public's right to privacy by preventing the sale of
Social Security numbers.
Under the legislation which Mr. Barton and I have
introduced, the Federal Trade Commission would be given
rulemaking authority to restrict the sale of Social Security
numbers, determine appropriate exemptions and to enforce civil
compliance with the bill's restrictions. On May 10th of this
year, that legislation passed through the Energy and Commerce
Committee. This, of course, is the other key Committee in terms
of dealing with this issue, and you have to take action in a
way that reflects your expertise on the whole issue of Social
Security since that subject is here in the Committee on Ways
and Means. But together we should find a way of affording real
protection to American families on this legislation. Taking
action now can help us to prevent further Amy Boyer's from
being victimized.
But even at a lower level, this whole idea that all of our
information is now out there for anyone to be able to crack is
wrong. These data miners have no regard for the personal
privacy of us as a society. We are reaching a point now, to be
honest with you, where some kid today who is googling some
sites right now, unless we figure out a way of ensuring that
that information is destroyed, 15 or 18 years from now, some
employer will be saying, ``Let's go back and find out what that
kid was googling to get some insight into who they are.'' So
all of this is becoming increasingly an important part of our
society, to determine what kind of privacy we want to provide
to American families. You are providing the leadership, Mr.
Chairman, I thank you for that.
[The prepared statement of Mr. Markey follows:]
Prepared Statement of the Honorable Ed Markey
a Representative in Congress from the State of Massachusetts
Mr. Chairman, thank you for inviting me to testify at today's
hearing.
The Gentleman from Texas (Mr. Barton), and I have introduced H.R.
948, the``Social Security Number Protection Act,'' in order to bring a
halt to unregulated commerce in Social Security numbers. It does not
establish an absolute prohibition on all commercial use of the number,
but it would make it crime for a person to sell or purchase Social
Security numbers in violation of rules promulgated by the FTC. The FTC
would be given the power to restrict the sale of Social Security
numbers, determine appropriate exemptions, and to enforce civil
compliance with the bill's restrictions.
Why is this legislation necessary? Let me share with you just one
story. About six years ago, a man named Liam Youens was stalking a 21-
year old New Hampshire woman named Amy Boyer. Youens reportedly
purchased Amy Boyer's Social Security number from an Internet Web site
for $45. Using this information, he was able to track her down, a
process that he chillingly detailed on an Internet Web site that he
named after his target. Finally, this demented stalker fatally shot Amy
Boyer in front of the dental office where she worked. Afterwards, he
turned the gun on himself.
The terrible tragedy of Amy Boyer's murder underscores the fact
that while the Social Security number was originally intended to be
used only for the purposes of collecting Social Security taxes and
administering the program's benefits, it has over the years evolved
into a ubiquitous national personal identification number which is
subject to misuse and abuse. The unregulated sale and purchase of these
numbers is a significant factor in a growing range of illegal
activities, including fraud, identity theft, stalkings and tragically,
even murders.
If you do a simple Internet search in which you enter the words
``Social Security numbers,'' you will turn up links to dozens of web
sites that offer to provide you, for a fee, Social Security numbers for
other citizens, or to link up a Social Security number that you might
have with a name, address and telephone number. Where are the data-
mining firms and private detective agencies that offer these services
obtaining these numbers? In all likelihood, they are accessing
information from the databases of credit bureaus, financial services
companies, data brokers, or other commercial firms.
If someone actually obtains a Social Security number from one of
these sites, they have a critically important piece of information that
can be used to locate the individual, get access to information about
the individual's personal finances, or engage in a variety of illegal
activities. By bringing a halt to unregulated commerce in Social
Security numbers, my amendment will help reduce the incidence of
pretexting crimes, identity thefts and other frauds or crimes involving
misuse of a person's Social Security number.
We need to take this action now if we are going to fully protect
the public's right to privacy by preventing sales of Social Security
numbers. Under the Markey-Barton bill, the FTC would be given
rulemaking authority to restrict the sale of Social Security numbers,
determine appropriate exemptions, and to enforce civil compliance with
the bill's restrictions. As you know, on May 10th of this year, the
Energy and Commerce Committee approved this legislation. The Speaker
has now referred the bill to the Ways and Means Committee until July
20th, for consideration of such provisions that may fall within the
Committee's jurisdiction. I would strongly urge the Committee to
approve this bill, so that this Congress can put in place stronger
protections to restrict the purchase and sale of Social Security
numbers. Taking action now will help us prevent a recurrence of
tragedies like the Amy Boyer case, as well as the much more frequent
incidences of misuse of the Social Security number to perpetrate
identity thefts.
I look forward to working with you, Mr. Chairman, and with the
Chairman of the full Committee, Mr Rangell, and Ranking Members McCrery
and Johnson as the Committee moves forward to consider this important
legislation.
Chairman MCNULTY. Thank you, Mr. Markey. I want to thank
you for your passionate activism on this issue for a long
period of time. The part of your testimony I agree with the
most is the time for talk should be over, and we should
actually do something. I am in the process of putting together
a proposal, which I am going to share with Mr. Johnson,
hopefully get bipartisan support on this Committee, and then
what I would like to do, Mr. Markey, is to talk to you and the
gentleman from Ennis, Texas, Mr. Barton, and try to meld our
proposals and get a united front and actually do something.
Does anyone which to inquire of Mr. Markey? Yes, Ms.
Schwartz?
Ms. SCHWARTZ. Thank you. Good morning. Just a question, you
leave the question of exemptions or possible appropriate use in
your legislation rather open, basically to be set later. I
understand that is a little bit of a difference between your
legislation and Senator Schumer's, is that correct? So, just to
inquire about whether you think there are any appropriate uses
that we ought to articulate in legislation and are you open to
that?
Mr. MARKEY. Yes, well, what Senator Schumer I think was
referring to is the fact that, for example, in the financial
services industry, we have to find a way where they can use
some of these identifiers so you can use the first five or the
last four or some combination and so that there is some use
that it can be placed but it doesn't unlock the whole key to
who the individual is. We are actually working together on that
for the financial services industry and others but only that a
part of it is available, that the entire number is not made
available unnecessarily because it is not necessary in order to
provide an identification. All of us when we go down, and we
punch in our little code when we are trying to take money out
of the ATM machine, we only need four numbers, we do not need a
nine number code. So, there is a way of doing it that can still
protect the number.
Ms. SCHWARTZ. Okay, and I think this question has somewhat
been asked, I am somewhat new to this Committee but I
understand there have been quite a few hearings on this and it
feels like this is an issue that has been around, and we just
have not taken action on. As you move forward as we do, as the
Chairman does, it certainly seems that it is time for us to do
something about it, to reach some understanding and agreement
about this and provide some of this protection. All of us are
asked for Social Security numbers all the time. We had an
interesting hearing actually, the full Committee, just about
people being appropriately afraid to share their Social
Security number because of such failure to protect it once you
give it out. So, I look forward to working with you and, of
course, working with the Senate as well to actually move this
along. Thank you.
Chairman MCNULTY. Does anyone else wish to inquire? Mr.
Markey, thank you very much for your testimony. We look forward
to working with you on actually enacting some legislation.
Mr. MARKEY. Thank you, Mr. Chairman, and I thank all of you
very much.
Chairman MCNULTY. We will now go to panel number two. Mr.
Barton is on his way. When he gets here, because he is in
another markup, we will accommodate him as well. Panel number
two consists of The Honorable Patrick O'Carroll, inspector
general of the Social Security Administration; Joel Winston,
associate director, the Division of Privacy and Information
Protection of the Federal Trade Commission; and Dan Bertoni,
the director of Education, Work force, and Income Security of
the GAO.
I want to thank all of you for being here today. Your
entire testimony will appear in the record. We ask you to
summarize it in about 5 minutes so that we can have some time
for some questions by the panel Members. If you could just keep
your eye on the little indicator there, when the green light
goes off and the amber light goes on, it is time to kind of
wrap up. When the red light goes on, we would appreciate if you
would try to conclude so we can get some questions in and also
have time to get to the third panel.
We will start with the inspector general.
STATEMENT OF HON. PATRICK O'CARROLL, INSPECTOR GENERAL, SOCIAL
SECURITY ADMINISTRATION
Mr. O'CARROLL. Good morning, Chairman McNulty. Good
morning, Mr. Johnson and Members of the Subcommittee. I want to
thank you for your interest in protecting the Social Security
number and for your interest in the work of the Office of the
Inspector General. It is a pleasure to be here today to discuss
this issue, which is at the heart of my office's mission:
protecting the Social Security number. I suggest that in order
to do so the time has come to strike an appropriate balance
between convenience and security. You have my comprehensive
written statement, and now I want to discuss some of its
highlights.
Over the past decade, we have worked in partnership with
the Social Security Administration and with this Subcommittee
to bring about improvements in the process by which SSA issues
Social Security numbers, new SSN cards and replacement cards.
However, we believe the greatest vulnerability is the theft of
the number. I assure you that it is harder than ever to obtain
a SSN or a Social Security card based on fraudulent information
or false pretense. Unfortunately, we cannot report the same
degree of progress in protecting the SSN once it legitimately
leaves SSA. Our audit and investigative work has taught us that
the more SSNs are used unnecessarily, the higher the
probability that they might become improperly disclosed and
then used to commit crimes. We have highlight vulnerabilities
and have suggested ways SSA can try to persuade organizations
to limit their use of the number and better protect sensitive
data.
However, legislation may be required to compel these
organizations to forego the convenience the SSN represents. One
of our most expansive reviews involved Federal agencies'
controls over the access and use of SSNs by external entities.
Recently, 15 Federal offices of inspectors general joined us
with this review. We provided a comprehensive report with
recommendations to improve the security the SSN at the Federal
Government level. While we believe our work brought about
improvements, recent OMB guidance makes it clear that the use
of the SSN in Federal agencies will have to be further
curtailed and security measures further improved.
Of course, the Federal Government is not the only
repository of SSN information. Schools, hospitals, businesses
and state and local governments request SSNs for a variety of
purposes, very few of which are actually required by law. Many
of these entities use the SSN simply as a matter of convenience
and do not provide adequate controls to protect the data. For
example, our auditors have studied by universities' and
hospitals' use of the SSN. While these institutions may have a
legitimate use for the number with respect to certain
functions, we found that once collected, the number was used
for other purposes and was not always given the level of
protection it deserves.
In response to our audits, SSA's outreach efforts and their
own experiences with data loss, many universities are now
moving away from the SSN as a student identifier. In an audit
currently underway, we are disturbed to learn though that 43
states still collect Social Security numbers for students in
kindergarten through 12th grade despite the fact that only
three of these states have laws that require it. Some of these
schools and school districts still print the student's SSN on
their attendance rosters, making it clear that they are placing
convenience ahead of security. It may be the time for
legislation barring the use of the SSN for all those but uses
required by law.
Our Social Security Number Integrity Protection Team
encouraged banning the display of SSNs on driver's licenses,
and this is one example of legislation enacted as part of the
Intelligence Reform and Terrorism Prevention Act of 2004 that
we believe has made a significant difference in SSN integrity.
We frequently remind people do not carry your Social Security
card in your wallet, so having the SSN on their driver's
license undermine these efforts. In the same vein, consider the
wisdom of SSNs displayed on the Medicare card or other forms of
identification. So, the IRTPA provided a degree of assistance
but more is needed.
H.R. 745, introduced in the last Congress, and Senate bill
238, which was just discussed in the current Congress, each
seek to address the display of SSNs and the sale of SSNs by
information brokers, practices not currently prohibited by law.
H.R. 948 would also prohibit the sale of SSNs under many
circumstances, which would help reduce the largely unfettered
trafficking in SSNs that are being done by information brokers.
Legislative action to limit the sale and display of SSNs is
critical to the security of the SSN, and I applaud these
efforts just as I applaud the Subcommittee's commitment to
improving the integrity of the SSN protection for all. In
summary, far from its original intent, the SSN has become a
convenient tracking number, whose proliferation has
significantly detrimental consequences. We cannot allow the
public security to be jeopardized over a matter of convenience.
Thank you.
[The prepared statement of Mr. O'Carroll follows:]
Prepared Statement of the Honorable Patrick O'Carroll,
Inspector General, Social Security Administration
Good morning, Chairman McNulty, Mr. Johnson, and members of the
Subcommittee. Thank you for the invitation to be here today to discuss
the Social Security number (SSN) and how we can better protect it and
the American people.
The Office of the Inspector General (OIG) at the Social Security
Administration (SSA) came into being in 1995, with the implementation
of the Social Security Independence and Program Improvements Act of
1994. As a new entity charged with preventing and detecting fraud,
waste, and abuse in SSA's programs and operations, we were well aware
of the central role that the SSN played in American society, and the
critical need for us to protect its integrity. With SSA, we have made
significant strides towards that end since our early days. However, we
are keenly aware that much more needs to be done. Today, I will provide
you a brief history of our audit and investigative efforts, which have
played an important role in strengthening SSN integrity--especially in
the way these important numbers are assigned. But, more importantly, I
will provide you with perspective on areas in which action is still
needed--perhaps through additional legislation--to better protect SSNs
from unnecessary collection and improper disclosure. I believe the
American people expect and deserve our attention to address this vital
matter.
Well before 9/11, and even before identity theft became as
significant an issue as it is today, we knew we had much work to do to
strengthen SSN integrity. We were especially aware of the broad uses of
SSNs throughout U.S. society and their importance to noncitizens while
they are in the U.S. We also recognized that SSNs are the cornerstone
of SSA's programs and, therefore, before we could turn too much of our
attention outward--to the use and misuse of SSNs--we first needed to
make sure that everything was in order within SSA. As a result, much of
our early SSN work was in the area of enumeration--the process by which
SSA assigns SSNs. If SSA's enumeration processes were not sound, no
amount of improvement to the use and security of the SSN after it was
issued would be of much value.
Since 1999, when we issued a Management Advisory Report emphasizing
the importance of proper SSN assignment and use, we have worked closely
with SSA to improve controls in the enumeration process. Based on our
recommendations, collaborative efforts and new legislative
requirements, SSA has improved the enumeration at birth and enumeration
at entry programs, heightened the awareness of SSA employees to
fraudulent identification documents presented with applications for
SSNs, tightened controls over the issuance of replacement Social
Security cards, and otherwise made it much more difficult to obtain a
valid SSN through the use of a fraudulent application.
During this period, my predecessors testified before this
Subcommittee and other Committees and Subcommittees of both houses of
Congress on SSN-related issues many times, presenting the results of
our work, responding to requests from Members, proposing legislation,
and seeking ways to further improve SSN integrity.
The September 11 attacks underscored the need to continue those
efforts, but with respect to SSNs, did not teach us anything we did not
already know about the critical role of the SSN in our society. In the
months following 9/11, we worked with the FBI and other law enforcement
agencies to provide critical information, and began a series of SSN-
based Homeland Security initiatives. These projects sought to ensure,
through review of SSNs and other information, that individuals with
access to critical infrastructure sites such as airports, seaports,
nuclear power plants, and similar locations, were who they claimed to
be, and not imposters who would do us harm.
Even while working on Homeland Security matters, our investigators
continued their day-to-day work on individual SSN misuse cases,
bringing to justice scam artists, identity thieves, counterfeit
document artists, and other criminals whose tool of the trade was the
purloined SSN. On an annual basis, we receive about 10,000 allegations
of SSN misuse a year, and investigate approximately 1,500 criminal
cases of misuse. After years of increases, these numbers have now held
steady for several years, indicating that not only our investigative
work, but also our audit work, is having a significant impact.
Having completed numerous audits that helped SSA strengthen its
enumeration processes, in more recent years our auditors have begun to
address the far more challenging issue of SSN misuse. While SSA can
implement controls to prevent the improper assignment of SSNs, it has
very few mechanisms to curb the improper--or simply the unnecessary--
use of an SSN. Our audit and investigative experiences have taught us
that the more SSNs are used unnecessarily, the higher the probability
that these numbers could be improperly disclosed and used to commit
crimes throughout society. We read about these occurrences in the
newspaper every day, but we've yet to develop meaningful ways to stem
the tide.
As I'll discuss in a moment, our recent audit work has highlighted
vulnerabilities and suggested some ways in which SSA can try to
persuade organizations that use SSNs to limit this use and better
protect this sensitive information. To some extent, these efforts,
along with the users' own experiences with improper disclosures, have
convinced some organizations to do as we and SSA have suggested.
However, because it is such a convenient and unique number, and change
may be costly, others appear to discount the risk and continue on with
business as usual. To convince these parties, we believe SSA needs more
help. Specifically, we believe the time has come to consider
legislation limiting the collection and use of SSNs to those purposes
mandated by Federal law, or otherwise reducing the use of SSNs as
convenient identifiers.
In 2002, the Federal inspector general community joined with us to
look more closely at one high-risk issue regarding SSNs: agencies'
controls over access, disclosure, and use of SSNs by external entities,
such as contractors, within their respective agencies. A total of 15
Offices of Inspector General participated in this effort, each
conducting an audit within their respective Agencies. We combined our
results and provided a comprehensive report, which included
recommendations to improve the security of the SSN at the Federal
Government level.While we believe that our work, and the work of our
fellow inspectors general, brought about improvements in SSN security
and heightened awareness of the issue, there is more to be done. Recent
OMB guidance makes it clear that at least at the Federal level, uses of
the SSN must be curtailed, and security measures enhanced. We will
continue to monitor the Federal sector's progress in accomplishing this
mandate.
Of course, the Federal Government is not the only source of SSN
information. As I'm sure you're aware, schools, businesses, and State
and local governments request SSNs for a multitude of purposes--very
few of which are required by law. Rather, many of these organizations
use the SSN as an identifier simply because it is convenient. For
example, our auditors have looked at the use of SSNs by universities
and hospitals as student and patient identifiers, respectively. While
both of these types of organizations may have had some reason for
collecting SSNs, such as financial aid or Medicare coverage, we found
that once collected, the number was used too frequently for other
purposes and not always given the level of protection necessary.
In response to our audits, SSA outreach, and their own experiences
with data exposures, many universities are moving away from using SSNs
as student identifiers. However, in an audit currently underway, we
were disturbed to learn that 43 States collect the SSNs of students in
kindergarten through 12th (K-12) grade. In only three of these States
is the collection of these numbers required by law. The No Child Left
Behind Act of 2001 requires that each State implement an accountability
program that measures the progress of students and schools through the
collection and analysis of data. However, the law does not require that
States use SSNs to identify and track students. Rather, we believe that
some K-12 schools use SSNs as a matter of convenience. For example,
while we did not perform a statistical sample, we know of some schools
and districts that still print the students' SSNs on attendance
rosters. We would suggest that the security of individuals' personal
information--in this instance, the personal information of children--
not take a back seat to administrative convenience. For the 2004/2005
school year, the National Education Association estimated that there
were more than 48 million K-12 students in over 15,000 school districts
across the country. We believe that the collection and use of SSNs
without proper controls is a huge vulnerability for this young
population. Recent data indicate the number of children under age 18
whose identities have been stolen is growing. This is particularly
troubling given that some of these individuals may not become aware of
such activity until they apply for a credit card or student loan.
We also found that State and local governments use the SSN as an
identifier for other programs, such as prescription drug monitoring,
when other identifiers such as drivers license numbers might be more
appropriate. Additionally, these entities don't always provide
sufficient protection of this data.
We even conducted an audit that looked at the access prisoners are
sometimes given to SSNs while doing work in prison on State records or
other documents containing SSNs and other personal information. The
possibility of giving a convicted identity thief access to the tools of
his or her trade while in prison is certainly alarming.
I'm proud of the work that has been done, and continues to be done,
by both our Office of Audit and our Office of Investigations, but our
focus on SSN integrity does not stop there. Several years ago, in order
to keep track of our many-faceted effort to protect the SSN, we formed
the Social Security Number Integrity Protection Team, or SSNIPT. That
group, comprised of attorneys, auditors, and investigators, has had its
own quiet--but important--successes. It was in part the efforts of the
SSNIPT team that led to the eradication of the display of SSNs on
Selective Service mailings and the Thrift Savings Plan website--two
practices in which the Federal Government was itself putting the SSN at
risk. The team has also worked to propose legislation, which was
ultimately enacted as part of the Intelligence Reform and Terrorism
Prevention Act of 2004 (IRTPA), to eliminate the practice of displaying
SSNs on drivers licenses. All of our exhortations over the years aimed
at getting Americans to stop carrying their Social Security cards in
their wallets would be of little value if the one document they were
required to carry also displayed their SSN.
The OIG will not waver in our commitment to protect the integrity
of the Social Security number through our timely audit, investigative,
and other work, and we welcome Congress' help. Legislation has been,
and will always be, a key factor in our ability to protect the SSN and
protect the American people. Legislation has, to some degree, improved
enforcement mechanisms in this area (the Identity Theft Penalty
Enhancement Act), but legislation that would limit the display of SSNs
on public documents or eliminate the sale of SSNs by information
brokers has not yet been passed, with the exception of the IRTPA
provision concerning drivers' licenses. Similarly, no law has been
passed to address the unnecessary collection of SSNs by schools,
hospitals, or other entities that use this number as a matter of
convenience but fail to adequately protect this personal information.
There are, however, a number of bills that have been introduced. In
the last Congress, H.R. 1745, as well as the current Congress' S. 238,
each seek to address both the display and the sale of SSNs, and H.R.
948, while silent on the display of SSNs, would also prohibit their
sale under many circumstances. Any legislative provisions that reduce
the display of SSNs or limit or eliminate trafficking in SSNs by
information brokers and others would be of great help to our efforts.
It is important, however, not only to stop intentional criminal
behavior, but to place an onus on those who use the SSN--either because
they are required to do so by law, or because the SSN is a convenient
identifier--to protect the information they are holding.
Consider an investigation we recently concluded in which several
people were convicted of SSN misuse on a large scale. The primary
subject of the investigation was a manufacturer of fraudulent
identification documents that he created using real names and SSNs that
his co-conspirators obtained. The documents were then used to defraud
banks, businesses, and individuals out of more than half a million
dollars. The names, SSNs, and other data were stolen from banks and
from a hospital where security measures were obviously inadequate to
prevent or detect the theft.
This individual and his co-conspirators are being criminally
prosecuted, but criminal prosecution is not always an option. One
proposal we have made in the past is that the OIG's Civil Monetary
Penalty authority be extended to include SSN misuse. Providing the
authority to penalize those who misuse SSNs but are not criminally
prosecuted, or to penalize institutions that collect, but fail to
protect, SSNs could create a strong deterrent and an effective tool.
The OIG has proven its ability to administer such a program through
its administration of the existing provisions of Sections 1129 and 1140
of the Social Security Act--and we are prepared to take on this new
challenge.
Indeed, we are faced with new challenges on a daily basis, as we
constantly find new ways to close gaps in the SSN's protection. We are
currently examining the practice of assigning SSNs to noncitizens who
will only be in the United States for a few months--but are allowed to
obtain an SSN that will be good forever. Consider, for example, the
practice of allowing noncitizens who enter the country with a fiance
visa to obtain an SSN. While deciding whether they will marry, these
noncitizens are allowed to stay in the United States for 3 months--
after which time they must marry, leave the country or apply for a new
immigration status with DHS. By approving their request for an SSN
during this 3-month period, we might be giving those who have no
intentions to marry a much-needed tool for overstaying their visas. We
believe a wiser course of action would be to approve the SSN
application after the marriage has occurred, but we may need a
legislative remedy to implement such a policy. Additional opportunities
exist to restrict SSN access to other populations that might take
advantage of similar programs.
We've also just undertaken an audit concerning the display of the
SSN on Medicare cards, a document that many Americans carry in their
wallets. I mentioned earlier our attempts to remove the SSN from
drivers' licenses; while the use of the SSN in the Medicare program may
be necessary, the display of the SSN on the card is something we'll be
taking a critical look at.
As we have stated before this Subcommittee on many occasions, the
SSN was never intended to do more than track a worker's earnings and
pay that worker benefits. As the uses of the SSN have expanded over the
decades, through acts of Congress and through the SSN's adoption simply
as a matter of convenience, its value has increased as a tool for
criminals. The Social Security card itself, which states on its face
that it is not to be used for identification, is frequently cited as
needing improvement. But spending billions of dollars to try and stay
one step ahead of counterfeiters is not the answer. The answer lies in
doing everything we can to ensure the integrity of the enumeration
process; limit the collection, use, and public display of the SSN;
encourage the protection of the SSN by those who use it legitimately;
and provide meaningful sanctions for those who fail to protect it or
who misuse it themselves.
We will continue our audit work in these areas, such as the fiance
visa audit I just mentioned. We will continue our investigations, such
as those I've described today. We will continue working to ensure
Homeland Security, as reflected in the role we played in the recent
arrests of terrorists planning an attack on Fort Dix. We will continue
to seek the prosecution of employers or others who knowingly provide
false SSNs to employees otherwise not authorized to work in the United
States, as we did just last week in the Pacific Northwest, where a
staffing agency was allegedly providing illegal workers with fraudulent
SSNs. And we will continue to work with SSA and with this Subcommittee
in hearings such as this, and in seeking legislation to make our
efforts still more effective.
Thank you, and I'd be happy to answer any questions.
Chairman MCNULTY. Thank you, Mr. O'Carroll. In accordance
with my previous announcement, we want to accommodate
Congressman Barton, who is in another markup. I want to thank
you, Joe, for making the time to come over and at this time, I
would like to recognize the gentleman from Ennis, Texas,
Congressman Barton. His entire testimony will appear in the
record, and we now invite him to summarize his testimony.
STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF TEXAS
Mr. BARTON. Thank you, Chairman McNulty. I apologize for my
tardiness. We do have a full Committee markup upstairs on nine
bills to reauthorize and approve the Food and Drug
Administration. I did not know Ways and Means had a hearing
room in the Rayburn Building. I headed out to the Longworth
Building, and I had to be turned around and brought back here,
but this is pretty nice. We can make a trade or something. I
also thank Ranking Member Johnson for his many courtesies over
the years.
----I want to thank this Subcommittee for holding this
important hearing on the vulnerability of the Social Security
number and how we should protect our Social Security number.
Twenty years ago, nobody gave a second thought to showing a
Social Security number on a driver's license. Now times have
changed. In the Internet age, the Social Security is the key to
our personal, medical and financial history. If we do not
protect it, other people can unlock our lives and steal both
our money, our reputations and sometimes our identities. The
thought of a universal identifier, like the Social Security
number, falling into the hands of an identity thief strikes a
chord of fear in every consumer in this country, as it well
should.
The Federal Government is partly to blame for allowing
Social Security numbers to morph into something so crucial.
When Social Security was being invented, they needed a way to
uniquely identify every participant. Since 1936, the government
has issued roughly 420 million Social Security numbers. No one
then imagined the ubiquitousness and the critical role that
these numbers would assume because records were on paper,
credit was a luxury for the elite, and identity theft was
literally something out of science fiction. Unfortunately, a
Social Security number now can be used to wreck a person's
finances. Our Social Security numbers are everywhere. They are
vulnerable to abuse and the government largely has failed to do
anything about it.
Last year, I applied for a cell phone at Radio Shack. I had
to give my Social Security number to three different people in
the course of getting that cell phone within a 30 minute
period. That is simply unacceptable in my opinion.
Technology is part of the problem and fortunately
technology is beginning to offer solutions. Businesses which
use Social Security numbers as commercial identifiers can often
authenticate customers effectively and in a flash with other
identifiers. Moreover, there are numerous situations in which
no benefit exists for the business to require a Social Security
number at all. I think some of them simply do it out of habit.
Once a business does have your Social Security number, can they
share it? Can they sell it? For that matter, can a business buy
your Social Security number from another business? None of that
to me seems like a very good idea, and I hope this Subcommittee
would agree with that. These are important questions and the
answers are even more important.
Erasing the link between our Social Security number and our
personal information I think and Congressman Markey thinks is
the best idea. Lacking that, there are a few easy steps that
each of us can take to cut the risk of our number falling into
the wrong hands. H.R. 948, the Social Security Number
Protection Act, is a good start. This bill accomplishes
something so simple that it is hard to believe that it has not
already been done. It makes the sale and purchase of our Social
Security number illegal. Buying and selling people's Social
Security numbers I think is intolerable in a modern society.
Internet information brokers should not have the ability to
sell information to anyone who walks in the front door and
plunks down a few dollars. As additional protection, H.R. 948
restricts the display of Social Security numbers online and
prohibits requiring your number on any identification or
Membership card.
I am well aware of the benefits Social Security numbers
provide in preventing fraud and protecting me from being a
victim. Despite comments from the critics, the intent of H.R.
948 does not affect legitimate uses of Social Security numbers.
The Federal Trade Commission has given rulemaking authority to
exempt honest purposes from the prohibitions that protect
consumers.
Mr. Chairman, Ranking Member, and Members of this
Subcommittee, the Energy and Commerce Committee, on which I
serve and Congressman Markey serves, voted unanimously to
report H.R. 948 last month. That does not happen often on the
Energy and Commerce Committee, let me tell you. Last night, we
were up here until 11 o'clock and passed six bills, all on a
party line vote, so an unanimous consent report of H.R. 948 is
an accomplishment. I hope that your Committee will now take up
either the bill that Mr. Markey and I are sponsoring or
discharge it so that we can take this important step in
protecting our consumers' identities and their privacy.
With that, Mr. Chairman, and Members of the Subcommittee, I
yield back.
Chairman MCNULTY. Thank you, Mr. Barton, and thank you for
your many years of work on this issue. I think most people have
their own personal stories about being asked for their Social
Security number. I have a similar one to yours. It was a retail
purchase. My wife and I were out a few years ago, and we were
buying a refrigerator. We made selection and filled out the
paperwork, and I was paying by personal check. I know you have
additional ID, so I had my driver's license, which is a picture
ID, and the driver's license number, which is not the Social
Security number, and I wrote that on the check and gave it to
the cashier. She then asked me for my Social Security to buy a
refrigerator. Now, the difference between you and me is I
refused.
Mr. BARTON. Good for you.
Chairman MCNULTY. I still got the refrigerator, but how
many people are in circumstances like that and they just freely
give their Social Security number? So, I think before we even
get to legislation, we have a tremendous job ahead of ourselves
in educating people about the proper circumstances under which
they should share their Social Security number. Thank you for
that news about reporting the bill out of the Committee. Mr.
Johnson reminded me that in the last Congress, we reported out
a bill out of Committee on Ways and Means but for some reason
or another, these bills never get enacted into law. I mentioned
to your colleague, Ed Markey, and to Senator Schumer earlier
that while everybody is grateful for what everyone has done in
the past in focusing on this issue, now is the time we need to
actually do something, to pass something and get enacted into
law. I want to thank you for your continued commitment to see
to it that that happens.
Does any Member wish to inquire of Congressman Barton? Ms.
Tubbs Jones?
Ms. TUBBS JONES. Just an inquiry, Congressman Barton. I was
reading a newspaper article from the Cleveland Plain Dealer,
which is my hometown newspaper, and what happened in the state
of Ohio was that an intern had a copy of a disk of a number of
people who were receiving, I guess it was back-up checks and so
it says that thousands of state workers rushed to sign up for
identity fraud protection after learning their personal
information was on a back-up computer tape stolen from an
intern's car. There are all kinds of crazy things that happen
that expose people's information to possible identity theft.
For the record, Mr. Chairman, I seek unanimous consent to
have two articles from the Plain Dealer entered into today's
record.
Chairman MCNULTY. Is there objection? The Chair hears none,
so ordered.
The first provided article follows:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The second provided article follows:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. TUBBS JONES. It ended up that the state decided that
they would hire a company to provide identity theft protection
for all these workers whose information had been lost in the
process. But you think about it, this is a legitimate use of
the Social Security number but being put in jeopardy as a
result of some stupid activity, or maybe I should not say
``stupid,'' someone not thinking about where they kept up with
information on behalf of workers. Having coming from a criminal
justice background, as a prosecutor, as a judge, sometimes I
think we try and implement laws to protect a certain situation,
it really may not be the criminal justice system that we need
to implement but having to safeguard this place to make
appropriate conduct for the use of information. I am like you,
I have to call into the bank to get my information, I have to
give them my full Social Security number to get the $2 that I
have in the bank. But it is really kind of a crazy situation.
Mr. BARTON. Can I borrow a dollar?
Ms. TUBBS JONES. Can you borrow a dollar? Let's see, maybe
I can help you out.
Well, I want to thank you for the work that you are doing
in this area and like to be supportive. Thank you, Mr.
Chairman.
Chairman MCNULTY. Does anyone else wish to inquire? If not,
we wish to thank Congressman Barton. Thanks, Joe.
Mr. BARTON. Thank you, Mr. Chairman.
Chairman MCNULTY. That concludes the testimony of panel
one. We will continue on panel two with Mr. Winston.
STATEMENT OF JOEL WINSTON, DIRECTOR OF PRIVACY AND INFORMATION
PROTECTION, FEDERAL TRADE COMMISSION
Mr. WINSTON. Thank you, Chairman McNulty, Ranking Member
Johnson, and Members of the Subcommittee. I am Joel Winston,
associate director of the Division of Privacy and Identity
Protection at the Federal Trade Commission. I appreciate the
opportunity to testify today about Social Security numbers and
identity theft.
As we have heard, identity theft afflicts millions of
Americans every year. One telling example illustrates the
damage it can cause. A few months ago, a consumer from Los
Angeles contacted the FTC Identity Theft Hotline. He reported
that his employer had suffered a data breach in which the
consumer's employee records, including his Social Security
number, had been compromised. Soon thereafter, an identity
thief opened five credit card accounts in the consumer's name,
resulting in thousands of dollars of unauthorized charges. But
the thief did not stop there, he also emptied the consumer's
checking account of almost $2,000. In the first month or so
after discovering the theft, this consumer spent hundreds of
hours trying to repair the damage.
The Social Security number is often the key item of
information that an identity thief needs to commit his crime.
It is therefore critical to make SSNs less accessible to
identity thieves. At the same time, it is important to remember
that SSNs serve legitimate and useful purposes in our economy,
including their widespread use to match individuals to
information about them. For that reason, any restrictions on
SSNs should be carefully tailored to reduce disclosures or uses
that are unnecessary without inadvertently eliminating or
burdening those that are necessary.
Although SSNs sometimes are used for legal compliance or
essential business purposes, too often they are used simply as
a matter of convenience or habit. For example, some
organizations still use SSNs on employee badges or ID cards
when a different and less sensitive identifier would work just
as well.
The President's Identity Theft Task Force, in its report
issued this April, concluded that, ``More must be done to
eliminate unnecessary uses of SSNs, both in the public sector
and the private sector.'' The government has already begun to
address its own SSN policies. This week, for example, the
Office of Personnel Management issued guidance to all Federal
agencies on limiting the collection and use of SSNs for human
resource purposes. With respect to the private sector, the Task
Force calls for a comprehensive review of SSN usage, and this
review has already begun. We will be looking at the extent to
which SSN uses are driven by business necessity and what the
benefits and costs would be of restricting them.
In the meantime, the Federal Trade Commission has taken,
and is continuing to take aggressive action to address identity
theft. The first priority is prevention, stopping thieves from
obtaining SSNs or other sensitive information. Businesses must
be vigilant in protecting sensitive data they collect from
consumers. To re-enforce this message, the Commission has
brought 14 law enforcement actions against businesses that fail
to reasonably safeguard consumers' personal information.
Consumers, too, must be more careful about guarding their
information and so consumer education is a key part of our
strategy. The Commission reaches out to the public in a variety
of ways, including our identity theft Web site and hotline, and
our highly successful multi-media national education campaign
named, ``Deter, Detect, Defend.''
But restrictions on SSN usage and disclosure and better
data security are not enough. Some sensitive information
inevitably will find its way to identity thieves. Therefore, we
must make it more difficult for criminals to use SSNs once they
obtain them. Creating better methods of authenticating
consumers would further this goal.
When a thief steals personal data, he can use it to open an
account only if he can convince the account provider that he is
the person whose data he stole. In April, the Commission hosted
a workshop on authentication. We learned some encouraging new
techniques to authenticate consumers that are being developed
and deployed, and we discussed how the government and private
sector can encourage their adoption.
I would like to turn now briefly to the issue of
legislation. As we have heard today, several bills have been
introduced in Congress over the past few years that would
restrict SSNs in various ways. Generally, these bills would
prohibit the display, purchase, sale or use of SSNs, subject to
several exceptions, such as for law enforcement, public health
and credit reporting purposes. The Commission has not taken a
formal position on these bills, but I believe that they have an
appropriate objective: to eliminate gratuitous SSN transfers or
use while recognizing that there are certain necessary and
legitimate transfers or uses that should be permitted. The
challenge is to draw the right line. As Mr. Johnson said, it is
a complex balancing act.
As I stated earlier, the Task Force is in the process of
developing a comprehensive record on the factors that impact on
where that line might be drawn. We support the idea that
rulemaking authority be granted to the appropriate Federal
agencies to implement and flesh out these exceptions, and I
note that H.R. 948 gives that authority to the FTC.
Identity theft is one of the most important consumer
protection issues of our time and must be attacked at every
angle. The Commission will continue to place a high priority on
preventing this crime and helping victims to recover. We look
forward to continuing our work with Congress in this effort,
and I would be happy to answer any questions that you might
have.
The prepared statement of Mr. Winston follows:]
Prepared Statement of Joel Winston, Director, Division of
Privacy and Information Protection, Federal Trade Commission
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman MCNULTY. Thank you, Mr. Winston.
Mr. Bertoni.
STATEMENT OF DAN BERTONI, EDUCATION, WORKFORCE, AND INCOME
SECURITY, GOVERNMENT ACCOUNTABILITY OFFICE
Mr. BERTONI. Good morning, Mr. Chairman, and Members of the
Subcommittee. I am pleased to be here to discuss ways to
protect the Social Security number, which was originally
created as a means to track worker earnings and administer
retirement benefits. Over time, the SSN has evolved beyond its
intended purpose, become the identifier of choice and is now
used for myriad non-Social Security purposes. This is
significant because a person's SSN, along with name and date of
birth, are key pieces of information used to commit identity
theft. Potential for misuse of the SSN has raised concerns
about how the public and private entities are obtaining, using
and protecting SSNs. My testimony today is based on our prior
work, as well as the report issued today for Senator Schumer
and will focus on describing SSN use in the public and private
sector, as well as vulnerabilities that remain to protecting
them.
In summary, a number of Federal laws and regulations
authorize or require agencies at all levels of government to
collect SSNs to administer their programs. For example, the
Debt Collection Act 1996 requires any individual doing business
with the Federal Government or applying for a grant or service
to furnish a valid SSN. Certain state and local government
agencies also collect SSNs as part of their responsibility for
maintaining public records. In a prior work, we reported that
41 states and the District of Columbia display SSNs in public
records, as well as 75 percent of all U.S. counties. SSNs were
most often found in court and property records.
As noted earlier, in our report issued today, we found that
the Internal Revenue Service and the Department of Justice are
the only Federal agencies commonly providing records containing
SSNs to state and local recordkeepers. IRS and Justice provide
thousands of property liens annually to recordkeepers in which
they have traditionally included full SSNs for identity
verification purposes.
Historically, access to public records occurred by visiting
local offices and search through electronic or paper records.
However, today, more recordkeepers provide potentially
unlimited access to sensitive information through bulk sales to
private companies and to the public via the Internet.
Some states, however, have begun to restrict how they
display or provide access to SSNs in such records. For example,
Florida counties we recently visited are currently using
special software to search for and remove millions of SSNs and
other sensitive information from their records.
In the private sector, information re-sellers, credit
bureau reporting agencies and health care organizations collect
SSNs from various sources and use this information primarily
for identification verification purposes. Large information re-
sellers obtain SSNs from various public records, such as
bankruptcy notices, tax liens, civil judgments and property
transactions. In addition to their own direct use of SSNs,
entities such as banks, securities firms, telecommunications
firms and tax preparers also share this information--SSN
information with third party contractors who perform services
for them.
Although new Federal and state laws have helped restrict
SSN use and display, vulnerabilities remain. For example, we
are concerned that SSNs are still displayed on certain
federally-issued cards. In particular, the Center for Medicare
and Medicaid Services has not yet acted to remove SSNs from
over 40 million Medicare cards despite our report citing this
weakness. We are also concerned that current Federal laws
restricting the sale of SSNs and other personal information
applied to certain types of entities, such as financial
institutions, but not to information re-sellers, who are
obtaining and using the same sensitive data.
However, recently proposed legislation, the Social Security
Protection Act of 2007, as discussed by Mr. Markey earlier, if
enacted, may help address this vulnerability by placing
additional restrictions on the sale and purchase of SSNs. H.R.
1745, which was introduced in the last Congress, also includes
provisions to address this issue.
Further, Federal oversight regarding the sharing of SSNs
with contractors is less stringent for the telecommunications
and tax preparation industries, which poses potential
additional challenges for protecting SSNs and other sensitive
data in those industries.
Finally, although Federal agencies have begun truncating
SSNs on documents provided to state and local recordkeepers,
different truncation methods between the public and private
sectors have implications for identity theft. Current Federal
lien records display the last four digits of SSNs, while
private re-sellers often provide the first five digits of the
SSN to the customer. Consequently, with minimal effort, our
analysts were able to electronically access private sector
databases, compare this information to Federal liens, and
reconstruct full identity and SSN information for 10 liens for
10 individuals from 10 states. The entire process took less
than an hour or about an hour or about 6 minutes per SSN and it
was all done from their desks. In light of this finding, we
continue to urge the Congress to consider enacting a single
truncation standard or assign an agency to do so.
Mr. Chairman, this concludes my remarks. I will be happy to
answer any questions that you or other Members of the
Subcommittee may have. Thank you.
[The prepared statement of Mr. Bertoni follows:]
Prepared Statement of Dan Bertoni, Director, Education,
Workforce, and Income Security, Government Accountability Office
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to discuss ways to better protect the
Social Security number (SSN), which was originally created as a means
to track workers' earnings and eligibility for Social Security
benefits. Since its creation, the SSN has evolved beyond its intended
purpose to become the identifier of choice for public and private
sector entities and is now used for myriad non-Social Security
purposes. This is significant because a person's SSN, along with name
and date of birth, are the key pieces of personal information used to
perpetrate identity theft. Consequently, the potential for misuse of
the SSN has raised questions about how private and public sector
entities obtain, use, and protect SSNs.
Over the last several years, the Congress and some states have
recognized the importance of restricting the use and display of SSNs by
both the public and private sectors. As a result, federal and state
laws have been enacted that to some degree protect individuals'
personal information, including SSNs. However, the continued use of and
reliance on SSNs by public and private sector entities, as well as the
potential for their misuse, underscore the importance of identifying
areas that can be further strengthened. GAO has issued a number of
reports and testified before this Subcommittee about the various
aspects of SSN use in both the public and private sectors. Accordingly,
my remarks today will focus on describing the (1) use of SSNs by
government agencies, (2) use of SSNs by the private sector, and (3)
vulnerabilities that remain to protecting SSNs.
In summary, a number of federal laws and regulations require
agencies at all levels of government to frequently collect and use SSNs
for various purposes. For example, agencies frequently collect and use
SSNs to administer their programs, link data for verifying applicants'
eligibility for services and benefits, and conduct program evaluations.
In the private sector, certain entities, such as information resellers,
collect SSNs from public sources, private sources, and their customers
and use this information for identity verification purposes. In
addition, banks, securities firms, telecommunication firms, and tax
preparers sometimes share SSNs with their contractors for limited
purposes. Although laws at both the federal and state levels have
helped to restrict SSN use and display, and both public and private
sector entities have taken some steps to further protect this
information, several vulnerabilities remain. For example, federal laws
addressing SSN use and collection in the private sector continue to
leave SSNs maintained by certain industries vulnerable to misuse by
identity thieves and others.
For this testimony, we primarily relied on information from our
prior reports and testimonies that address public and private sector
use and protection of SSNs. These products were issued between 2002 and
2006 and are listed in the Related GAO Products section at the end of
this statement. We conducted our reviews in accordance with generally
accepted government auditing standards.
Background
The Social Security Act of 1935 authorized the Social Security
Administration(SSA) to establish a record-keeping system to manage the
Social Security program, which resulted in the creation of the SSN.
Through a process known as ``enumeration,'' unique numbers are created
for every person as a work and retirement benefit record. Today, SSA
issues SSNs to most U.S. citizens, as well as non-citizens lawfully
admitted to the United States with permission to work. Because the SSN
is unique for every individual, both the public and private sectors
increasingly use it as a universal identifier. This increased use, as
well as increased electronic record keeping by both sectors, has eased
access to SSNs and potentially made this information more vulnerable to
misuse, including identity theft.
Specifically, SSNs are a key piece of information used to create
false identities for financial misuse or to assume another individual's
identity. Most often, identity thieves use SSNs belonging to real
people. However, the Federal Trade Commission's (FTC) identity theft
victim complaint data has shown that only 30 percent of identity theft
victims know how thieves obtained their personal information. The FTC
estimated that over a 1-year period, nearly 10 million people
discovered they were victims of identity theft, translating into
estimated losses of billions of dollars.
Federal Laws Affecting SSN Use and Disclosure
There is no one law that regulates the overall use of SSNs by all
levels and branches of government. However, the use and disclosure of
SSNs by the Federal Government is generally restricted under the
Privacy Act of 1974. Broadly speaking, this act seeks to balance the
government's need to maintain information about individuals with the
rights of individuals to be protected against unwarranted invasions of
their privacy. Section 7 of the act requires that any federal, state,
or local government agency, when requesting an SSN from an individual,
tell individuals whether disclosing the SSN is mandatory or voluntary,
cite the statutory or other authority under which the request is being
made, and state what uses it will make of the individual's SSN.
Additional federal laws also place restrictions on public and
private sector entities' use and disclosure of consumers' personal
information, including SSNs, in specific instances. As shown in table
1, some of these laws require certain industries, such as the financial
services industry, to protect individuals' personal information to a
greater degree than entities in other industries.
[Table 1: NOT AVAILABLE AT TIME OF PRINT.]
In 1998, Congress also enacted a federal statute that criminalizes
fraud in connection with the unlawful theft and misuse of personal
identifiable information, including SSNs. The Identity Theft and
Assumption Deterrence Act made it a criminal offense for a person to
``knowingly transfer, possess, or use without lawful authority,''
another person's means of identification ``with the intent to commit,
or to aid or abet, or in connection with, any unlawful activity that
constitutes a violation of Federal law, or that constitutes a felony
under any applicable state or local law.'' Under the act, an
individual's name or Social Security number is considered a ``means of
identification.'' In addition, in 2004, the Identity Theft Penalty
Enhancement Act established the offense of aggravated identity theft in
the federal criminal court, which is punishable by a mandatory two-year
prison term.
State Laws Affecting SSN Use and Disclosure
Many states have also enacted laws to restrict the use and display
of SSNs. For example, in 2001, California enacted a law that generally
prohibited companies and persons from engaging in certain activities
with SSNs, such as posting or publicly displaying SSNs, or requiring
people to transmit an SSN over the Internet unless the connection is
secure or the number is encrypted. In our prior work, we identified 13
states--Arizona, Arkansas, Connecticut, Georgia, Illinois, Maryland,
Michigan, Minnesota, Missouri, Oklahoma, Texas, Utah, and Virginia--
that have passed laws similar to California's. While some states, such
as Arizona, have enacted virtually identical restrictions on the use
and display of SSNs, other states have modified the restrictions in
various ways. For example, unlike the California law, which prohibits
the use of the full SSN, the Michigan statute prohibits the use of more
than four sequential digits of the SSN.
Some states have also enacted other types of restrictions on the
uses of SSNs. For example, Arkansas, Colorado, and Wisconsin prohibit
the use of a student's SSN as an identification number. Other recent
state legislation places restrictions on state and local government
agencies, such as Indiana's law that generally prohibits state agencies
from releasing SSNs unless otherwise required by law.
Government Agencies Collect and Use SSNs for a Variety of Purposes
A number of federal laws and regulations require agencies at all
levels of government to frequently collect and use SSNs for various
purposes. Beginning with a 1943 Executive Order issued by President
Franklin D. Roosevelt, all federal agencies were required to use the
SSN exclusively for identification systems of individuals, rather than
set up a new identification system. In later years, the number of
federal agencies and others relying on the SSN as a primary identifier
escalated dramatically, in part, because a number of federal laws were
passed that authorized or required its use for specific activities. For
example, agencies use SSNs
for internal administrative purposes, which include
activities such as identifying, retrieving, and updating records;
to collect debts owed to the government and conduct or
support research and evaluations, as well as use employees' SSNs for
activities such as payroll, wage reporting, and providing employee
benefits;
to ensure program integrity, such as matching records
with state and local correctional facilities to identify individuals
for whom the agency should terminate benefit payments; and
for statistics, research, and evaluation.
Table 2 provides an overview of federal statutes that address
government collection and use of SSNs. In some cases, these statutes
require that state and local government entities collect SSNs.
[Table 2: NOT AVAILABLE AT TIME OF PRINT.]
Some government agencies also collect SSNs because of their
responsibility for maintaining public records, which are those records
generally made available to the public for inspection by the
government. Because these records are open to the public, such
government agencies, primarily at the state and local levels, provide
access to the SSNs sometimes contained in those records. Based on a
survey of federal, state, and local governments, we reported in 2004
that state agencies in 41 states and the District of Columbia displayed
SSNs in public records; this was also true in 75 percent of U.S.
counties. We also found that while the number and type of records in
which SSNs were displayed varied greatly across states and counties,
SSNs were most often found in court and property records.
Public records displaying SSNs are stored in multiple formats, such
as electronic, microfiche and microfilm, or paper copy. While our prior
work found that public access to such records was often limited to
inspection of the individual paper copy in public reading rooms or
clerks' offices, or request by mail, some agencies also made public
records available on the Internet.
In recent years, some agencies have begun to take measures to
change the ways in which they display or provide access to SSNs in
public records. For example, some state agencies have reported removing
SSNs from electronic versions of records, replacing SSNs with
alternative identifiers in records, restricting record access to
individuals identified in the records, or allowing such individuals to
request the removal of their SSNs from these records.
Private Sector Entities Collect SSNs from Various Sources for Identity
Verification Purposes
Certain private sector entities, such as information resellers,
consumer reporting agencies (CRAs), and healthcare organizations
collect SSNs from public and private sources, as well as their
customers, and primarily use SSNs for identity verification purposes.
In addition, banks, securities firms, telecommunication firms, and tax
preparers engage in third party contracting and sometimes share SSNs
with their contractors for limited purposes, generally when it is
necessary and unavoidable.
Private Sector Entities Collect SSNs from Both Public and Private
Sources
Information resellers are businesses that specialize in amassing
personal information, including SSNs, and offering informational
services. They provide their services to a variety of customers, such
as specific businesses clients or through the Internet to the general
public. Large or well known information resellers reported that they
obtain SSNs from various public records, such as records of
bankruptcies, tax liens, civil judgments, criminal histories, deaths,
and real estate transactions. However, some of these resellers said
they are more likely to rely on SSNs obtained directly from their
clients, who may voluntarily provide such information, than those found
in public records. In addition, in our prior review of information
resellers that offer their services through the Internet, we found that
their Web sites most frequently identified public or nonpublic sources,
or both, as their sources of information. For example, a few Internet
resellers offered to conduct background investigations on individuals
by compiling information from court records and using a credit bureau
to obtain consumer credit data.
CRAs, also known as credit bureaus, are agencies that collect and
sell information about the creditworthiness of individuals. Like
information resellers, CRAs also obtain SSNs from public and private
sources. For example, CRA officials reported that they obtain SSNs from
public sources, such as bankruptcy records. We also found that these
companies obtain SSNs from other information resellers, especially
those that specialize in collecting information from public records.
However, CRAs are more likely to obtain SSNs from businesses that
subscribe to their services, such as banks, insurance companies,
mortgage companies, debt collection agencies, child support enforcement
agencies, credit grantors, and employment screening companies.
Organizations that provide health care services, including health
care insurance plans and providers, are less likely to obtain SSNs from
public sources. These organizations typically obtain SSNs either from
individuals themselves or from companies that offer health care plans.
For example, individuals enrolling in a health care plan provide their
SSNs as part of their plan applications. In addition, health care
providers, such as hospitals, often collect SSNs as part of the process
of obtaining information on insured people.
Private Sector Entities Primarily Use SSNs to Verify Individuals'
Identities
We found that the primary use of SSNs by information resellers,
CRAs, and health care organizations is to help verify the identity of
individuals. Large information resellers reported that they generally
use the SSN as an identity verification tool, though they also use it
for matching internal databases, identifying individuals for their
product reports, or conducting resident or employment screening
investigations for their clients. CRAs use SSNs as the primary
identifier of individuals in order to match information they receive
from their business clients with information on individuals already
stored in their databases. Finally, health care organizations also use
the SSN, together with information such as name, address, and date of
birth, for identity verification.
In addition to their own direct use of customers' SSNs, private
sector entities also share this information with their contractors.
According to experts, approximately 90 percent of businesses contract
out some activity because they find either it is more economical to do
so or other companies are better able to perform these activities.
Banks, investment firms, telecommunication companies, and tax
preparation companies we interviewed for our prior work routinely
obtain SSNs from their customers for authentication and identification
purposes and contract with other companies for various services, such
as data processing, administrative, and customer service functions.
Company officials reported that customer information, such as SSNs, is
shared with contractors for limited purposes, generally when it is
necessary or unavoidable. Further, these companies included certain
provisions in their standard contact forms aimed at safeguarding
customer's personal information. For example, forms included electronic
and physical data protections, audit rights, data breach notifications,
subcontractor restrictions, and data handling and disposal
requirements.
Vulnerabilities Remain to Protecting SSNs in both the Public and
Private Sectors
Although federal and state laws have helped to restrict SSN use and
display, and public and private sector entities have taken some steps
to further protect this information, our prior work identified several
remaining vulnerabilities. While government agencies have since taken
actions to address some of the identified SSN protection
vulnerabilities in the public sector, private sector vulnerabilities
that we previously identified have not yet been addressed.
Consequently, in both sectors, vulnerabilities remain to protecting
SSNs from potential misuse by identity thieves and others.
Government Agencies Have Taken Additional Actions to Address SSN
Protection, yet Vulnerabilities Remain
In our prior work, we found that several vulnerabilities remain to
protecting SSNs in the public sector, and in response, some of these
vulnerabilities have since been addressed by agencies. For example, in
our review of government uses of SSNs, we found that some federal,
state, and local agencies do not consistently fulfill the Privacy Act
requirements that they inform individuals whether SSN disclosure is
mandatory or voluntary, provide the statutory or other authority under
which the SSN request is made, or indicate how the SSN will be used,
when they request SSNs from individuals. To help address this
inconsistency, we recommended that the Office of Management and Budget
(OMB) direct federal agencies to review their practices for providing
required information, and OMB has since implemented this
recommendation.
Actions have also been taken by some federal agencies in response
to our previous finding that millions of SSNs are subject to exposure
on individual identity cards issued under federal auspices.
Specifically, in 2004, we reported that an estimated 42 million
Medicare cards, 8 million Department of Defense (DOD) insurance cards,
and 7 million Department of Veterans Affairs (VA) beneficiary cards
displayed entire 9-digit SSNs. While the Centers for Medicare and
Medicaid Services, with the largest number of cards displaying the
entire 9-digit SSN, does not plan to remove the SSN from Medicare
identification cards, VA and DOD have begun taking action to remove
SSNs from cards. For example, VA is eliminating SSNs from 7 million VA
identification cards and will replace cards with SSNs or issue new
cards without SSNs between 2004 and 2009, until all such cards have
been replaced.
However, some of the vulnerabilities we identified in public sector
SSN protection have not been addressed. For example, while the Privacy
Act and other federal laws prescribe actions agencies must take to
assure the security of SSNs and other personal information, we found
that these requirements may not be uniformly observed by agencies at
all levels of government. In addition, in our review of SSNs in
government agency-maintained public records, we found that SSNs are
widely exposed to view in a variety of these records. While some
agencies reported taking actions such as removing SSNs from electronic
versions of records, without a uniform and comprehensive policy, SSNs
in these records remain vulnerable to potential misuse by identity
thieves. Consequently, in both instances, we suggested that Congress
consider convening a representative group of federal, state, and local
officials to develop a unified approach to safeguarding SSNs used in
all levels of government. Some steps have since been taken at the
federal level to promote inter-agency discussion of SSN protection,
such as creation of the President's Identity Theft Task Force in 2006
to increase the safeguards on personal data held by the Federal
Government.
In April 2007, the Task Force completed its work, which resulted in
a strategic plan aimed at making the Federal Government's efforts more
effective and efficient in the areas of identity theft awareness,
prevention, detection, and prosecution. The plan's recommendations
focus in part on increasing safeguards employed by federal agencies and
the private sector with respect to the personal data they maintain,
including decreasing the unnecessary use of SSNs in the public sector.
To that end, last month, OMB issued a memorandum requiring federal
agencies to examine their use of SSNs in systems and programs in order
to identify and eliminate instances in which collection or use of the
SSN is unnecessary. In addition, the memo requires federal agencies to
participate in governmentwide efforts to explore alternatives to agency
use of SSNs as personal identifiers for both federal employees and in
federal programs.
Vulnerabilities Persist in Federal Laws Addressing SSN Collection and
Use by Private Sector Entities
In our reviews of private sector entities' collection and use of
SSNs, we found variation in how different industries are covered by
federal laws protecting individuals' personal information. For example,
although federal laws place restrictions on reselling some personal
information, these laws only apply to certain types of private sector
entities, such as financial institutions. Consequently, information
resellers are not covered by these laws, and there are few restrictions
placed on these entities' ability to obtain, use, and resell SSNs.
However, recently proposed federal legislation, if implemented, may
help to address this vulnerability. For example, the SSN Protection Act
of 2007, as introduced by Representative Edward Markey, would give the
Federal Trade Commission (FTC) rulemaking authority to restrict the
sale and purchase of SSNs and determine appropriate exemptions. The
proposed legislation would therefore improve SSN protection while also
permitting limited exceptions to the purchase and sale of SSNs for
certain purposes, such as law enforcement or national security.
Vulnerabilities also exist in federal law and agency oversight for
different industries that share SSNs with their contractors. For
example, while federal law and oversight of the sharing of personal
information in the financial services industry is very extensive,
federal law and oversight of the sharing of personal information in the
tax preparation and telecommunications industries is somewhat lacking.
Specific actions to address these vulnerabilities in federal laws have
not yet been taken, leaving SSNs maintained by information resellers
and contractors in the tax preparation and telecommunications
industries potentially exposed to misuse, including identity theft.
We also found a gap in federal law addressing SSN truncation, a
practice that would improve SSN protection if standardized.
Specifically, in our Internet resellers report, several resellers
provided us with truncated SSNs showing the first five digits, though
other entities truncate SSNs by showing the last four digits.
Therefore, because of the lack of SSN truncation standards, even
truncated SSNs remain vulnerable to potential misuse by identity
thieves and others. While we suggested that the Congress consider
enacting standards for truncating SSNs or delegating authority to SSA
or some other governmental entity to do so, SSN truncation standards
have yet to be addressed at the federal level.
Concluding Observations
The use of SSNs as a key identifier in both the public and private
sectors will likely continue as there is currently no other widely
accepted alternative. However, because of this widespread use of SSNs,
and the vulnerabilities that remain to protecting this identifier in
both sectors, SSNs continue to be accessible to misuse by identity
thieves and others. Given the significance of the SSN in committing
fraud or stealing an individual's identity, it would be helpful to take
additional steps to protect this number. As the Congress moves forward
in pursuing legislation to address SSN protection and identity theft,
focusing the debate on vulnerabilities that have already been
documented may help target efforts and policy directly toward immediate
improvements in SSN protection. To this end, we look forward to
supporting the Subcommittee and the Congress however we can to further
ensure the integrity of SSNs. Related to this, we have issued a report
on the Federal Government's provision of SSNs to state and local public
record keepers, and we have also recently begun a review of the bulk
sale of public records containing SSNs, including how federal law
protects SSNs in these records when they are sold to entities both here
and overseas.
Mr. Chairman, this concludes my prepared testimony. I would be
pleased to respond to any questions you or other members of the
subcommittee may have.
Chairman MCNULTY. I thank all of the witnesses. Thank you,
Mr. Bertoni, especially for this new report, which you issued I
believe today as a result of the inquiry by Senator Schumer.
Mr. BERTONI. Yes.
Chairman MCNULTY. That is now a part of the record of the
Subcommittee, and we will certainly consider that in our
deliberations. I want to thank Mr. O'Carroll for the time we
spent together recently to talk about issues generally
regarding Social Security, and I want to thank you for your
commitment to helping us to reduce the backlog, to keep the
agency focused on its core mission and also the subject of
today's hearing, protecting the American people from identity
theft. I am glad to know we are on the same wavelength and
working for the same purposes.
Mr. Winston, thank you also for your testimony. You
mentioned this review of the Social Security number uses. Where
are you on that, how long will that take, when can we expect to
see some kind of a product on that?
Mr. WINSTON. As I mentioned, the Task Force issued its
report in April, at which point we immediately put together a
group of FTC and other agency employees to begin this review.
In fact, this week, we are meeting with a number of officials
from trade associations and business groups and others to try
to find out more not only about how they use Social Security
numbers but why and what it would cost in terms of money, as
well as inconvenience of change.
Chairman MCNULTY. But just in line with my previous
thoughts about this Congress actually doing something, when
could we expect to see the results of your review?
Mr. WINSTON. The Task Force report calls for a report to
the President by the first quarter of 2008. I suspect we will
have information well before that that would be useful.
Chairman MCNULTY. Well, we would really appreciate any data
that you could give us prior to that because some of us do not
intend to wait around until 2008 to start moving legislation.
At this time, I would yield to the ranking Member, Mr. Johnson.
Mr. JOHNSON. Thank you, Mr. Chairman. We are not going to
wait until 2008, huh? Mr. O'Carroll, I remember some years ago
the Social Security Administration was handing out new Social
Security numbers to upward of 100 people--or 100 times to the
same guy just by a phone call. Have we stopped that because we
passed legislation to do it?
Mr. O'CARROLL. Yes, Mr. Johnson, that was one of the
recommendations that came out after 9/11 when we started to
ratchet down on the security of the number of it, and what we
were looking at was multiple SSNs being reissued on it. We now
have in the SSA systems because of our recommendations and
because of your legislation, we are now being much more
attentive to the number of cards going out, it is into the
system. There are flags put up. We are taking a look at numbers
of cards going to the same address, sort of the same type of
similar thing with replacement cards. When 300 cards go to one
address, it is what we call a ``clue.'' So, we have been trying
to plug up that hole.
Mr. JOHNSON. How do you do that?
Mr. O'CARROLL. Well, what we are doing with that is it is
flagged, we get the information on it, and in our case we have
been doing audit work on it where we actually go to the address
what the address is. In some cases, it is legitimate in terms
of it is a university or something where it is one entity but
where it is an apartment building in some locale, we actually
recommend that to our investigators and our investigators are
going there, and we are looking to find who is collecting those
false cards and making arrests.
Mr. JOHNSON. Well, you mentioned your ongoing role to
ensure homeland security, as reflected in the recent arrest of
terrorists planning an attack on Fort Dix. Based on your
experience to date, how are Social Security numbers and
document fraud, how is that fraud being committed by potential
terrorists or do you know?
Mr. O'CARROLL. Well, as we know with terrorists and in fact
all criminals, everyone is trying to assimilate into the
public. What happens is that we are finding in a lot of cases
people trying to do that illegal assimilation are going to
identity mills, and they are going to places where they are
able to get immigration documents, Social Security cards, and
we monitor that all the time and keep track in terms of the
prices that going for it and just ways of monitoring. But we
work very closely with Immigration, with FBI, in the case of
Fort Dix, with the New Jersey State Police, all of them are a
part of the Joint Terrorism Task Force up there, which we are a
member.
What had happened in the case of Fort Dix was we found out
that several of the suspects in it, in previous occasions in
dealing with law enforcement, used false identities up to and
including Social Security card fraud. I have got to tell you
prosecutors use Social Security misuse, which is part of the
legislation that came out this Congress, we use that as an
enforcement tool, the misuse of the SSN to identify and arrest
terrorist suspects.
Mr. JOHNSON. Good for you. Are you finding people from
overseas asking for Social Security cards before they come over
here?
Mr. O'CARROLL. Well, yes, and there are two stories to it.
In terms of one, it is a good one because what is happening is
before they get here, they go into an enumeration process where
they are dealing with embassies overseas and they are being
vetted by the embassy before they come here, which is a good
technique. What we are finding, though, and we have done it in
our audit reports, is that we find that only Social Security
employees really put the due diligence into checking all the
documentation, checking all the information, and we are finding
that when SSA delegates that responsibility to other agencies
to be doing it, we are not getting the same type of quality.
So, in our audit report we recommended that Social Security
work with State Department on making sure that the documents
that are taken in those applications overseas are valid, are
good and that they are legitimate needs for SSNs.
Mr. JOHNSON. Do we need to put anything in legislation to
reaffirm that or is it clear enough now?
Mr. O'CARROLL. If you do not mind, let me check that and
get back to you because I think at this point it does seem to
be--it has been brought to State Department's attention, and I
have got to tell you, it is a good program, and it is a fairly
new one so we might be at a point now of monitoring it before
we do any more recommendations for it. But I will check it and
get back to you.
Mr. JOHNSON. Thank you, sir. I appreciate it.
Chairman MCNULTY. Thank you, Mr. Johnson. Mr. Levin may
inquire.
Mr. LEVIN. Thank you, Mr. Chairman and Mr. Johnson, for
having this hearing. When I read your opening statements, you
mentioned, Mr. Chairman, this is the sixteenth hearing on this
topic.
Chairman MCNULTY. It is time for action.
Mr. LEVIN. That the FTC receives between 15,000 and 20,000
contacts each week from those who have been victimized. Mr.
Johnson, my pal, you say in your statement, according to the
Privacy Rights Clearinghouse, since January 2005, that breaches
have been over 155 million. So, the staff, as usual, has
prepared some really incisive questions, but could I ask you
this because this kind of jumps off the pages, what is the
problem? What is taking so long? Why have we been having all
these hearings and there are all these breaches and all these
thefts? What is holding this up, what is holding you up? What
is holding Washington up?
Mr. WINSTON. I guess I cannot answer the question about why
you have had so many hearings but as far as what is holding up
the FTC and the other agencies that have been working on this
problem, we have been working diligently on it. We have done a
lot of law enforcement. We have done a lot of outreach. I think
additional legislation would be very helpful in making it
easier for us to tackle this problem.
Mr. LEVIN. You are an active participant in crafting this
legislation?
Mr. WINSTON. Yes, we have been involved. We have provided
technical assistance to different Committees and the different
sponsors. We have urged Congress to pass national data breach
notification standards and national data securities standards.
We think that is critical in this fight.
There are a lot of steps that are being taken but it is a
complex problem and it is an ever-evolving problem. Identity
theft is everything from your cousin going up in your bedroom
and stealing your wallet to international crime rings hacking
into computer databases and getting records. In tackling it, we
need to tackle it from every angle, as I mentioned.
Mr. LEVIN. Okay, so it is complex but if we go home and
talk to our constituents and we say about any problem, it is
complex, it changes their complexion, they get kind of red. So,
I will ask the two of you, Mr. O'Carroll and Mr. Bertoni, what
is the problem? Why is it so difficult? Why haven't we acted
besides its complexity?
Mr. BERTONI. As far as why you have not acted?
Mr. LEVIN. Congress and the Executive and all of you?
Mr. BERTONI. I think as far as the pressures on the
Congress, there are interests on the other side of this issue
that make the case that commerce and business to business
information sharing and ultimately customer service will
deteriorate. I think that argument has been heard. It points--
it stalled forward progress in terms of making sure that other
industries have similar protections in terms of their
information security and disclosure similar to the financial
services institutions, in particular the telecommunications and
tax preparer industry. That bar is lower, and we have concerns
that that bar is lower, and we believe at a minimum it should
be raised at least to the level of the financial services
community. So, I guess the roundabout answer is there are
arguments on both sides and at some point which one will win or
which compromise will prevail, that is something for you all as
policy-makers to work out.
Mr. LEVIN. I think that is a useful answer. Mr. O'Carroll,
you get 30 seconds to explain why there has not been more
action.
Mr. O'CARROLL. I guess I better talk quick. I think there
has been a lot of action in terms of when I came to this
inspector general's office 10 years ago, the Social Security
number was out there, it was being used as the primary
identifier on virtually every document up to and including the
driver's license. In the time that I have been here, it is now
off of the driver's licenses. The Social Security statement,
which goes out every year to every citizen, has a truncated
number on it now. When government checks went out, they had a
Social Security number in the window on the check, that
stopped. I got to say it has been a long haul doing it because
of the convenience factor. Everyone used the Social Security
number as a convenient tracking number, and it has been really
our mission to try to get it back into the box through all this
time. The Social Security Protection Act was some steps in the
right direction, it took us a number of years with this
Committee to get that through, and I think if you could do
another act of this kind with more controls over the Social
Security number, that would probably be the benefit of this
Congress.
Mr. LEVIN. Thank you. Thank you.
Chairman MCNULTY. Thank you, Mr. Levin. Mr. Lewis may
inquire.
Mr. LEWIS OF KENTUCKY. Thank you, Mr. Chairman. Going back
to the balance that you were talking about there, Mr. Winston,
in your testimony you stated that restrictions on the Social
Security number should be reduced to unnecessary use without
inadvertently burdening necessary use. Could you explain what
you believe to be necessary and unnecessary use?
Mr. WINSTON. Yes, I think the H.R. 948 really goes at it
the right way. It lists--it basically bans sale and purchase of
the Social except for certain specific purposes, law
enforcement, public health and safety, for credit verification,
for fraud prevention. Then it says that the FTC should do
rulemaking in order to flesh out those exceptions and add
additional ones if it determines that it is appropriate. I
think that is the right approach.
Mr. LEWIS OF KENTUCKY. Mr. Bertoni, would you want to
comment on that too?
Mr. BERTONI. In terms of the balance, striking a better
balance, as I said before, I think it is important that actions
taken do not upset the free flow of commerce, the ability of
businesses to share information. But as our report, as we
continue to say in our reports, there are still industries that
still fall we believe way out of the parameters in terms of a
reasonable amount of regulation and control in terms of their
information security and disclosure policies. Again, at a
minimum, if you looked at what has happened in the financial
services sector, that sector has not grinded to a halt. There
have been changes made. We are asking the Congress to look at
some of these other sectors to see if that bar could be raised.
Again, there would be some compromises to be made, but we also
believe there are soft spots and areas to be strengthened in
several of those areas.
Mr. LEWIS OF KENTUCKY. Mr. Winston, of course all of you I
think would agree that if we could authenticate the consumer or
the customer, we would go a long way in stopping thieves. I
know you have been looking at that, Mr. Winston. What have you
come up with as far as finding a good way to authenticate the
people who are out there?
Mr. WINSTON. We did hold a 2-day workshop on this subject
with lots of people from all over the world coming in to talk
about their experiences. I think what came out of that was that
there is no panacea. There is no one perfect way to
authenticate. If there were, thieves, who are very smart, would
come up with a way to defeat it. So, what we are seeing more
and more of are multiple layers of authentication, not just one
piece of information but a biometric, a thumb print, an iris
scan, plus an identification number or pin number. So, there is
a lot of movement in that direction and government can
facilitate that and encourage it. It probably is not a wise
thing for government to come in and say this is how you have to
authenticate consumers.
Mr. LEWIS OF KENTUCKY. Okay, thank you.
Chairman MCNULTY. Thank you, Mr. Lewis. Mr. Becerra may
inquire.
Mr. BECERRA. Thank you, Mr. Chairman. Thank you all for
your testimony. Let me ask a question. My understanding is if
we were to try to re-issue the Social Security number to try to
take care of discrepancies and to try to give people a new
number that is not out there in the public domain, and if we
were to try to give it some type of enhanced security, a
photograph or some type of biometric, we are looking at
somewhere in the order of about $10 billion to do that. Is
that--I know a rough estimate but is that still more or less an
estimate, Mr. O'Carroll?
Mr. O'CARROLL. It is a moving target, Congressman, in that
it depends on the type of--what features would go into the new
card, whether it was a biometric.
Mr. BECERRA. Give me a rough estimate.
Mr. O'CARROLL. I say that just a rough off-the-top of my
head number, that would be a good number, the $10 billion but
with a lot more ``but's'' to it.
Mr. BECERRA. I understand because I want to move off of
that, I am just trying to get a rough sense of things, so about
$10 billion gives you a new card that might give Americans
enhanced security. Right now SSA would swallow that cost,
Congress would have to provide you with the money to do that,
otherwise it would be impossible to actually administer because
there will be tremendous cost trying to get folks to come in
with their birth certificates and whatever else they will need
to try to identify themselves for purposes of getting this new
card. Okay, so let me ask this, who should pay for the
establishment and maintenance of a new identity system,
identification system, taxpayers or the users? Because right
now the Social Security number imposes no cost on any consumer,
any business if it is used solely for the purpose of
identifying how much you have earned for Social Security
purposes in the future.
That the taxpayers I think we are willing to bear because
we are going to get the benefits of the Social Security system
in the future. But as it is right now with identity theft, with
business losses mounting into the billions, tens of billions of
dollars, there are lots of costs involved in trying to secure
your identity or restore your identity or for a business to try
to reclaim losses. I hear no talk about who is going to pay for
giving us a more secure system, the taxpayers or all the
consumers, meaning the businesses and actual individual
consumers, who would utilize that increased security that would
come from a new identification system that may be housed within
Social Security?
Mr. O'CARROLL. Okay, not to be argumentative but why would
Social Security be the vehicle for this new identifier?
Mr. BECERRA. That is a good question.
Mr. O'CARROLL. Be put back on to the management of the
Social Security Administration when we have a good number now
that is doing what it is supposed to do in terms of tracking
wages and tracking benefits on it and the commercial half is
the other one.
Mr. BECERRA. Let's take that path, say we say the Social
Security number will be used only for Social Security purposes.
Disability benefits, retirement benefits, death benefits.
Mr. O'CARROLL. Tax purposes.
Mr. BECERRA. That is not necessarily Social Security but we
have ventured into at least taxes for purposes of the use of
the Social Security number but for other reason, but then what
would you suggest or does Social Security what would be used as
that identifier that used nationally for whether it is consumer
purposes or other types of purposes?
Mr. O'CARROLL. I thought I did a pretty good job of batting
this away from Social Security.
[Laughter.]
Mr. O'CARROLL. I am thinking I might yield my time to one
of my esteemed panel members.
Mr. BECERRA. Let me ask Mr. Bertoni that question is
because what I am trying to get a sense--those must all be the
folks from GAO who are laughing back there, I am just trying to
get a sense, we are going to have do something but who should
pay it? My sense is that the taxpayer should pay something
because ultimately we are all taxpayers, most of us are
taxpayers, and we want to have that security. But I am not out
there selling my identification number to identity thieves. I
am not the one that tells a particular business or government
agency use my number for some other purpose, whether it is for
purposes of registering a divorce or buying a refrigerator. So
why should the taxpayer then foot the bill to make this card,
if it is used for Social Security, to make it more secure?
Mr. BERTONI. Again, that is certainly a policy question. I
can tell you how it is now. SSA has certainly----
Mr. BECERRA. I do not want to know how it is now, give me a
sense, who should pay?
Mr. BERTONI. I think there are models out there where you
could construct a different model where others could pay
outside of the agency.
Mr. BECERRA. ``Others,'' identify ``others''?
Mr. BERTONI. I am just considering say the driver's, and I
am not advocating, I am just kicking something around here,
there are models where people who are buying the card or buying
the service, which is a driver's license, would be asked to pay
a fee for that. I am not aware of any models where say
beneficiaries of a particular card or identity card, such as a
SSN, like an information re-seller, would have to pay. I cannot
talk to that because I am not aware of that model. The only two
models I am aware of are the agency footing the bill or the
purchaser of the license or the card, historically that has not
been something that SSA has wanted to do. Beyond that, again, I
think that is an option, a policy option for Congress to
consider.
Mr. BECERRA. A user fee of sorts?
Mr. BERTONI. There are models but I am not advocating that.
Mr. BECERRA. No, I understand and I thank you for your
comments. Mr. Chairman, thank you very much. I know my time has
expired.
Chairman MCNULTY. Thank you, Mr. Becerra. Mr. Ryan may
inquire.
Mr. RYAN. Thank you, Mr. Chairman. I guess I will pick up
where Mr. Becerra left off because this issue has so many
sources, so many directions. It interweaves all of these
problems we have got, terrorism, immigration, all of these
things, so we have some no-brainers, unify the truncation
standards, right, and some other easy low-hanging fruit things.
At the end of the day, it seems like what we are headed to is
how do we, A, authenticate people and, B, kind of clean up the
database in Social Security and stop the mission creep of the
number being used, these are pretty much the two issues here,
right? So now we are being faced with this sort of fork in the
road, do we do a Social Security card, do we just fix the
Social Security card, put $11.7 billion, $10 billion, whatever
this number is, and make the Social Security card better with
biometrics and a centralized Federal database or do we go a
different route? I guess that is kind of the fork we are in
right now.
Let me ask just each of the three of you, if we go down
this path of a better 21st Century Social Security card with
the biometrics and all of this, do you believe that given the
way the market works, given the way identity thieves work, that
a Social Security card under today's technology can be
implemented and can be successful for the long term from
preventing identity theft and all that. I will just ask the
three of you, just go down the line, however you want to start,
Mr. O'Carroll?
Mr. O'CARROLL. I will tell you, Mr. Ryan, we have done a
lot of looking at Social Security cards in terms of whether to
use different type of stock for it, different printing for it,
whether to put biometrics into it, everything else, and I have
got to tell you what we have found by looking at just history
in general is when whenever the government comes up with any
type of a document, a form or whatever, especially if there is
going to be some financial gain in figuring out a way of
compromising it, the counterfeiters usually do figure out a way
to compromise it. So, even when you say, if we come up with
one, do you think we will get a few years out of it before
somebody does it, then all of a sudden you are going to go back
to the thought of another $10 billion of coming up with a new
card.
Mr. RYAN. Yes.
Mr. O'CARROLL. So, what we are advocating on this is that
it is the number, it is not the card, and if we can put more
time, effort, whatever into the system work on it, where we are
getting good, positive hits on terms of when information is put
in, is this the right person for it, and that is again what I
am saying with this is that the first step on this thing is
really with the government in terms of right now the agencies
going to each other, basically work on that type of thing, the
technology for it, that is a big step in the right direction.
Then at the time, which kind of goes back to what we were
talking about before, is when you are talking in terms of the
financial sector and all the other forms of identity that are
being used, our recommendation is to use different numbers than
the Social Security number for it. The one that I am always
sort of cautious on with this thing is with the Social Security
number, I think we have done a very good job about it, is
keeping it, at least in terms of the government, for the
government uses of it, and not having it become a national
identity document, which is kind of the role where if you got
into biometrics and hard cards and that, it is a whole other
step.
Mr. RYAN. So, we could get ourselves on the slippery slope,
but I want the other two of you to comment. Let me throw this
at you as well. Tell me if I am wrong, we are at this fork, do
we go down this sort of unifying national ID card route, which
has all of the Orwellian and privacy and obsolete issues
associated with it, or can the market produce ever upgraded
standards on helping people authenticate who they are and give
people the tools in the marketplace to be able to authenticate
their identity and then you clean up the Social Security number
itself and then people can operate through society by
preventing identity theft and being able to authenticate who
they are and the government does a job of basically saying this
particular authenticating agency or company is correct, they do
a good job. The government can do a job of making sure that a
business that wants to market itself as an authenticating
entity, has the Good Housekeeping Seal of Approval, can do
that, is that the path that we go down, meaning instead of the
national ID card, do we have institutions that are out there in
the private sector that can be authenticators of people or not?
Do you understand what I am trying to get to? I would like to
just ask you to consider that as well and give me your take on
that.
Mr. WINSTON. Sure. Mr. Ryan, I think what you are----
Mr. RYAN. Yes, I am not doing a good job of explaining
myself.
Mr. WINSTON. No, actually you are.
Mr. RYAN. Okay.
Mr. WINSTON. What you are playing out I think is the very
debate that is going on with the real ID act. There are certain
advantages to that, of course, of having one ID card for
everything. It is easy to use, hopefully it is secure, but
there are down sides and there are privacy issues and there are
cost issues that are very serious. My own view is that maybe
another way to go is to further develop what is happening now,
which is multiple forms of authentication, not having one form
of authentication for every purpose but in different sectors
having different forms of authentication. It can be a pin, it
can be a biometric. That is much harder for an identity thief
to break into. There are convenience issues, of course.
Consumers do not want to memorize 15 different passwords, but I
think there is ongoing a development of better, useable forms
of authentication that I think have a good chance of solving
this problem.
Mr. RYAN. Mr. Bertoni.
Mr. BERTONI. There is a lot in that question. I think one
thing we need to consider early on is given that we have real
ID there, do we want to go forward with a parallel path of
having a Social Security card with very similar secure
features? I think you could create some redundancies that do
not need to be there. So, there is an issue for the country to
consider in terms of what will it be, will it be real ID, will
it be the Social Security number? We issued a report last year
that talked about the pro's and con's and options, and I can
provide you some of that.
But, again, to step back, even before we talk about who
does it and what we might use, there are real implementation
issues to consider with just the Social Security
Administration. With 300 million cards issued out there, how do
we do it? Is it laddered? Is it all at once? Who gets it first?
Prior to 1978, there was very little fraud verification for
people seeking a SSN. These people could come forward now, get
their Social Security card, and we really did not do a good job
of verifying who they were in the first place. So, we have
millions of people with these pre-1978 cards that they are
going to walk away with an ID card that is going to be what
most people conceive to be bullet proof, and they may not be
who they say they are. That is an issue.
I think in terms of data cross-matching, we have gone on
record at GAO that short of new cards, biometrics, there is a
lot that the public and private sector can do in terms of data
cross-matching, using various elements, not just the Social
Security number. Truncation is a great protection. It should be
part of the verification scheme, but there are new models out
there where they use multiple data points to give the verifier
a higher comfort level that you are who you say you are. So,
that to us is certainly something that needs to be considered
and moved on.
Mr. RYAN. I assume my time is up. Thank you, Mr. Chairman.
Chairman MCNULTY. Thank you, Mr. Ryan. Ms. Schwartz.
Ms. SCHWARTZ. Well, thank you. I am going to try and take
us off the discussion of a national ID card. I am not sure we
are anywhere near any agreement about the need for such a thing
and who would do it and how we would pay for it and how we
would protect people's identification. I think pulling us back
if we could just a little bit to the use of the Social Security
number and kind of risks we are already engaged in. It seems to
me we ought to take care of that first, and we have not done
that yet. So, let me just understand here, the feeling so far
is that you do not, and I guess it would be the Social Security
Administration, does not have the authority to restrict the use
of Social Security numbers, I think that is a simple yes or no?
Mr. O'CARROLL. Yes.
Ms. SCHWARTZ. You do not have the authority, you do not?
Mr. O'CARROLL. Correct. There is no authority. Once it is
outside of Social Security, it is out in the public, we have no
authority to restrict.
Ms. SCHWARTZ. So, individuals ask for it, they give it--we
all have, as you pointed out, hospitals, universities,
schools----
Mr. O'CARROLL. But we can recommend people say no but we
cannot enforce them not to ask.
Ms. SCHWARTZ. You do not also feel that you have the
authority to set standards about its use? For example, you
mentioned display, I think all of us have actually seen from
what hospitals used it at some time or health centers might
have used it as their patient chart number. It was on my Blue
Shield insurance card for years, how hard was that to figure
out, it said Allison Schwartz and my Social Security number, I
think they would probably have assumed it was my husband's just
out of sexism but it was actually mine, and I had my insurance.
They only just recently have changed that, I assume, because of
the concerns about identity theft. So, the question is do you
feel like you could not even or you do not have the authority
now to set standards about display or use or protection of a
Social Security number used by any kind of private entity?
Mr. O'CARROLL. Correct. There is very limited use. One of
the limits that is on it is that when it is falsely used in
advertising, and we can enforce that. That is the one where you
get in your mail a document that looks like it came from the
Social Security Administration, it is using the logo, and that
type of stuff. We can restrict that type of use but the other
types of uses where Radio Shack is asking for your Social
Security number, we cannot. That is where this is very
difficult because once it got out of SSA and got into the
economy, it started becoming that financial tracker.
Ms. SCHWARTZ. Hence, the need for us to take some action
to----
Mr. O'CARROLL. Yes.
Ms. SCHWARTZ [continuing].--Limit the use in the private
sector and attempt to set some standards or suggest who does
set the standards on how they protect this very sensitive
information.
One other question for you. The IRS, as you well know, has
been subcontracting with private collection agencies to collect
taxes. The first thing they ask is for the Social Security
number. We had a hearing which revealed the fact that
individuals are very hesitant, appropriately, to give someone
who just says, ``Hi, I am Susan, I cannot tell you why I am
calling, I have to make sure I know who I am talking to first,
would you give me your Social Security number?'' It is just
stunning actually that this is a government-authorized
activity. Now, many people do not give their Social Security
appropriately but some do. Now, do you know if you or the IRS
has set very careful limits on the protection of those Social
Security numbers once they get them, these are now private
agencies?
Mr. O'CARROLL. Well, it is interesting that you bring that
up. One is that you, as you noticed there, what we are saying
is when somebody calls you up on the phone and asks for your
Social Security number, do not give it, which reinforces that.
But then with secondary information and back and forth, trust
with information and know that what they are calling about is a
transaction with the government, there is that. But what we
have done, and we have gone to the Department of Treasury, is
that we have asked all other--we have asked 15 other inspectors
general to take a look at their departments and the use that
they have of Social Security numbers, up to and including
contractors, which is what you are talking about, and in 2001,
six years ago, there was very little control over that. There
were no real limits on it, nothing was in the contract about
safeguarding the Social Security information and that.
In a follow-up that we did about a year ago, those same 15
agencies were finding out--and they are all the biggest
departments--were finding out that, yes, they are safeguarding
their own information, one, they are too cautious on
disclosures of it, so any of their documents, they are very
cautious to not have Social Security numbers.
Ms. SCHWARTZ. The department is or the subcontractors are?
Mr. O'CARROLL. These are the departments and then each of
the departments are asked at their subcontractors and whether
the contractors were abiding by security of any Social Security
number information, and we found that they were.
Ms. SCHWARTZ. So, you have done a study?
Mr. O'CARROLL. Yes, and so we keep doing that to make sure
that the Federal agencies are looking at subcontractors and
making sure, like in this instance, that there is protection on
it. OMB, under the new PII guidance, is also reinforcing that.
So, I have got to say at least government-wise and government
contractor-wise, we are being very--much more astute or much
more attentive to that issue.
Ms. SCHWARTZ. So, the concern is really much more in the
private sector and the use of these numbers in the private
sector.
Mr. O'CARROLL. Yes.
Ms. SCHWARTZ. We have had other hearings but we really need
to do something to give you the tools and the authority, I am
looking at both you actually, exactly how we will write all
this legislation I guess remains to restrict the use of the
Social Security number and to set very clear standards about
its use. It is pretty stunning how it has been used. So, thank
you very much. Mr. Chairman, I think my time is up.
Chairman MCNULTY. Thank you, Ms. Schwartz. Ms. Tubbs Jones.
Ms. TUBBS JONES. Thank you, Mr. Chairman. You do, sir,
however the authority to restrict more than one person using
the same Social Security number though, do you not?
Mr. O'CARROLL. Yes, we do.
Ms. TUBBS JONES. That is as big a dilemma in government as
anything else is with regards to Social Security numbers,
correct?
Mr. O'CARROLL. The misuse of the SSN and the legal use,
yes.
Ms. TUBBS JONES. Yes, and so we have many employers who
employ people in the United States of America and they in the
same company and more than one person using the same Social
Security card number, Social Security number, excuse me, not a
card but the number?
Mr. O'CARROLL. Yes.
Ms. TUBBS JONES. What are we doing about that?
Mr. O'CARROLL. Well, we are working in terms with
Immigration to be taking a look at what is called the basic
pilot, which is the verification program, that when an employee
applies for a job, we verify the SSN as being a legitimate SSN
and a legitimate name and the basic information of male,
female, date of birth on it. That is being done.
Ms. TUBBS JONES. So, what is your enforcement?
Mr. O'CARROLL. Excuse me?
Ms. TUBBS JONES. I am going to interrupt you because I do
not have but 5 minutes.
Mr. O'CARROLL. Sure, hey, we are coming from the same
place.
Ms. TUBBS JONES. So, what are your enforcement tools for
that purpose?
Mr. O'CARROLL. Well, enforcement tools on it is the misuse
of the SSN, we use that violation when people are misusing it,
and as an example when we were talking about the Fort Dicks
terrorist investigation, we worked with ICE every day of the
year where people are misusing SSNs and where they are charged
with it. Unfortunately, prosecutors are not the most thrilled
with that type of a prosecution unless it is in large numbers.
Ms. TUBBS JONES. I am not talking about terrorists, I am
talking about the employers who allow the use of more than one
person to use a Social Security number, what are we doing about
those employers and what are our enforcement tools and what
have we done?
Mr. O'CARROLL. We are going after them. We just had a
recent case in Massachusetts in which an employer was telling
any new employee coming in if they did not have a Social
Security number, go to this location and they will give you a
Social Security number. They were getting counterfeit Social
Security numbers going to work for this employer and the
employer was arrested.
Ms. TUBBS JONES. Do you have any numbers? If you do not
have them with you today, I would be interested on how many
employers we have prosecuted for allowing employees to use--
more than one employee to use the same Social Security number,
I would be interested in having that?
Mr. O'CARROLL. I would have to respond back on that. I am
not sure whether it is a large number but it is a number, and I
will get it for you.
Ms. TUBBS JONES. I will tell you what, I am not sure
either, but I bet money that it is a large number. I am
laughing--not laughing but I just pulled out my Ohio Public
Employees Retirement System prescription drug card, it has got
my Social Security number on it, broad as day. That is my ID
number. I guarantee you there are a whole lot of others out
there that are using that.
It is easy for us to sit in this room, and I am not going
to be a holier than thou person, but it is easy for us to sit
in the room and have a discussion and be congenial in the
course of our discussion about what we are going to do about
Social Security numbers, and I have only been in Congress 9
years and I am sure, as we said, we have been sitting here
having these nice little collegial discussions about the impact
and that is why we end up where we are right now with the
misuse and identity theft of Social Security numbers.
I just would hope that even in our collegiality, that in
2007, that we will move forward to accomplishing some real
things because all of us sit here and say, ``It is right here
on my card. I call in to the bank, I want to get my bank
account number. I have got to give my Social Security number,
my mother's maiden name,'' and on and on. We have accepted it
as just part of the living in the United States of America and
accessing information, but we have got to get further ahead and
be serious about how we involve this. After that nice little
piece I have done, Mr. Chairman, I thank all of you for the
work that you do, but tell us what you need, let's do it, let's
not just sit here and allow people to continue to be put in
harm's way as a result of misuse. I thank you, Mr. Chairman,
for your time.
Chairman MCNULTY. I thank Ms. Tubbs Jones, and I want to
assure her that Mr. Johnson and I have expressed our
determination to move forward with some legislation rather than
just talking about the issue. Mr. Ryan has an additional
inquiry.
Mr. RYAN. Thank you, Mr. Chairman. Mr. O'Carroll, I wanted
to follow-up on Ms. Tubbs Jones question, I want to ask you
about these no-match letters. This happens to us all the time
where we will have an employer that will call or write us and
say they have received a no-match letter from the Social
Security agency where they said, ``Well, we have found that
five people are claiming the same number, we do not know if
your employee is the right person or the wrong person. You
cannot fire the person, we are going to do the investigation.''
Then they typically have no follow-up from thereafter. So they
are caught.
So can you just walk me through what is the process and the
procedure at SSA, do you have what you need to do to find out
who people are or who they are not? How do you do this, do you
just do random audits of your database to see more than one
claim on a Social Security number? What do you do when you find
four or five people claiming the same number? What is the
outcome? Can you just explain this briefly to me?
Mr. O'CARROLL. Well, when the tax information goes to SSA
and that information is run against the SSA database, that is
where the no-match's are coming out. It is all automated, it is
automatic, a letter is automatically sent out to the employer.
Mr. RYAN. So, every no-match that comes in is identified?
Mr. O'CARROLL. Yes.
Mr. RYAN. Those that can be identified with an employer, a
letter is generated on it to that employer. Really it is an
automated process. On occasion, if there are a lot of them, SSA
will contact employers with a liaison service to see if they
can help them but for the most part it is a pretty passive
action, where the letter goes out, the employer is notified,
the employer knows that the information that he is given is
incorrect and basically he or she is instructed to contact the
employee and straighten it out. Then also the employee is
recommended to go to Social Security and Social Security will
then straighten it out with the employee.
Mr. RYAN. But since the employer just has an I-9 Form he or
she has to fill out, which they have to have some document, one
of what 29, I think thrown in front of them, they do not know
whether the person is legitimate or not, whether they are
illegal or not, how then does the person proceed? They send the
person to the local Social Security office and then it is up to
the Social Security to use their best judgment to determine
whether the person they say they are or not, is that basically
how this follow-up occurs?
Mr. O'CARROLL. A lot of people follow up with the employee
on it, yes. But I have got to tell you in most cases, it can be
rectified at the employer/employee level in terms of the person
does have the work documents, the other documents for the
employer to look at and it can be resolved at that level. I
have to tell you one of the down sides of this one is that in
many cases by the time the employers are getting these no-match
letters, especially in transient type industries, that employee
is long gone and that is probably the biggest issue on this
thing is that, and it is one of the biggest problems with
misuse of SSNs in the application process of it is that if that
person used false identification or purported to have a false
identification, was turned away from SSA initially or whatever,
we are never able to find that person because the information
was all false that they had and they are gone into society.
That is probably the biggest problem with the no-match
letters is that most cases are the biggest violators--or not
violators, the biggest recipients of no-match letters are large
industries are very transient. That is probably the biggest
issue of it is that that employee is no longer there because it
is a year later when the tax information comes in.
Mr. RYAN. But it also seems like the way the system is
configured now, a person could still get away with possessing a
wrong Social Security number even through this system, correct?
Mr. O'CARROLL. Yes.
Mr. RYAN. Even after the no-match letter person who really
is not who they say the are, using some other Social Security
number, could still continue using it?
Mr. O'CARROLL. That does happen, yes.
Mr. RYAN. All right, thank you. Mr. Bertoni?
Mr. BERTONI. Yes, we did some work on that last year, the
electronic suspense file whereby wages that do not match, the
name, date of birth, Social Security, end up in this file with
billions of records and, yes, in fact we have seen Social
Security numbers with all zeros, all 9s, all 8s, ``ABCDEFG''
that are being used and people are working under them. We have
recommended to IRS, DHS to pick up the enforcement effort.
Mr. RYAN. Thank you.
Chairman MCNULTY. Thank you, Mr. Ryan. If there are no
further inquiries, I want to thank Mr. Bertoni, Mr. Winston and
Mr. O'Carroll for your testimony. It has been very helpful. We
do intend to try to move legislation. I would ask that the
witnesses continue to be available to the Members and our staff
as we try to move in that direction, thank you very much.
In the interest of time, while panel three is coming to the
podium, I would just like to introduce the Members of the
panel. We have Justin Yurek, president of ID Watchdog of
Denver, Colorado; Stuart Pratt, president of Consumer Data
Industry Association; James D. Gingerich, director,
Administrative Office of the Courts of the Supreme Court of
Arkansas, on behalf of the Conference of State Court
Administrators; Annie Anton, associate professor of Software
Engineering, North Carolina State University, on behalf of the
Association for Computing Machinery; Marc Rotenberg, executive
director of the Electronic Privacy Information Center; and
Gilbert Schwartz, partner of Schwartz & Ballen, LLP, on behalf
of the Financial Services Coordinating Council.
I want to thank all the witnesses for being here and
sharing your expertise today and for your patience in waiting
for the other two panels to testify. All of your statements
will appear in the record in their entirety. We would ask each
one of you to summarize your statement in as close to 5 minutes
as you can. Just keep an eye on the little device in front of
you to give you an indication when you should wrap up. So with
a summary of your testimony, it leaves a little bit more time
for Members to make inquiries. I think we will start with Mr.
Yurek and go right down the line and hear everyone's testimony
first and then allow the Members to inquire. Mr. Yurek?
STATEMENT OF JUSTIN YUREK, PRESIDENT, ID WATCHDOG, DENVER,
COLORADO
Mr. YUREK. Thank you, Mr. Chairman and Members of the
Committee. My name is Justin Yurek and I am the president of ID
Watchdog Corp. ID Watchdog is an identity theft detection and
resolution company that helps consumers to protect themselves
from, and resolve issues related to, identity theft. Our firm
experiences firsthand the pain and suffering of the consumer at
the hands of identity thieves and it is this pain that I wish
to highlight to do. Ultimately, the question of legislative
reform comes down to an analysis of the expenses incurred by
business and government and restricting access to sensitive
data, such as Social Security numbers, versus the benefit such
action would afford consumers. I wish to illustrate these
benefits to consumer victims by way of case study. Rather than
dealing with faceless statistics, I would like to tell the
story of one of ID Watchdog's clients. I believe there is great
benefit in looking at the specifics of his one case to
determine general facts about all identity theft.
We first met our client, Charlie W., in April of 2006.
Initially, Charlie asked us to perform a full background check
to ensure that his personal data records were accurate. ID
Watchdog pulled data from thousands of databases that cover 13
crucial areas of consumer information. The shocking results
revealed the following incidents in Charlie's name which he was
not responsible for. I apologize for the laundry list I am
about to say, but I think all the details are important: Four
traffic citations in Florida, Washington and Arizona; three
felony arrests for assault and harassment in Washington; a
conviction for assault where he served, supposedly, 144 days in
jail in Washington; an active national warrant for arrest in
Washington for bail jumping; an active warrant for arrest in
Arizona for failure to appear; a newly issued driver's license
in Florida; several thousand dollars of unpaid medical bills in
Washington and Florida; and several thousand dollars of phantom
1099 income dating back to 1996.
A practicing Buddhist, Charlie had never had so much as a
speeding ticket, let alone felony arrests for assault.
Additionally, Charlie was a resident of Colorado and had never
been to Florida, Washington or Arizona. Dismayed, he
immediately engaged us to assist in restoring his name.
A few weeks after Charlie engaged ID Watchdog to help him,
his employer did a routine background check. As a result,
Charlie was called into an office where he was to be fired,
arrested and sent to Washington to face the active warrants
there. We quickly intervened on Charlie's behalf and by
providing photographs and fingerprints were able to save
Charlie, termination, arrest and extradition.
Along side these very direct problems, Charlie also
suffered significant secondary problems. First, his access to
loans in order to finance and expand his business was limited
due to his damaged credit reports. Second, he paid inflated car
and medical insurance rates as a result of his damaged driving
and medical records. Third, Charlie paid inflated interest
rates on his mortgage and other lines of credit due to his
unfairly lowered credit score.
A month later, the thief who was plaguing Charlie's
identity was tracked to a car dealership in Louisiana where he
was attempting to purchase a new vehicle using Charlie's
identity. We immediately alerted the local sheriff's office who
dispatched an officer to confront the thief. Once on the scene,
the officer found that without an active warrant in Louisiana,
he did not have proper cause to arrest the thief and planned to
let him go. In response, ID Watchdog quickly called law
enforcement officials in Washington state to have them fax over
the active national warrant to the Louisiana authorities. After
the Louisiana parish sheriff's office was able to verify that
the warrant was still active, the thief was finally arrested.
The thief's real name was Hugh P. For more than 10 years
prior, Hugh had stolen Charlie's wallet, which contained his
driver's license and health insurance card. The health
insurance card had Charlie's Social Security number printed on
it. Over the years, Hugh had used Charlie's identity in every
brush with law enforcement, whenever he needed medical
treatment, and whenever he had 1099 income which he did not
want to claim for tax reasons. In Hugh's own words, ``It was
very easy to use his ID and Social Security number. No one ever
looks twice at them. To be honest, I never dreamt I would be
caught.''
The case of Hugh and Charlie illustrates the key problems
with the system as it stands today. Social Security numbers are
overexposed and overused, giving thieves too much access to
sensitive data. Entities lack standard client authentication
procedures leading to easy proliferation of the crime and law
enforcement agencies lack multi-jurisdictional cooperation and
effective laws leading to ineffective investigation and
prosecution of the crime, as well as fearless criminals.
I applaud the Committee's commitment to this topic. As
discussions continue, I would ask that you focus on the three
previously mentioned areas when considering new legislation:
Easily accessible Social Security numbers, lack of client
authentication practices and lack of multi-jurisdictional
cooperation and effective laws are at the heart of the crime's
popularity with criminals and therefore must be at the heart of
any legislation aimed to stop identity theft.
Finally, as the Committee continues to develop improved
legislation, I would ask they keep in mind individual stories,
such as Charlie's, and the trials and tribulation that he
experienced. After all, hardworking, innocent, upstanding
individuals like him will be the true beneficiaries of
effective legislative change.
Thank you very much.
[The prepared statement of Mr. Yurek follows:]
Prepared Statement of Justin Yurek, President,
ID Watchdog, Denver, Colorado
Mr. Chairman and members of the Subcommittee,
My name is Justin Yurek. I am the president and co-founder of ID
Watchdog, a Denver-based identity theft detection and resolution
company. Since2005, ID Watchdog has assisted identity theft victims in
resolving identity theft related problems.
Our comprehensive process encompasses all aspects of identity theft
from detection of the crime, to scoping and resolution. During the
process, ID Watchdog takes a limited power of attorney and actually
carries out the recovery process on behalf of our clients. Based on
this experience, we believe that we have a unique perspective on
identity theft as we have interfaced with all applicable entities
involved in the problem--from law enforcement, to government, to
creditors, to collection agencies, to reporting agencies, and so on. In
addition, our diverse client base has given us the opportunity to deal
with all types of identity theft--from financial, to criminal, to
medical, to family identity theft, etc.
I appreciate the opportunity to share our broad-based familiarity
with the topic of identity theft and am happy to speak today about the
role of Social Security numbers (SSNs) in identity theft and about the
need to enhance SSN privacy.
Introduction:
The purpose of my testimony is to underscore the plight of the
consumer in the problem of identity theft. Often the problems of the
consumer are overshadowed by losses sustained by business interests
affected by the crime. Unlike the direct-losses absorbed by businesses,
the effects of identity theft to an individual victim are consequential
damages, and therefore less quantifiable. Nonetheless, the effects of
identity theft to individual victims are devastating. The problem of
identity theft is not a simple one and unfortunately continues to grow
at an alarming rate. Identity theft is the fastest growing white collar
crime in America; growing from fewer than 100,000 cases in 2000 to over
10 million new cases in 2006. At the same time that raw incidents of
identity theft have grown, so has the scope and nature of the crime
itself. While largely associated with financial consequences, identity
theft crimes have gone well beyond credit reports into other more
troubling areas. According to Federal Trade Commission statistics, only
30 percent of crimes reported last year were related to financial and
credit report relevant matters. The newest and fastest growing segments
of identity theft include medical, tax, and criminal related identity
theft.
As the scope and nature of the crime broadens, we also see the time
and energy required to recover from the crime increasing. We are now
faced with a crime that is happening to more individuals and is
simultaneously escalating in severity and consequence for the victims.
With current protections, identity theft is not a matter of ``if'' for
consumers; it is a matter of ``when,'' as everyone will ultimately
become a victim to some degree. These trends cannot be allowed to
continue and the Subcommittee is in an excellent position to affect
significant improvement on the current identity theft epidemic by
enacting legislation that would directly affect the dissemination, use,
and misuse of the social security number--undoubtedly the most
important weapon in an identity thief's arsenal.
The Social Security number was not designed to serve as a
universal, unique, personal identifier. However, it has developed over
time to fill that role in government, military, public and private
sectors. Despite becoming the de facto standard, there have been very
few formal development efforts for the protection of this important
identifier, resulting in a dangerous imbalance between the importance
and accessibility of the SSN on one hand, and the protections afforded
to the individual on the other.
I will detail a few case studies from ID Watchdog's own client base
to show the problem of identity theft from a consumer point of view. I
hope to illustrate the desperate need for legislative reform to ease
the damage inflicted to a rapidly growing number of citizens.
Case Study 1_Charlie W. (Colorado)Charlie W. realized that he was
an identity theft victim when we performed a full background check on
him in April of 2006. Analyzing thousands of reports in 13 crucial
areas, ID Watchdog found the following fraudulent activity in Charlie's
name: 2 traffic citations in Florida, several thousand dollars in
medical bills in Washington, a traffic citation in Washington for
driving with a suspended license, 3 felony convictions in Washington, a
record of 144 days spent in jail in Washington, a warrant for his
arrest for bail jumping in Washington, an arrest for DUI in Arizona, a
second warrant for his arrest for failure to appear in Arizona, a new
drivers license in Florida, a bill for an ambulance ride in Florida,
and unaccounted-for 1099 income for work done in several states.
Shortly after contracting with ID Watchdog to resolve these issues,
Charlie's employer pulled a routine background check and found all of
this data as well. Charlie was threatened with termination from his
job, arrest, and extradition based on his active warrants. ID Watchdog
intervened on his behalf and Charlie was neither arrested nor fired.
However, it took several months of additional work to quash the
outstanding warrants and to absolve him of the fraudulent debts.
Charlie's problems started a decade ago when the perpetrator of his
identity theft stole his wallet. The thief used Charlie's
identification documents including his Social Security number to
perfect his impersonation of Charlie. Despite not realizing that he was
a victim, Charlie suffered numerous damages during this 10-year period.
First, he paid inflated car insurance rates as a result of his damaged
driving record. Second, his access to loans in order to finance and
expand his business was limited due to his damaged credit reports.
Third, Charlie paid inflated interest rates on his mortgage and other
loans and credit lines due to his erroneously negative credit reports.
These monetary damages were then coupled with the emotional damage
related to his close call with his employer as well as the stress of
completing the restoration process.
Case Study 2_Anita J. (Colorado)Anita J. became a victim of
identity theft after she began applying for mortgages online. Shortly
after submitting her personal data to several mortgage brokerage sites,
fraudulent activity began occurring within Anita's identity. Over the
next several months an industrious identity thief purchased four
properties in Anita's name. The combined value of the mortgages
attached to these properties approached $1 million. Anita took a hiatus
from her mortgage shopping and it wasn't until several months later,
when she began investigating new mortgages again, that she realized she
had been victimized. By the time she became aware of her problem; all
four properties had been placed in foreclosure. Non-payment of the
mortgages had dropped her credit scores more than 200 points.
Collection companies eventually found Anita and began to demand payment
for the delinquent accounts. Anita's credit card companies noticed the
sudden drop in her credit scores and began to ratchet up her once low
interest rates to above 20 percent. Appalled that all of this had
occurred, Anita began the arduous process of repairing this damage and
winning back her good name. Her efforts began to take a toll on her
work. The long hours she spent writing letters to credit bureaus,
dealing with title companies related to the properties, and phone calls
made patiently trying to explain to unsympathetic collection agencies
that ``they had the wrong person,'' eventually raised Anita's stress to
unhealthy levels. She began to log the time she was spending on the
problem and surpassed 400 hours before finally enlisting our help.
Anita was quickly absolved of the debts that had illegally been
acquired in her name. However, the rest of her case demanded more
attention. Removing the delinquent mortgages and foreclosures from each
one of her three credit reports presented a significant challenge--even
with police reports and clear evidence of her innocence. Harder still
was the removal of her name from public records related to the
foreclosure and title work of the properties. This kind of straight
forward ``new account'' ID theft is one of the most classic forms of
the crime. Although the dollar amount involved is extremely high, this
case and the steps required to solve it represent a very large portion
of the 10 million cases of identity theft reported last year.
Case Study 3_David H. (Illinois)David H. realized that he was a
victim of identity theft after he returned to the United States from
Japan, where he served in the US Air Force. David was victimized not by
one, but two separate thieves in different parts of the country. After
receiving a couple of mysterious calls from collection agents, David
checked his credit report to find over 20 fraudulent accounts in his
name. David was shocked to find cell phone accounts, credit cards,
utilities, and hospital bills that were in his name, but that he did
not open. Not only did David have no prior knowledge of these accounts,
he was not even in the United States when they had been opened. David's
predicament quickly became worse when he was informed by his manager at
work that he was being fired because a background check found a felony
drug conviction in Arizona. Once again, these alleged incidents
occurred when David was abroad in the Air Force. After a long, drawn
out process that involved filing extensive paperwork with the local
magistrate in Arizona and reissuing a new driver's license, the arrest
records were purged from David's background. Additionally, he was
eventually reinstated to his old job; however, David's troubles were
not yet over. Several months later, David received notice from the
state of Illinois that 60 percent of David's wages were to be garnished
due to unpaid child support payments. Not surprisingly, David had never
met the woman who was receiving the payments, and was not in the
country at the time the child was conceived or born. After two weeks of
work and several in-person interviews with child services personnel,
David was absolved from the payments.
Military personnel have traditionally been at high-risk for
identity theft because of the military's use of Social Security numbers
for identification. The number is often prominently displayed on ID
cards and even on an individual's bunks in some cases. To date, David
has spent one and a half years defending himself from false accusations
and restoring his good name. He has been subjected to harassment from
collection agencies, his credit score has been crushed, and he had to
endure the humiliation of being fired from his job under the stigma of
a false criminal conviction. He has been falsely accused of fathering
illegitimate children and nearly lost 60 percent of his income as a
result. Adding final insult to injury, these problems all occurred
while David was actively serving his country during wartime. David's
case is an example of how there is probably too much reliance by data
brokers on the Social Security number to authenticate the identity of
persons in records from many different sources. Today, the majority of
David's problems have been resolved and deleted from his records,
however he lives in constant vigilance, because the thieves could go
back to work at anytime.
RecommendationsIn the criminal world, identity theft continues to
grow in popularity. It is our opinion that 3 driving factors have
contributed to this rise in popularity, and that these factors need to
be addressed by any new legislation. These factors are:
1. The availability of the Social Security number.
2. The ease of use of this data to commit fraud due to lack of
effective authentication procedures.
3. The lack of legal consequences for a thief.
Identity thieves perceive identity theft as a low risk/high payoff
crime. This perception will need to be altered to affect significant
changes in the growth trends of the crime.
The Availability of the Social Security Number
Social Security numbers are simply used too much. Before using an
identity to perform a crime, identity thieves must harvest personal
identifying information such as name and Social Security number. The
flow and availability of this information today affords thieves too
many ways to obtain this data. Possible legislative changes to consider
in order to improve this situation could include the following:
Companies should be restricted from using the Social Security
number for customer identification purposes. The Social Security number
should be removed from easily accessible public records. Social
Security numbers should be removed from all forms of identification
that might be lost or stolen. Social Security numbers should never be
sold to unaffiliated 3rd parties for any reason.
The Ease of Use of This Data to Commit Fraud Due to Lack of Effective
Authentication Procedures
Once a thief has harvested a victim's identifying information, he
must now use it for his own benefit. In almost all cases, slight
modifications need to be made to a victim's identity before a crime can
be committed. For example, a thief opening a new credit card account
would need to fill out a credit application. On this application he
would write the victim's name and Social Security number, but his own
address and telephone number. With his own address on the application,
the thief is ensured that the new card will be shipped to him rather
than to the victim himself. With his own phone number, the thief will
be able to call to activate the card from a phone number that he
controls. Additionally, the thief would sign the application with his
own signature, rather than the victim's.
Standardized client authentication practices would greatly curtail
potential identity thieves' ability to materially use identifying
information to commit crimes and should be considered for new anti-
identity theft legislation. These practices should include both high-
tech approaches such as cross matching address history and name against
Social Security number; and low-tech approaches such as signature
verification. Such standards should be implemented universally for all
entities that maintain and use the Social Security number and should
come with meaningful penalties for non-compliance and negligence.
The Lack of Legal Consequences for a Thief
Other than the potentially easy and lucrative payouts of identity
theft, thieves are motivated to commit the crime due to a low prospect
of facing prosecution. Two sub-factors contribute to this perception of
safety. First, existing legislation is too vague and oftentimes too
different from jurisdiction to jurisdiction to be effective. Further
clarification of penalties for the misuse of Social Security numbers
and identity theft along with stricter penalties should be considered
in any new legislation. Second, thieves currently exploit an
environment of non-cooperation and non-communication that exists among
the many entities involved in the investigation of identity theft. The
result is a very low arrest rates for identity thieves. The multi-
jurisdictional nature of the crime is at the heart of this problem. It
is imperative for an over-reaching entity such as the Federal Trade
Commission or the President's Identity Theft Task Force to coordinate
between the various entities and jurisdictions involved in the
investigation and prosecution and to facilitate open channels of
cooperation and communication. With identity theft the thief and the
victim are seldom in the same place, and as such it is imperative that
disparate law enforcement agencies have the means to share information
and resources.
ConclusionThe statistics about identity theft are frightening. The
sheer number of victims stands at an overwhelming 10 million per year.
With such proportions, it is easy to become numb to these figures;
however, it is a useful exercise to look at specific case studies to
find general guidance for meaningful solutions. Additionally, it is
vital for all of us to remain in tune with the specific pain and
suffering that these crimes cause in order to maintain the proper
motivation to find a solution. The Subcommittee has shown great
leadership and tenacity over the past seven years in continuing to
explore measures to limit identity theft. I implore you to continue
your efforts and hope that when considering the costs associated with
changes in legislation (especially costs to business), those costs
should be weighed against the benefits that would be afforded to
consumers such as Charlie W., Anita J., and David H.
Chairman MCNULTY. Thank you, Mr. Yurek.
Mr. Pratt.
STATEMENT OF STUART PRATT, PRESIDENT, CONSUMER DATA INDUSTRY
ASSOCIATION
Mr. PRATT. Mr. Chairman, Ranking Member Johnson, and
Members of the Committee, thank you for this opportunity to
appear before you today. My name is Stuart Pratt. I am
president and chief executive officer of the Consumer Data
Industry Association.
Let me start by saying that the CDIA supports efforts to
limit the sale and display of the Social Security number to the
general public. We also believe that sensitive personal
information, like a Social Security number, should be secured.
But we also believe in preserving the Social Security for
legitimate uses for business to business and business to
government transactions. Some context I think for that point is
important. Forty million addresses change in this country every
year. Three million last names change due to marriage and
divorce. There are many other examples in our written testimony
but in fact most identifiers change and our names are not
unique. A unique identifier is important to fair information
uses.
Consumers have expectations and the Social Security number
plays a role in meeting these expectations. Consumers expect
data about them to be accurate. Consumers want to be protected
from fraud. Data about them should be protected and secured.
There are Federal laws that exist today, and they are effective
and the operation of these should be preserved. Some examples
are the Gramm-Leach-Bliley Act and the Fair Credit Reporting
Act and there are other examples in our testimony. But these
laws restrict the use and display of the Social Security
number. They restrict how it can be used, who can use it, and
under what circumstances.
Responsible uses of the SSNs do meet, I think, consumer
expectations. This really just is not our view, the GAO
concluded in a 2004 study that Social Security numbers are used
to build tools that verify an individual's identity or match
existing records since there is no widely accepted alternative,
and we agree. The report further states that restricting
business access to Social Security numbers would hurt consumers
and possibly aid identity thieves, since it would be more
difficult for businesses to verify an individual's identity.
Again, we agree.
The Federal Trade Commission in its own testimony has
stated that SSNs play a vital role in our economy, enabling
businesses and government and others to match information to
proper individuals. For example, consumer reporting agencies
use SSNs to ensure the data furnished to them is placed in the
correct file, that they are providing the right report for the
consumer. SSNs are used for locator services, to find lost
beneficiaries, witnesses, law violators, to collect child
support, to enforce judgments.
But the SSN is not the final word on identity verification,
and I think that this point is very important. The SSN plays a
role, it is an important role, but data matching does not
equate to identity verification or authentication. Our Members
in fact produce one billion fraud likelihood assessments each
year. We also produce 1.4 billion identity verification
assessments each year. It is not just about data matching.
Identity verification is much more. It is a risk assessment
based on the deployment of a range of tools that consider
matches of data, but they also consider application data. They
also consider timing of application and various components of
identity and whether or not they have been used previously in
fraudulent applications.
We also recognize that the Social Security number has value
in public records and this is important for this Committee's
consideration. Public records play a vital role in our society.
Bankruptcy records, tax liens and judgments are part of a
credit report. Public records help in the location of missing
and exploited children. Validating professional licenses is
critical for the health care industry. Without an SSN to tie
these records together, a consumer can simply alter an address,
change a name and separate himself or herself from the record.
Preserving the SSN in public records is essential, but our
Members do support State Government efforts to redact the SSN
from the display to the general public, and we think there is
good progress being made on that front.
Finally, some building blocks of good public policy should
include preemption. If you are going to establish a national
standard, let's get it right and have a national standard and
not a fifty-first state law. Preserve the operation of current
laws, like the Fair Credit Reporting Act, and I think this is
where we may differ with some of the approaches thus far. The
Fair Credit Reporting Act is a well-established statute, as is
the Gramm-Leach-Bliley Act, including information safeguards.
Ensure that the appropriate rulemaking authority is bounded and
that it takes into consideration small business implications
and the Regulatory Flexibility Act.
In conclusion, our Member's uses of the SSN meet consumer
expectations. Data used is accurate, fraud can be prevented,
identities can be better verified, public records are useful in
our society. We appreciate this opportunity to testify, and we
look forward to your questions.
[The prepared statement of Mr. Pratt follows:]
Prepared Statement of Stuart Pratt, President,
Consumer Data Industry Association
Chairman McNulty, Ranking Member Johnson and members of the
subcommittee, thank you for this opportunity to appear before you today
to discuss the importance of Social Security numbers. For the record,
my name is Stuart Pratt and I am president and CEO of the Consumer Data
Industry Association.\1\
---------------------------------------------------------------------------
\1\ CDIA, as we are commonly known, is the international trade
association representing over 300 consumer data companies that provide
fraud prevention and risk management products, credit and mortgage
reports, tenant and employment screening services, check fraud and
verification services, systems for insurance underwriting and also
collection services. As we will discuss below, the secure and protected
use of the social security number (SSN) is an important key to the
effectiveness of these systems and services.
---------------------------------------------------------------------------
Our members applaud this committee for the thoughtful and open
dialogue that you have fostered regarding how Social Security numbers
are used, to identify risks associated with such use, and to address
these risks in a reasonable, targeted fashion.
As a preliminary matter, CDIA supports efforts to limit the sale
and public display of Social Security numbers. CDIA's members do not
publicly sell or display Social Security numbers to the general public,
and we oppose such activity. However, as will be discussed below, such
restrictions have to be carefully considered, balanced and bounded so
that restrictions on use do not interfere with legitimate business uses
of SSNs to detect and prevent ID theft and financial fraud and for
other beneficial purposes.
The SSN is the only unique, individual identifier that
follows a person throughout their lives, literally from the time they
are born.
SSNs are important to the smooth operation of today's economy
because there is no other single identifier that serves the same
purpose as effectively as the SSN.
Although there are other identifiers that may serve similar
purposes in some contexts, there are no other identifiers that serve
this role across all individuals and circumstances.
For instance, name and address can't be used because they are too
common, change due to marriage and divorce, and, according to the U.S.
Census Bureau, 42 million consumers move every year. Even for consumers
who's address and name are constant, they do not always use their
identifiers inconsistently (i.e., in some instances they will use a
nickname, and may inconsistently use their generational designations
(e.g., III, or Sr.)). There are also times where consumers themselves
make mistakes when completing applications. Thus, a consumer's
identifiers may be presented in different ways in different databases
and, in some cases, the data may be partially incorrect. Further,
personal identifiers such as name and birthday, are generally not as
unique as we may believe they are.
Further, the use of other alternatives that could possibly serve as
a substitute for an SSN, such as a cell phone number or driver's
license number, is often restricted by law.
Thus, the SSN is a truly unique identifier.
As the only unique identifier, the use of the SSN has migrated
beyond simply keeping track of social security payments, even within
the Federal Government itself. For example, it is used for tax
purposes, Selective Service registration, employment verification, the
provision of government benefits and a host of other uses. In addition,
the use of the SSN is often mandated by the Federal Government. For
instance, the Treasury Department regulations regarding PATRIOT Act
compliance for financial institutions in many instances requires
financial institutions to use the consumer's full SSN, as obtained from
``trusted [private] sources,'' such as credit bureaus.
Additionally, many State laws require the use of the SSN for a wide
range of important purposes dependent on accurate identification. For
instance, to meet requirements of the law, government data often must
be cross-checked or enhanced with data from private sector databases.
For the private sector, the role of the SSN is that it serves as a
unique identifier that is permanent, so a consumer cannot voluntarily
relinquish it in bad times, and it is consistent across various
systems. For example, a financial institution, a wireless
communications company and a hospital can all rely on the same
identifier for widely divergent purposes, all to help ensure that the
individual before them is the person they believe is before them. Said
differently, after having verified that a consumer is legitimate, a
bank, for example, can then create a unique identifier such as a
customer or PIN number. But as long as the bank is dependent on third-
party sources to cross-check applicant data, unique identifiers must
cut across external data sources.
CURRENT LAW PROTECTS THE PUBLIC FROM INAPPROPRIATE USE
There are several federal and state laws and regulations that
restrict the use or disclosure of SSNs, including: the Gramm-Leach-
Bliley Act (15 U.S.C. 6826(b)) and its implementing regulations
(``Privacy Rule''); the Fair Credit Reporting Act (15 U.S.C. 1681 et
seq.); Section 5 of the FTC Act (15 U.S.C. 41-51); the Fair Debt
Collection Practices Act (15 U.S.C. 1601 et seq.); the Health Insurance
Portability and Accountability Act (Pub. L. 104-191); and the Drivers
Privacy Protection Act (18 U.S.C. 2721 et seq.). Together, these laws
restrict the use and display of SSNs, how they can be used, who they
can (and can't) be shared with, and under what circumstances.
The use of the SSN by Credit Reporting Agencies (CRAs), for
instance, is governed by both the FCRA and, in most instances, GLB as
well. These statutes limit how and when CRAs can disclose SSNs, to
whom, and under what circumstances.
For instance, many CDIA-member products are focused on helping
consumers to gain access to the goods and services for which they
apply--assisting a lender or other service provider in determining a
consumer's eligibility. These products are regulated under the Fair
Credit Reporting Act (15 U.S.C. 1681 et seq.) as ``consumer reports.''
Eligibility determinations include applications for any type of credit
including unsecured credit, home purchases, auto financing, home equity
loans, as well as for insurance of all types, employment, government
benefits, apartment rentals, and for other business transactions
initiated by the consumer.
The FCRA, enacted in 1970, has been the focus of careful oversight
by the Congress, resulting in significant changes in both 1996 and
again in 2003. There is no other law that is so current in ensuring
consumer rights and protections are adequate.
Similarly, some fraud detection tools are regulated under GLBA, and
the use of data regarding those products is similarly circumscribed.
Beneficial Uses of the SSN
Because the SSN allows for consistency across various systems and
data bases, there are a number of ways that the SSN is used that
benefits consumers. Further, without the availability of the SSN, many
of the products and services that consumers take for granted today
could become more scarce.
For instance, CDIA's members produce a range of critical consumer
data products which bring great value to individual consumers, to
society, and to the nation's economy. Our members design products used
for determinations of a consumer's eligibility for a product or
service, to prevent identity theft and fraud and to aid in the location
of consumers for a variety of reasons.
(1) Proper File matching: Ensuring that data goes to the right
file, and is reported about the right individual.
Lydia Parnes, Director of the Bureau of Consumer Protection at the
Federal Trade Commission, recently testified about the importance of
Social Security numbers before the Senate Judiciary Subcommittee on
Terrorism, Technology and Homeland Security:
``SSNs play a vital role in our economy, enabling businesses,
government, and others to match information to the proper individual.
For example, consumer reporting agencies use SSNs to ensure that the
data furnished to them is placed in the correct file, and that they are
providing the right credit report for the right consumer. SSNs also are
used in locator databases to find lost beneficiaries, witnesses, and
law violators and to collect child support and other judgments.
Employers must collect SSNs for tax reporting purposes, and health care
providers may need them to facilitate Medicare reimbursement.'' She
went on to say that ``the SSN is valuable in enabling entities to match
information to consumers. With 300 million Americans, many of whom
share the same name, the SSN presents significant advantages as a means
of identification because of its uniqueness and permanence.''
Financial institutions and others rely on full and complete
information from credit bureaus. Complete information is necessary if
the appropriate information is to be placed in the proper consumer
account. As an example, a financial institution may obtain information
from a credit bureau on its customer named Tom Jones. As you can
imagine, there are thousands of Tom Joneses in the country. In fact, it
is likely that many Tom Joneses share the same last four digits of
their SSN. Therefore, a report with information pertaining to Tom Jones
with the last four digits of 1234 may not provide the financial
institution with sufficient information to determine to WHICH Tom Jones
the report refers.
SSNs, therefore, help to ensure that our members are more likely to
load data to the correct file with a high degree of precision. This is
particularly true where a new account has been opened and is being
added to the consumer's file for the first time. Consumer reporting
agencies of all types have, under the Fair Credit Reporting Act, a duty
to maintain reasonable procedures to ensure the maximum possible
accuracy of the file; SSNs help them meet this requirement.
SSNs also help to ensure that the proper consumer's file is
produced when a consumer applies for a benefit under the FCRA. If a
consumer reporting agency cannot, with precision, identify the proper
file of the consumer, it returns a message to the creditor indicating
that no record was found. This result would likely lead to far higher
credit denials for consumers due to the inability of the creditor to
review the consumer's credit history. Said differently, the Fair Credit
Reporting Act certainly does not contemplate the consumer reporting
agency ``taking a guess`` as to which consumer's file must be accessed
and thus this current liability coupled with the absence of the SSN
would seriously impinge on the way in which credit is granted in this
country today.
(2) Identity Verification to Prevent Identity Theft and Fraud
A number of CIDA members produce products that are used by
financial institutions, insurance companies and others to verify the
identity of an individual and ensure that the person they are
interacting with is who they say they are. These products are very
effective in detecting and preventing identity theft and financial
fraud before it happens.
The SSN helps businesses to prevent fraud by cross-checking
applicant data against various other data sources in order to
authenticate the consumers' identity. Absent the use of an SSN, these
systems will be far less likely to trigger security protocols, which
prevent the crime of identity theft.
In 2004, the GAO conducted a study on Social Security numbers, and
concluded that ``information resellers, credit reporting agencies and
health care organizations use social security numbers to build tools
that verify an individual's identity or match existing records since
there is no widely accepted alternative.'' The report further states
that ``restricting business access to social security numbers would
hurt customers and possibly aid identify thieves since it would be more
difficult for business to verify an individual's identity.''
(3) Other specific products and services are enabled and enhanced
through the availability of the SSN:
Access to home ownership: Every homeowner benefits from a credit
reporting system that reduces the costs of all mortgage loans by a full
two percentage points, thus putting literally thousands of dollars in
disposable income into their pockets. Homeownership is no longer a
luxury of the well-to-do, but is a truly democratized American dream
enjoyed by nearly seventy percent of the population.\2\ The SSN helps
to facilitate the efficient operation of this system, as described
above.
---------------------------------------------------------------------------
\2\ Kitchenman, Walter., U.S. Credit Reporting: Perceived Benefits
Outweigh Privacy Concerns, Pp. 5 (1998).
---------------------------------------------------------------------------
Child support payment enforcement: Access to SSNs dramatically
increases the ability of child support enforcement agencies to locate
non-custodial, delinquent parents (often reported in the news with the
moniker ``deadbeat dads''). For example, the Financial Institution Data
Match program required by the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (PL 104-193) led to the location
of 700,000 delinquent individuals being linked to accounts worth nearly
$2.5 billion. Child support enforcement agencies report that their
efforts are far more effective when they have access to the parent's
SSN. One agency reports that they are able to locate fully 80 percent
more delinquent non-custodial parents when the SSN is available, and
the Association for Children for Enforcement of Support (ACES), a
private child support recovery organization, has stated that social
security numbers are the most important tool for locating parents who
have failed to pay child support.
Locator Services--SSNs are used routinely by law enforcement to
locate missing children, fugitives and witnesses to crimes. The ability
to conduct an information search using an SSN is essential.
Restrictions on access to SSNs in government records would hamper the
ability of law enforcement to obtain this vital information. Further a
number of states report that use of SSNs to match across data bases has
greatly reduced entitlement fraud. For example, Pension Benefit
Information (PBI), a private company that locates former employees that
are due pension benefits, has indicated that in many cases the SSN
becomes the only link between an employer and their former employees
with vested benefits. Employees move, marry and change their name, but
the one thing that remains constant is their SSN.
Locating sex offenders--SSNs are used to locate registered and
unregistered sex offenders. There are over 560,000 sex offenders in the
U.S. Approximately twenty-four percent of these individuals fail to
comply with address registration requirements mandated by law. Access
to SSNs allows law enforcement to locate sex offenders even when the
registration address has not been kept current.
Employment/security screening: As discussed above, SSNs serve as
vital links among disparate records that help businesses verify
prospective employees' identities and conduct thorough, accurate
background checks to ensure workplace safety and business security.
Small business B-to-B transactions: An SSN is the key business
entity identifier to virtually all sole proprietorships or
partnerships; as a result, SSNs are necessary to facilitate business-
to-business transactions between small businesses.
Securitized credit markets: Confidence in the U.S. securities
market is made possible by accurate financial histories compiled using
the SSN as a key identifier. Restricting use of the SSN could undermine
confidence in these securities, resulting in substantially higher
consumer costs for credit, including mortgages and auto loans.
Insurance fraud prevention--Insurance companies use public record
information compiled using social SSNs to detect fraudulent insurance
claims. According to the National Fraud Center, the average American
household pays $200 to $400 a year in additional insurance premiums to
offset the cost of fraud. This cost would likely increase if companies
do not have the information they need to detect and prevent fraud.
(4) Additionally, without the use of the SSN, consumers would
suffer harm:
Incomplete data harms consumers: There would likely be an decrease
in the ability of consumer reporting agencies to properly match
incoming information to the correct consumer about whom the information
relates. Think about the consequence to consumers of having a consumer
credit report that does not contain all of the accounts that they pay
on time and which makes them eligible for the lowest cost loans.
Incomplete data harms our banking system: The absence of the SSN
would also put at risk the safety and soundness of lending decisions
due to less information being included in consumer credit reports due
to data matching problems.
Incomplete data prevents consumer access to goods and services:
Think about the consequence for consumers when a consumer reporting
agency cannot locate the proper file on a consumer and thus a lender,
insurer or other service provider wanting to do business with the
consumer has to deny the application, or the consumer has to pay higher
rates.
INFORMATION SECURITY AND THE SSN
As discussed above, the use of data like the SSN actually helps to
prevent fraud and identity theft, by enabling better authentication of
consumers, so that a lender knows that a loan applicant is you, and not
an identity thief.
However, concerns have been raised that the SSN is a ``key,'' and
all a potential identity thief needs to ``unlock'' a consumer's
credit--that simply is not true.
There are 2 basic types of financial fraud that may be perpetrated
against an individual. The first is fraud against a person's existing
accounts, such as credit card fraud, where a thief obtains your account
number or credit card, and charges items to that card or drains your
existing bank account. While those instances are problematic, and may
cause a consumer some stress while getting those problems rectified,
they do not cause any long-term harm to the consumer; they suffer no
financial liability, and such fraud does not impact their credit in any
way. More than 2/3rds of all ``identity theft,'' as identified by the
FTC, falls into this category.
The second, and more serious type of financial fraud is what we
term ``real name'' fraud, where a fraudster obtains a person's
sensitive personal information, such as their SSN and other
information, and somehow fools a lender into thinking that they are
that person. This may enable the thief to open new credit accounts in a
victim's name without the knowledge of the victim. While the victim is
ultimately not responsible for the financial harm, this type of fraud
can have serious repercussions for the victim.
As discussed, while obtaining a person's SSN may potentially make
them susceptible to identity theft, it takes a lot more information,
and the ability to use it in a way that thwarts the fraud detection
tools in place, to commit ``real'' identity theft. Further, the SSN
plays a major role in helping to stop such fraud, as well.
The availability of MORE information, rather than less, is the key
to reducing reliance on the SSN. Database matching is often like
finger-print matching--the more unique data points there are, the more
ability there is to identify and authenticate an individual. Further,
each piece of data reduces the reliance on every other piece. However,
Congress has limited the use of alternatives, increasing the reliance
on SSNs.
For instance, there are other unique identifiers that could help
reduce the reliance on SSNs, such as Driver's License numbers, that do
exist. However, the Driver's Privacy Protection Act (DPPA) has limited
the ability of data base companies to utilize those to supplement, or
even supplant, the use of SSNs.
Wireless cell phone numbers also have the potential to serve that
purpose. However, while those numbers are not used for telemarketing,
Congress has, in other contexts, considered limiting the utility of
these numbers for identification and fraud detection purposes, as well.
PUBLIC RECORDS AND THE SSN
Public records play a vital in our society and bring value to the
consumer. Bankruptcy records, tax liens and judgments are part of
consumer ``credit'' reports used by lenders to make decisions that
implicate safety and soundness. Records of eviction are critical to
landlords who must themselves pay the bills and attempt to lease
properties to consumers who will do the same. Validating professional
licenses for employment screening agencies is yet another use of public
records, as is accessing criminal histories.
Through the development of nationwide databases of public record
information, our members have solved the problems inherent in having to
search through tens of thousands of federal and state court houses and
agency databases. In this way, the SSN is as important an identifier in
a public document as it is in a private-sector database. It is a
critical identifier for all of the data management reasons we discuss
above. Without an SSN, a consumer can simply alter a few items of
information, such as moving to a new address, or even changing a name
and thus separate himself/herself from a bankruptcy record, a tax lien,
a record of eviction and even a criminal history, in some cases.
Clearly this is not a positive outcome for consumers or for American
businesses which are on the front lines of making, for example, fair
and accurate risk based lending and employment decisions, while at the
same time fighting identity theft and fraud.
Some federal proposals have suggested that state agencies must
limit access to the SSN. The concern of the CDIA's members is that this
apparent unfunded mandate will drive under-funded state agencies to
either stop requesting the SSN when processing vital records, or to
simply deny all access to public records containing SSNs.
It is important that public records, including those records
containing SSNs, continue to be made available. The open public records
system is the cornerstone of the U.S. democracy and economy.
The debate about the presence of the SSN in public records has
suggested a possible binary solution, where SSNs could be made
available electronically for certain entities, but could possibly be
redacted for publicly available electronic documents, though costs
associated with such an unfunded mandate will have to be addressed. It
is encouraging to hear state court organizations discussing strategies
for protecting SSNs, and CDIA will continue to engage in these
dialogues.
However, while CDIA believes that disclosure of the SSN to the
general public must be addressed, we also believe that public records
must be made available, including SSNs, to those with an appropriate
need. Ultimately, dialogue with state and federal agencies coupled with
the advancement of technologies will address concerns about public
records which contain SSNs. An unfunded mandate will destabilize the
system of public records which is so important to our democracy.
Some Additional Notes on Other Important Issues:
Finally, there are a few additional issues I would like to
highlight before I conclude:
Legitimate business uses:
It is important that any restrictions imposed on the sale or
display of SSNs contain exceptions for legitimate business uses such as
identity verification; detecting, preventing and investigating ID theft
and fraud; locating individuals; collecting child support and other
lawful debts; and for any purposes permitted under the Fair Credit
Reporting Act and Gramm-Leach-Bliley Act.
Preemption:
Ensuring that the Social Security number issue is addressed in a
uniform fashion, so that all consumers are protected, is a vital
component of this debate. Any legislation that would restrict the sale
or display of SSNs must contain federal preemption so that businesses
are subject to a single, national law rather than having to comply with
various state laws all with differing and potentially conflicting
requirements.
Exempt Current Law
As discussed previously, SSNs are broadly covered by a whole host
of current statutes. Instead of adding an additional compliance burden
on top of those laws, we would urge the Committee to exempt practices
already covered under existing laws.
Minimize Rulemaking Authority
Because so many business practices rely on stable laws, CDIA would
urge the Committee to codify any changes to current law, to the extent
possible, rather than granting broad authority to the regulatory
agencies.
Further Assisting Identity Theft Victims: Provide the
Ability to ``Ping'' the SSN Database
CRAs utilize very sophisticated tools to ensure the accuracy of
their systems. However, in rare cases of identity theft, it would be
useful for us to have the ability to cross-check our databases to
determine if a particular SSN is associated with a particular person.
This would be very useful in further helping ensure the accuracy of our
databases, and could help contribute to the accuracy of our databases
and the ability to help correct the records of Identity Theft victims.
CONCLUSION
In conclusion, you can see that the underlying theme in the
discussion of SSN uses is that of balance and ultimately ensuring the
security of the number. Law that imposes national uniform information
security regulations on all who possesses the SSN in combination with a
person's name and address, is the most responsible and constructive
focus for Congress. In contrast, law that overreaches in attempting to
limit use of the SSN is likely to merely take fraud prevention tools
out of the hands of legitimate businesses at the expense of consumers.
Ironically, to prevent fraud you must be able to crosscheck
information. To maintain accurate databases, you must be able to
maintain a range of identifying elements. Absent the availability of
the SSN, we will be less able to build accurate databases, to
accurately identify records and to help prevent identity theft through
the development of fraud prevention and authentication tools.
Ultimately consumers expect us all to accomplish the goals of
protecting and securing the SSN, and also ensuring the accuracy and
effectiveness of databases which contain information about them.
Thank you for this opportunity to testify.
Mr. JOHNSON. Thank you, Mr. Pratt.
Mr. Gingerich, you may testify.
STATEMENT OF JAMES D. GINGERICH, DIRECTOR, ADMINISTRATIVE
OFFICE OF THE COURTS, SUPREME COURT OF ARKANSAS, ON BEHALF OF
THE CONFERENCE OF STATE COURT ADMINISTRATORS, WILLIAMSBURG,
VIRGINIA
Mr. GINGERICH. Thank you, Mr. Johnson and Members of the
Committee. It is an honor to appear before you to have the
opportunity to share with you some of the work which has
already been done and is being actively considered in our
Nation's state court systems in this very important area of
balancing the public access to court records with privacy
concerns of individuals.
As to the specific topic of the hearing today, our
country's state court systems have been quite active, as this
Committee has, in recognizing the serious threat to personal
privacy which comes from public access to personally
identifying information, such as the Social Security number.
Previously, in hearings of this Committee, members of COSCA
have testified about the work undertaken by the Conference of
Chief Justices and the Conference of State Court Administrators
in 2000 and 2001 to develop a recommended comprehensive policy
on access to court records and suggested that those guidelines
be adopted by every state supreme court in the United States.
On August 1, 2002, CCJ and COSCA adopted the resolution
endorsing the guidelines and encouraging their adoption.
I am pleased to report that since that testimony, 20 state
supreme courts have adopted the guidelines, another eight
states have made revisions to their previously adopted rules
based upon the guidelines and five states have commissions
currently underway considering adoption of the guidelines.
About 60 days ago, my own state of Arkansas became the most
recent state to adopt a comprehensive policy after almost 2
years of study and debate. We utilized the recommended
guidelines, as well as the good work which has been done in
many of our sister states. As it relates to the Social Security
number, let me just read you the rule that has now been adopted
by the Arkansas Supreme Court. It applies to every court record
in the state, whether it is a paper record or an automated
record and whether it lies in the supreme court building or any
rural courthouse in the state.
``The following information in case records is excluded
from public access and is confidential absent a court order to
the contrary . . . number four, Social Security numbers; number
five, account numbers of specific assets, liabilities,
accounts, credit cards and personal identification numbers; and
number eight litigant addresses and phone numbers.'' Those
three exceptions were all borne out of our concern about, and
our many hours of debate about, the very real problem of
identity theft. I have to suggest however that there were some
things that we learned along the way to guide how we now
implement that policy, which I think are consistent with your
purposes.
First of all, the suggestion that we should simply ban the
use of the Social Security number from any non-Social Security
related activity is not good public policy and has serious
negative consequences on the efficient and accurate operation
of State court systems. It also conflicts with many other
important public policy goals, adopted both at the state level
and at the Federal level, which require the use of a Social
Security number. I will not go into all of the issues, but I
think my written testimony recites the many, many ways in which
courts legitimately and appropriately have need for that
information to do the work of a court system; for example when
judges need accurate and verifiable information in order to
enter decisions about assets and income, especially in family
law cases, and in some states for the accurate identification
of parties. In Arkansas, we do not use the Social Security
number at all in criminal cases but, for example, in our
juvenile justice system, both in dependency and in delinquency
cases we use it in order to accurately identify an individual.
Our state public policy suggests that we are not going to
fingerprint children and so it is the only way in which we can
accomplish that. Those records are segregated and sealed but
nonetheless it is an appropriate use of the Social Security
number. There many other ways. So, for Arkansas it was not the
case of barring the use of the Social Security number but in
implementing policies to protect the information from
unnecessary disclosure.
There is a second thing we learned; eliminating or
restricting access to the Social Security number when the
collection of the Social Security number has been required by
the court or is otherwise required by state or Federal law in
the future is an appropriate policy which we support and which
we intend to implement.
As to the ``in the future,'' our own rule adopted by the
Supreme Court in Arkansas provides that the implementation date
will apply only to records that are created after January 1,
2009. After looking at the scope of the issues for those files
that resided in courthouses in millions of records in 75 county
courthouses across Arkansas, it is simply impossible for us to
expect that local officials in those courthouses were going to
have any ability to go back and redact all of those records.
So, we looked forward in terms of doing the best we could.
I should add, however, that our court specifically provided
authority for the local court officials to redact earlier
records if they are able to, and that will probably happen on a
case by case basis. To the extent that collection of the Social
Security number is required by the court, when courts are
asking people for the information ourselves, we can control it,
we can manage it; and so in Arkansas we will adopt a rule
similar to that which already exists in Washington, Minnesota
and North Dakota to separate that information in a separate
court file, with only the main file being available to the
public. The information like the Social Security numbers will
be in a separate file and will be unavailable, either in paper
or in the automated record. When the Social Security number is
otherwise provided in a pleading, for example, or in something
that is presented by a lawyer to the court, we have very little
control over that; but Arkansas will adopt a rule that requires
the attorneys or parties to protect that information.
I realize I am out of time, Mr. Chairman, and I would just
say in conclusion that we recognize the problem. I think our
state supreme courts are doing a pretty good job of trying to
get to the implementation of the policy which you desire, and
we are looking forward to working with you and the Committee in
that effort.
Thank you.
[The prepared statement of Mr. Gingerich follows:]
Prepared Statement of James D. Gingerich, Director, Administrative
Office of the Courts, Supreme Court of Arkansas, on behalf of the
Conference of State Court Administrators, Williamsburg, Virginia
Mr. Chairman and Members of the Subcommittee,
The Conference of State Court Administrators (COSCA) is pleased to
present testimony on today's hearing on protecting the privacy of the
social security number from identity theft.
SUMMARY
Mr. Chairman and members of the subcommittee, the state court
community has been grappling with the issue of protecting privacy as it
relates to court records for the past few years. We are taking a
proactive stance in protecting the privacy of individuals and their
social security numbers, while at the same time maintaining traditional
open court access. Today, we will share examples of what state courts
that are doing on this via the approval of court rules.
In collaboration with the Conference of Chief Justices (CCJ), we
established a project entitled ``Public Access to Court Records: CCJ/
COSCA Guidelines for Policy Development by State Courts,'' which
outlines the issues that a jurisdiction must address in developing its
own rules, and provides one approach. The Guidelines touch on the use
of social security numbers (SSNs) in court records as well as other
private information. The entire text of the Guidelines can be found
online at http://www.courtaccess.org/modelpolicy/
18Oct2002FinalReport.pdf. Both CCJ and COSCA, adopted a resolution
endorsing the Guidelines and urged the states to address them.
Mr. Chairman, SSNs are pervasive in state court documents and
procedures. The testimony that follows gives the subcommittee numerous
examples of how we use SSNs in day-to-day court proceedings. For
example, we use SSNs to insure that judges have the best evidence
available to them. We also use SSNs to collect fines and restitution.
In addition, many SSNs appear in the public record in many types of
court cases including, but not limited to, bankruptcy, divorce and
child support cases. My testimony also details the federal requirements
imposed on us to collect SSNs for various reasons, for example, to
track parents who are not paying child support.
Mr. Chairman, we stand ready to work with you to craft solutions to
address the problem of identity theft. We want to do our part to
eliminate it. We are at the same time concerned about the effort to
require us to redact or expunge SSNs that appear in public records. We
feel that this type of requirement would impose an unfunded mandate on
state courts in this country. The cost to fulfill this requirement
would be high because many SSNs appear in paper documents as well as
other hard-to-redact microfilm/microfiche.
ABOUT COSCA
Before I begin my remarks, I would like to provide some background
on our group and our membership. I submit this testimony on behalf of
the Conference of State Court Administrators (COSCA). The National
Center for State Courts, of which I am President, serves as secretariat
to COSCA. COSCA was organized in 1955 and is dedicated to the
improvement of state court systems. Its membership consists of the
principal court administrative officer in each of the fifty states, the
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth
of the Northern Mariana Islands, and the Territories of American Samoa,
Guam, and the Virgin Islands. A state court administrator implements
policy and programs for a statewide judicial system. COSCA is a
nonprofit corporation endeavoring to increase the efficiency and
fairness of the nation's state court systems. As you know, state courts
handle 98 percent of all judicial proceedings in the country. The
purposes of COSCA are:
To encourage the formulation of fundamental policies,
principles, and standards for state court administration;
To facilitate cooperation, consultation, and exchange of
information by and among national, state, and local offices and
organizations directly concerned with court administration;
To foster the utilization of the principles and
techniques of modern management in the field of judicial
administration; and
To improve administrative practices and procedures and to
increase the efficiency and effectiveness of all courts.
Although I do not speak for them today, I also would like to tell
you about the Conference of Chief Justices (CCJ), a national
organization that represents the top judicial officers of the 58
states, commonwealths, and U.S. territories. Founded in 1949, CCJ is
the primary voice for state courts before the federal legislative and
executive branches and works to promote current legal reforms and
improvements in state court administration. COSCA works very closely
with CCJ on policy development and administration of justice issues.
STATE COURTS ARE RESPONDING TO PRIVACY CONCERNS
Mr. Chairman, let me begin by informing you of the progress that
many state courts are making to protect individual privacy rights,
while maintaining the American tradition of open courts. Through court
rules, state court systems are changing their procedures for viewing
and accessing court records as they relate to the appearance of social
security numbers. Washington State, for example, is establishing a
procedure for ``sealing'' family case court records containing
privileged information such as social security numbers and financial
information. In effect, Washington is creating two sets of records: a
public and a private one. Vermont is placing the burden on parties to
expunge or redact social security numbers from papers filed with the
court. Minnesota is requiring that parties in a divorce case fill out a
confidential information sheet, which contains social security numbers,
to be kept separate from the official record. South Dakota adopted a
rule that protects SSNs and financial account number information by
requiring these numbers to be redacted from documents and submitted to
the Court on confidential information forms.
In addition to the proactive stance we are taking to this issue, we
are also responding to some of the demands placed on our court systems
by state legislatures and governors. In 2005, 53 bills were signed into
law by governors dealing with social security number privacy. That's 17
more than in 2004; an increase of 46 percent. These bills range from
simple prohibition of displays of SSNs on public records to new
expansive criminal and civil statutes that punish wrongdoers and those
that traffic in social security numbers as a means to steal a person's
identity. In the 2006 sessions, state legislatures considered 176
measures dealing with social security numbers and privacy. Again, this
number is an increase over the prior year.
At the direction of the CCJ and COSCA leadership, we established a
special subcommittee of the CCJ/COSCA Court Management Committee to
explore privacy protection innovations and share them with the Congress
and the Administration. This committee meets twice a year at our annual
and mid-year meetings. This subcommittee has been researching the issue
and is responsible for compiling examples of best practices in this
area that I am presenting today.
NATIONAL EFFORT TO CRAFT PUBLIC ACCESS GUIDELINES TO COURT RECORDS
Our project entitled, ``Public Access to Court Records: CCJ/COSCA
Guidelines for Policy Development by State Courts'' was a joint effort
of CCJ/COSCA and the NCSC to give state court systems and local trial
courts assistance in establishing policies and procedures that balance
the concerns of personal privacy, public access and public safety.
The State Justice Institute (SJI) funded this project in 2001 and
it was staffed by the NCSC and the Justice Management Institute. The
project received testimony, guidance and comments from a broad-based
national committee that included representatives from courts (judges,
court administrators, and clerks), law enforcement, privacy advocates,
the media, and secondary users of court information.
The Guidelines recommend the issues that a jurisdiction must
address in developing its own rules governing public access. The
Guidelinesare based on the following premises:
Retention of the traditional policy that court records
are presumptively open to public access
The criteria for access should be the same regardless of
the form of the record (paper or electronic), although the manner of
access may vary
The nature of certain information in some court records
is such that remote public access to the information in electronic form
may be inappropriate, even though public access at the courthouse is
maintained
The nature of the information in some records is such
that all public access to the information should be precluded, unless
authorized by a judge
Access policies should be clear, consistently applied,
and not subject to interpretation by individual courts or court
personnel
The Guidelines Committee examined the use of SSNs in current court
practices. They looked at the inclusion of SSNs in bulk distribution of
court records, and in other private information that courts
traditionally protect, such as addresses, phone numbers, photographs,
medical records, family law proceedings, and financial account numbers.
Finally, the Committee examined various federal laws and requirements
governing SSN display and distribution by state and local entities.
On August 1, 2002, CCJ and COSCA endorsed and commended ``the
Guidelines to each state as a starting point and means to assist local
officials as they develop policies and procedures for their own
jurisdictions.''
STATE COURTS' INTEREST IN COLLECTING AND USING SOCIAL SECURITY NUMBERS
A question we are often asked is why do state courts utilize SSNs?
What is the state court interest in collecting SSNs? Why do state
courts need to require parties to provide their SSNs in the course of
state court litigation? The following are some of the reasons we use
them:
Accurate determination of assets/income Judges need the most
accurate information on assets and income when making their decisions,
especially in family law cases. In many instances this involves
examining assets by a social security number. There are numerous
examples of individuals giving a false social security number to avoid
paying child support, for example. The same logic applies in dealing
with divorce cases in dividing assets.
Identification of parties A growing number of court systems are
using case management information systems in which an individual's
name, address, and telephone number are entered once, regardless of the
number of cases in which the person is a party. The advantage of these
systems is to be able to update an address or telephone number for all
cases in which the person is a party by a single computer entry. SSNs
provide a unique identifier by which court personnel can determine
whether the current ``John Smith'' is the same person as a previous
``John Smith'' who appeared in an earlier case.
Courts have often used SSNs to identify criminal defendants as well
as parties to civil cases. In the future, persons accused of crime will
be identified by automated fingerprint identification systems (AFIS)
which scan fingerprints and classify them electronically. The primary
future need for SSNs as a means to identify individuals will therefore
be in civil, not criminal, litigation.
Collection of fees, fines and restitution by courts SSNs are the
universal personal identifier for credit references, tax collection,
and commercial transactions.
When courts give a litigant an opportunity to pay an assessment
resulting from a judgment in periodic payments, the court needs to be
able to function as a collection agency. Having the convicted person's
social security number is necessary for use of state tax intercept
programs (in which a debt to the state is deducted from a taxpayer's
state income tax refund) and other collection activities. Some states
use additional means to enforce criminal fines and restitution orders,
such as denial of motor vehicle registration; SSNs are often used for
these purposes as well.
Creation of jury pools and payment of jurors SSNs are a necessary
part of the process by which multiple lists (for instance, registered
voters and registered drivers) are merged by computer programs to
eliminate duplicate records for individual citizens in the creation of
master source lists from which citizens are selected at random for jury
duty. Duplicate records increase an individual's chance of being called
for jury duty and reduce the representativeness of jury panels. Some
courts use SSNs to pay jurors as well.
Making payments to vendors SSNs are used as vendor identification
numbers to keep track of individuals providing services to courts and
to report their income to state and federal taxing authorities.
Facilitating the collection of judgments by creditors and
government agencies Courts are not the only entities that need to
collect judgements. Judgment creditors need SSNs to locate a judgment
debtor's assets and levy upon them. Courts often require that the
judgment debtor make this information available without requiring
separate discovery proceedings that lengthen the collection process and
increase its costs. Federal law now requires state courts to place the
parties' SSNs in the records relating to divorce decrees, child support
orders, and paternity determinations or acknowledgements in order to
facilitate the collection of child support. On October 1, 1999, that
requirement was extended to include the SSNs of all children to whom
support is required to be paid.
Notification to the Social Security Administration of the names of
incarcerated and absconded persons The Social Security Administration
cuts off all payments to persons incarcerated in federal, state or
local prison or jails, and to person who are currently fugitives from
justice. The savings to the federal budget from this provision are
substantial. To implement this process, Social Security Administration
needs to identify persons who have been sentenced to jail or prison and
persons for whom warrants have been issued. The agency has
traditionally obtained this information from state and local
correctional agencies. See 42 USC Sec. ?1A402(x)(3) requiring Federal
and State agencies to provide names and SSNs of confined persons to the
Social Security Administration. The state courts of Maryland are
involved in an experimental program to provide such information
directly from court records. The Maryland program has two additional
future advantages for state courts. First, the program offers the
possibility of obtaining better addresses for many court records;
social security and other welfare agencies have the very best address
records because of beneficiaries' obvious interest in maintaining their
currency. Second, cutting off benefits may provide a useful incentive
for persons receiving benefits to clear up outstanding warrants without
requiring the expenditure of law enforcement resources to serve them.
Transmitting information to other agencies In addition to the
Social Security Administration, many states provide information from
court records to other state agencies. A frequently occurring example
is the Motor Vehicle Department, to which courts send records of
traffic violations for enforcement of administrative driver's license
revocation processes. These transfers of information often rely upon
SSNs to ensure that new citations are entered into the correct driver
record.
POTENTIAL LEGISLATION
Mr. Chairman, in the past, this subcommittee has considered various
pieces of legislation that would, in some form or another, prohibit the
display of a person's social security number on a public record.
Blanket prohibitions like these will place courts in the position of
trying to comply with conflicting public policies. We submit the
following questions for your consideration:
The Welfare Reform Law requires courts to collect SSNs on court
orders granting divorces or child support or determining paternity.
State laws contain similar requirements in other types of cases in some
states. What steps must a court take to restrict access to these
documents, which are matters of public record in most states?
SSNs appear in many financial documents, such as tax returns, which
are required to be filed in court (e.g., for child support
determinations) or are appended to official court documents, such as
motions for summary judgments. What steps must a court take to restrict
access to these documents, which are also matters of public record in
most states?
We were encouraged by language in the report accompanying HR 2971
(Rept.108-685, Part 1, p. 21) in the 108th Congress dealing with
incidental vs. non-incidental appearances of SSNs in public records:
During Social Security Subcommittee hearings on the bill, court and
other public records administrators testified they receive numerous
documents filed by individuals, businesses, and attorneys that often
include SSNs the government did not require to be submitted, and of
which they are therefore unaware. They stated redaction of
``incidentally'' included SSNs would create a serious administrative
burden, and it would require significant resources to review each
document and redact such incidental SSNs . . . With respect to SSNs
submitted in court documents absent the court's requirement to do so,
the individual communicating the SSN in the document, not the court,
would be held responsible according to Section 108 of the bill.
(Emphasis ours)
In drafting social security legislation, we respectfully ask that
you expand on the above sentiments in actual legislative language of
any future bill.
Courts will have substantial increased labor costs in staff time to
redact or strike the appearance of SSNs in paper records or in
microfilm/microfiche if a redaction requirement is imposed.
In the event you draft legislation dealing with redaction, we urge
you to make a distinction between existing court records/documents and
future documents. For example, requiring a court to retroactively
redact or expunge old records would be a nightmarish task due to the
cost in staff time and the actual compiling of said court records.
Finally, in an effort to make courts and court records more open,
many courts are now beginning to make available many public records on
the internet either as text/character documents or by scanning and
placing them online through imaging software (PDF files). While the
removal of SSNS in text/character documents may be relatively easy in
some computer generated records (XML), other scanned records, such as
PDF files, will be harder to change necessitating more staff and an
increase in labor costs.
OUR FUTURE COURSE OF ACTION
CCJ and COSCA have recommended that state courts adopt the
following policies, unless state law directs them otherwise, to protect
citizen privacy while providing service to litigants:
Official court files State courts should not attempt to expunge or
redact SSNs that appear in documents that are public records. As was
mentioned earlier, federal law requires state courts to place the
parties' SSNs in the records relating to divorce decrees, child support
orders, and paternity determinations or acknowledgement in order to
facilitate the collection of child support. The purpose of placing that
data on judgments is not just to provide it to child support
enforcement agencies; it is also to provide it to the parties
themselves for their own private enforcement efforts. Any other
interpretation puts the courts in an untenable position--having an
affirmative obligation to provide judgments in one form to parties and
child support enforcement agencies and in another form to all other
persons.
This same reasoning applies to income tax returns or other
documents containing SSNs filed in court. It would be unreasonable, and
expensive, to expect courts to search every document filed for the
existence of SSNs. Further, court staff has no authority to alter
documents filed in a case; the social security number may have
evidentiary value in the case--at the very least to confirm the
identity of the purported income tax filer.
Case management information databases Data in automated information
systems raises more privacy concerns than information in paper files.
Automated data can be gathered quickly and in bulk, can be manipulated
easily, and can be correlated easily with other personal data in
electronic form. Data in an automated database can also be protected
more easily from unauthorized access than data in paper files. It is
feasible to restrict access to individual fields in a database
altogether or to limit access to specific persons or to specific
categories of persons. Consequently, state courts should take steps to
restrict access to SSNs appearing in court databases. They should not
be available to public inquirers. Access to them should be restricted
to court staff and to other specifically authorized persons (such as
child support enforcement agencies) for whose use the information has
been gathered.
Staff response to queries from the public When court automated
records include SSNs for purposes of identifying parties, court staff
should be trained not to provide those numbers to persons who inquire
at the public counter or by telephone. However, staff may confirm that
the party to a case is the person with a particular social security
number when the inquirer already has the social security number and
provides it to the court staff member.
In short, staff may not read aloud a social security number, but
may listen to a social security number and confirm that the party in
the court's records is the person with that number. This is the same
distinction applied to automated data base searches. This distinction
is one commonly followed in federal and state courts.
CONCLUSION
Mr. Chairman, we recognize the role of SSNs in the incidence of
identity theft cases. The current state of affairs with regards to the
treatment of SSNs provides lawbreakers the continued opportunity to
exploit the current system at the expense of ordinary Americans. The
threat of identity theft is real and we want to do our part to
eliminate it.
I have presented several ways our courts utilize SSNs. Finding
solutions to protect an individual's privacy will be complex and
difficult. Many state courts are already taking steps to fashion
solutions in response to the problem. I remind you of the earlier
mentioned approaches from Washington, Vermont, Minnesota and South
Dakota. Other states are experimenting with different approaches.
Thank you for asking for our input on this important matter. The
Conference of State Court Administrators stands ready to work
collaboratively and cooperatively to craft solutions to this important
issue. I will be happy to answer any questions you may have.
Chairman MCNULTY. Thank you, Mr. Gingerich.
Dr. Anton.
STATEMENT OF ANNIE I. ANTON, ASSOCIATE PROFESSOR OF SOFTWARE
ENGINEERING, NORTH CAROLINA STATE UNIVERSITY, RALEIGH, NORTH
CAROLINA, ON BEHALF OF THE ASSOCIATION FOR COMPUTING MACHINERY
Ms. ANTON. Good morning, Chairman McNulty, Ranking Member
Johnson and members of the Subcommittee. Thank you for the
opportunity to testify today. This statement represents my own
personal position as well as that of the Association for
Computing Machinery's U.S. Public Policy Committee.
By way of introduction, I am an associate professor at
North Carolina State University and director of an academic
privacy research center. In addition, I serve on several
industry and government boards of technical advisors, including
the DHS State of Privacy and Integrity Advisory Committee.
Right now, personal information about you, me and millions
of Americans is being compiled, accessed, sold and exchanged
among businesses and government agencies. Yet, we should all be
concerned. Is that personal information protected? Is it being
shared only among those with a legitimate need for it? Can
criminals easily access our personal information? These
concerns are compounded by three factors: First, the widespread
use of Social Security numbers has made it a de facto national
identification number; second, computing technologies enable us
to collect and exchange and analyze personal information on an
unprecedented scale; and, third, there are widespread problems
with cyber security leading to frequent and large security
breaches. In particular, technology allows personal information
to be combined with Social Security numbers, thus creating a
convenient way to track individuals across public and private
records. This raises privacy concerns, and these concerns are
exacerbated because many businesses use the Social Security
number as both an identifier and an authenticator.
The terms ``identifier'' and ``authenticator'' have
specific technical meanings that are often confused. An
``identifier'' is a label associated with a person. An
``authenticator'' provides the basis to believe that somebody
is accurately labeled by some given identifier. So,
authenticators might be something you know, like a secret
password or a pin, something you have, like the key to your
house, and something you are, such as a biometric. A Social
Security number is an identifier. It is something that anyone
can know, and many will, so it is not a secret. Hence, it is
unuseable as an authenticator.
Even though many organizations use it in this way, and this
is a very big problem. My passport picture coupled with a
tamper evidence security seal is an authenticator because it
links me, something I am, as embodied my photograph, with my
identity. Using Social Security numbers for both identification
and authentication makes them much more valuable to a criminal
who is intent on stealing someone's identity. This is a problem
of our own making and it is a problem that we can eliminate.
In the time remaining, I will highlight a few
recommendations from my written testimony. First, we should
move away from authentication based on information that is
easily compromised. Social Security numbers or mother's maiden
names are poor choices for authentication.
Second, individuals should be empowered to control the
dissemination of their Social Security numbers. Congress can
support this by protecting citizens who prefer not to provide a
Social Security number when conducting business that does not
legally require it.
Third, we should reduce the exposure of citizen Social
Security numbers by prohibiting their display on ID cards and
in public records and by redacting them from existing public
records. For example, Choice Point is now redacting Social
Security numbers and other personal information from reports
that it provides to its clients. This practice should be
required at other companies and organizations, especially data
brokers and credit bureaus.
Finally, we should require stronger security practices
during the transmission and storage of Social Security numbers
and all other personal information.
In conclusion, Congress is the only entity that can make
meaningful changes to protect the privacy and identities of
U.S. citizens. We are encouraged by your attention to these
issues, and the computing professionals that I represent stand
ready to help you in your efforts.
Thank you for your attention. I will be happy to answer any
questions.
[The prepared statement of Ms. Anton follows:]
Prepared Statement of Ana I. Anton, Ph.D. Associate Professor,
North Carolina State University
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman MCNULTY. Thank you, Dr. Anton.
Welcome back, Mr. Rotenberg.
STATEMENT OF MARC ROTENBERG, EXECUTIVE DIRECTOR, ELECTRONIC
PRIVACY INFORMATION CENTER
Mr. ROTENBERG. I seem to have a technological problem but
thank you, Mr. Chairman, Mr. Johnson and Members of the
Subcommittee. It is nice to be with you this morning, and I
appreciate the opportunity to testify on this issue. I have
over the years appeared before the Subcommittee on the Social
Security number issue. I have also litigated a number of the
leading Social Security number privacy cases, one of which
involved a resident in Virginia a number of years ago who was
asked by the state secretary to provide his Social Security
number when he went to register to vote. He did not object to
that, what he objected to was the fact that the state of
Virginia was publishing his Social Security number in the
public voting rolls, and he said that that was a threat to his
personal privacy. We wrote a brief for the Federal Appeals
Court at that time, before people even used the phrase
``identity theft'' and we said if you make the Social Security
number available, it will make it easier for people to commit
the crime of financial fraud.
Fortunately, the court agreed with us. The state of
Virginia and many other states changed their practices.
Unfortunately, as you know, this problem has become quite a bit
more severe over the last several years. I am going to say a
few words about that today.
One of the key points I wanted to make this morning is
actually I think the Privacy Act 1974 saw this problem coming
and there is a provision in the Privacy Act that says very
clearly that the Federal Government should try to minimize the
collection and use of the Social Security number. It really
should only be used for the original intended purposes, as well
as a few others that have been authorized by law, including the
use as a taxpayer identification number. But, as we all know,
today the Social Security number is widely used across the
Federal Government.
It is used also in the financial services sector, which for
some of the reasons that Professor Anton has described, creates
a particular problem for consumers in this country. The Social
Security number is both an identifier and a password. If you
have access to someone else's Social Security number, there is
a very good chance that you are going to be able to pull up the
records on that person and also use the number to get access to
the content of those records, and that is precisely what
identity thieves do when they use the Social Security number to
get access to someone's credit record information.
Now, I describe in my testimony the problem has not escaped
the notice of the White House. The President established a Task
Force on Identity Theft, it was cochaired by the Attorney
General, the chair of the Federal Trade Commission. We spent a
lot of time on that task force, and we made some very specific
recommendations. The task force rightly said that Social
Security numbers were contributing to this problem but in our
view, they did not go far enough to recommend strong solutions
to diminish the problem. They wanted more enforcement authority
to go after people who committed the crime of identity theft,
but they did not do enough in our opinion to limit the
collection and use of the Social Security number to really get
to the problem at its source.
So the rest of my testimony talks about some of the
specific suggestions and actions that I believe the Congress
could take to limit the problems associated with the misuse of
the Social Security number, not using it for example as a
record identifier, particularly in the private sector, not
publicly displaying it on Web sites, not putting it on identity
cards. As I also describe, and it speaks to an issue that you
raised earlier, Mr. Ryan, I think the more difficult we make it
for people to use the Social Security number as a general
purpose identifier, the more likely it is that businesses will
come up with other systems of identification that are
appropriate for a specific context.
If we think about it, this is actually our commonsense
understanding of what an identifier should be. You have a bank
account number for your banking relationship. You have a credit
card number for your credit relationship. You probably have a
number for your utility bill. That is actually a very good
thing because if one of those numbers are compromised, it does
not create a risk for you that all the other account
information will be compromised. But part of the way to make
that system work is to not let businesses cut corners by using
the Social Security number in place of their own record
identifier. So, that is a very important part of our
recommendation for you today.
Regarding the bill that has passed out of the Committee on
Energy and Commerce, we think it is a good bill. It includes a
lot of important provisions, but we do have a couple of
specific recommendations that we think could make it a bit
stronger. One issue we are particularly concerned about, and I
know it is something that this Committee has considered in the
past, and that is the issue of state pre-emption.
Now, you know if you pre-empt the states in this area, a
lot of legislation that has already been passed that protects
the privacy of the Social Security number will be effectively
overwritten, and I think that could be very problematic,
particularly in this area where things are developing so
quickly. So, what I would urge you to do on that issue is to
establish a Federal base line, make the national standard the
floor. For the states where there is not protection, you will
give them protection. But if it is a baseline, you allow the
states that are doing more and trying to anticipate some of the
new problems to go forward and maybe give you some material for
the next bill.
So, thank you very much for the opportunity to testify.
[The prepared statement of Mr. Rotenberg follows:]
Prepared Statement of Marc Rotenberg, Executive Director,
Electronic Privacy Information Center
I. Introduction
Chairman McNulty, Ranking Member Johnson, and Members of the
Subcommittee, thank you for the opportunity to testify on the misuse of
the Social Security number and the escalating problem of identity theft
My name is Marc Rotenberg and I am Executive Director of the
Electronic Privacy Information Center. EPIC is a non-partisan research
organization based in Washington, D.C.\1\ Founded in 1994, EPIC has
participated in the leading cases involving the privacy of the Social
Security number and has frequently testified in Congress about the need
to establish privacy safeguards for the Social Security number to
prevent the misuse of personal information.\2\
---------------------------------------------------------------------------
\1\ EPIC maintains an archive of information about the SSN online
at http://www.epic.org/privacy/ssn/ [``EPIC SSN Page''].
\2\ See, e.g., Greidinger v. Davis, 988 F.2d 1344 (4th Cir. 1993)
(``Since the passage of the Privacy Act, an individual's concern over
his SSN's confidentiality and misuse has become significantly more
compelling''); Beacon Journal v. Akron, 70 Ohio St. 3d 605 (Ohio 1994)
(``the high potential for fraud and victimization caused by the
unchecked release of city employee SSNs outweighs the minimal
information about governmental processes gained through the release of
the SSNs''); Marc Rotenberg, Exec. Dir., EPIC, Testimony at a Joint
Hearing on Social Security Numbers & Identity Theft, Before the H. Fin.
Serv. Subcom. on Oversight & Investigations and the H. Ways & Means
Subcom. on Social Security, 104th Cong. (Nov. 8, 2001), available
athttp://www.epic.org/privacy/ssn/testimony_11_08_2001.html; Chris Jay
Hoofnagle, Legislative Counsel, EPIC, Testimony at a Joint Hearing on
Preserving the Integrity of Social Security Numbers and Preventing
Their Misuse by Terrorists and Identity Thieves Before the H. Ways &
Means Subcom. on Social Security & the H. Judiciary Subcom. on
Immigration, Border Sec. & Claims, 105th Cong. (Sept. 19, 2002),
available at http://www.epic.org/privacy/ssn/ssntestimony9.19.02.html.
---------------------------------------------------------------------------
Two weeks ago in testimony, I urged the Subcommittee to strengthen
the privacy safeguards for the proposed Employment Eligibility
Verification Systems and warned that the errors in the Basic Pilot will
be exacerbated by the increased dependence on the SSN.\3\ And, about a
year ago, I urged Members of this Subcommittee to reject the use of the
SSN as a national identifier and to ensure the development of adequate
privacy and security safeguards to address the growing crisis of
identity theft.\4\
---------------------------------------------------------------------------
\3\ Marc Rotenberg, President, EPIC, Testimony at a Hearing on
Employment Eligibility Verification Systems Before the H. Ways & Means
Subcom. on Social Security, 110th Cong. (June 7, 2007), available at
http://www.epic.org/privacy/ssn/eevs_test_060707.pdf.
\4\ Marc Rotenberg, President, EPIC, Testimony at a Hearing on
Social Security Number High-Risk Issues Before the H. Ways & Means
Subcom. on Social Security, 109th Cong. (Mar. 16, 2006), available at
http://www.epic.org/privacy/ssn/mar_16test.pdf.
---------------------------------------------------------------------------
Today, my statement will focus on the dramatic increase in identity
theft in the United States that has resulted directly from the misuse
of SSN and the need to pass comprehensive legislation to limit the use
of the SSN as well the need to develop better systems of identification
that are more robust.
II. Summary of Social Security Number History
Social Security numbers have become a classic example of ``mission
creep,'' where a program designed for a specific, limited purpose has
been transformed for additional, unintended purposes, some times with
disastrous results. The pervasiveness of the SSN and its use to both
identify and authenticate individuals threatens privacy and financial
security.
These risks associated with the expanded use of the Social Security
number and identification cards underscore the importance of the
hearing today.
The SSN was created in 1936 for the purpose of administering the
Social Security laws. SSNs were intended solely to track workers'
contributions to the Social Security fund. Legislators and the public
were immediately distrustful of such a tracking system, which can be
used to index a vast amount of personal information and track the
behavior of citizens. Public concern over the potential abuse of the
SSN was so high that the first regulation issued by the new Social
Security Board declared that the SSN was for the exclusive use of the
Social Security system.
Over time, however, legislation allowed the SSN to be used for
purposes unrelated to the administration of the Social Security system.
For example, in 1961 Congress authorized the Internal Revenue Service
to use SSNs as taxpayer identification numbers.
A major government report on privacy in 1973 outlined many of the
concerns with the use and misuse of the Social Security number that
show a striking resemblance to the problems we face today. Although the
term ``identify theft'' was not yet in use, Records Computers and the
Rights of Citizens described the risks of a ``Standard Universal
Identifier,'' how the number was promoting invasive profiling, and that
many of the uses were clearly inconsistent with the original purpose of
the 1936 Act. The report recommended several limitations on the use of
the SSN and specifically said that legislation should be adopted
``prohibiting use of an SSN, or any number represented as an SSN for
promotional or commercial purposes.'' \5\
---------------------------------------------------------------------------
\5\ Dep't of Health, Educ. & Welfare, Secretary's Advisory Comm. on
Automated Personal Data Systems, Records, Computers, and the Rights of
Citizens 125-35 (MIT1973), available at http://www.epic.org/privacy/
hew1973report/.
---------------------------------------------------------------------------
In enacting the landmark Privacy Act of 1974, Congress recognized
the dangers of widespread use of SSNs as universal identifiers, and
included provisions to limit the uses of the SSN. The Privacy Act makes
it unlawful for a government agency to deny a right, benefit or
privilege because an individual refuses to disclose his or her SSN.
Section 7 of the Privacy Act specifically provides that any agency
requesting that an individual disclose his or her SSN must ``inform
that individual whether that disclosure is mandatory or voluntary, by
what statutory authority such number is solicited, and what uses will
be made of it.'' \6\ The Privacy Act makes clear Congress' recognition
of the dangers of widespread use of SSNs as universal identifiers.
---------------------------------------------------------------------------
\6\ Privacy Act of 1974, 5 U.S.C. Sec. ?1A552 (a) (2006).
---------------------------------------------------------------------------
The Senate Committee report stated that the widespread use of SSNs
as universal identifiers in the public and private sectors is ``one of
the most serious manifestations of privacy concerns in the Nation.''
Short of prohibiting the use of the SSN outright, Section 7 of the
Privacy Act provides that any agency requesting that an individual
disclose his SSN must ``inform that individual whether that disclosure
is mandatory or voluntary, by what statutory authority such number is
solicited, and what uses will be made of it.'' This provision attempts
to limit the use of the number to only those purposes where there is
clear legal authority to collect the SSN. It was hoped that citizens,
fully informed that the disclosure was not required by law and facing
no loss of opportunity in failing to provide the SSN, would be unlikely
to provide an SSN and institutions would not pursue the SSN as a form
of identification.
But the reality is that today the SSN is the key to some of our
most sensitive and personal information. The financial services sector,
for instance, has created a system of files, keyed to individuals'
SSNs, containing personal and financial information on nearly 90
percent of the American adult population. This information is sold and
traded freely, with virtually no legal limitations. In addition, credit
grantors rely upon the SSN to authenticate a credit applicant's
identity. Many cases of identity theft occur when thieves apply using a
stolen SSN and their own name. Despite the fact that the names,
addresses, or telephone numbers of the thief and victim do not match,
accounts are opened and credit granted using only the SSN as a means of
authentication.\7\
---------------------------------------------------------------------------
\7\ See, e.g., TRW, Inc. v. Andrews, 534 U.S. 19 (2001) (Credit
reporting agencies issued credit reports to identity thief based on SSN
match despite address, birth date, and name discrepancies); Dimezza v.
First USA Bank, Inc., 103 F. Supp.2d 1296 (D. N.M. 2000) (same). See
also United States v. Peyton, 353 F.3d 1080 (9th Cir. 2003) (Credit
issued based solely on SSN and name, despite clear location
discrepancies); Aylward v. Fleet Bank, 122 F.3d 616 (8th Cir. 1997)
(same); Vazquez-Garcia v. Trans Union De P.R., Inc., 222 F. Supp.2d 150
(D. P.R. 2002) (same).
---------------------------------------------------------------------------
Even the government is susceptible to identity theft based solely
on obtaining an SSN and the name associated with it. Stolen SSNs are
used to file fraudulent tax returns and to seek refunds owed to other
citizens. When the proper owner of the SSN files his tax return it may
be rejected as a duplicate and he may be required to spend time fixing
his records in order to receive his tax refund.\8\
---------------------------------------------------------------------------
\8\ President's Identity Theft Task Force, Combating Identity
Theft: A Strategic Plan 21 (April 23, 2007) [``ID Theft Task Force
Report''], available at http://www.idtheft.gov/reports/
StrategicPlan.pdf.
III. President's ID Theft Task Force and Nexus Between SSNs and
---------------------------------------------------------------------------
Identity Theft
The growing misuse of the Social Security number and the associated
problem of Identity Theft have not escaped the notice of the White
House. In May 2006, the President established an Identity Theft Task
Force to ``track down on the criminals who traffic in stolen identities
and protect American families from this devastating crime.'' \9\ The
Task Force, chaired by the Attorney General and the FTC Chair, was
expected to protect the financial information of citizens and reduce
the threat of identity theft, which the FTC now annually reports is the
number one concern of American consumers.\10\
---------------------------------------------------------------------------
\9\ Press Release, Office of the Press Sec'y, Fact Sheet: The
President's Identity Theft Task Force (May 10, 2006), available at
http://www.whitehouse.gov/news/releases/2006/05/20060510-6.html.
\10\ Fed. Trade Comm'n, Consumer Fraud and Identity Theft Compliant
Data: January-December 2006 (Feb. 7, 2007), available at http://
www.consumer.gov/sentinel/pubs/Top10Fraud2006.pdf.
---------------------------------------------------------------------------
EPIC participated in the task force proceedings and provided
extensive comments.\11\ We supported the Task Force's recommendation to
reduce reliance on SSNs at all levels of government. We said:
---------------------------------------------------------------------------
\11\ EPIC, Comments to the Federal Identity Theft Task Force,
P065410 (Jan. 19, 2007), available at http://www.epic.org/privacy/
idtheft/EPIC_FTC_ID_Theft_Comments.pdf.
---------------------------------------------------------------------------
Reducing use of SSNs and limiting the amount of data collected by
government bodies is fundamental to maintaining the security of
consumer data. This is an especially critical limitation upon the
public sector, since government has the power to compel individuals to
disclose personally identifiable information. The personal data
collected by government entities should never be disseminated in public
records or sold to the private sector. The Task Force should curtail
the publicly available sources of the SSN, including the Social
Security Death Register; bankruptcy filings and other court records;
birth and death records; and records of other life events.\12\
---------------------------------------------------------------------------
\12\ Id. at 8.
---------------------------------------------------------------------------
EPIC also pointed to the growing problem of the misuse of the SSN
by businesses:
The Task Force should also carefully investigate and analyze SSN
use in the private sector, as there is evidence that private sector use
of SSNs contributes substantially to the problem of identity theft.
Restricting the sale, purchase and display of SSNs by private entities
is a critical consideration in combating identity theft. The private
sector must move away from using SSNs as identifiers, a goal which is
feasible as demonstrated by Empire Blue Cross' transition from SSNs to
alternative identification numbers for its 4.8 million customers.\13\
---------------------------------------------------------------------------
\13\ Id. at 8-9.
---------------------------------------------------------------------------
The President's Task Force recognized the connection between the
misuse of the Social Security number and the crime of identity theft
but failed to propose adequate safeguards. According to the President's
Identity Theft Task Force, ``the SSN is especially valuable to identity
thieves, because often it is the key piece of information used in
authenticating the identities of consumers.'' \14\ The SSN is also
commonly used by the government and entities in the private sector to
identify individuals. As the Task Force noted, ``SSNs--are widely used
in our current marketplace to match consumers with their records
(including their credit files) and as part of the authentication
process.'' \15\ In short, SSNs function as both a username and a
password--a single piece of information that both identifies an
individual and authenticates that identification, a lock and a key
rolled into one. Because of the way in which the SSN is used for
identification and the prevalence of that use, much of your most
sensitive information does not even have the same sort of rudimentary
security as your email account.
---------------------------------------------------------------------------
\14\ ID Theft Task Force Report at 23, supra note 8.
\15\ Id. at 44.
---------------------------------------------------------------------------
As noted by the Task Force, ``the SSN is a critical piece of
information for the thief, and its wide availability increases the risk
of identity theft.'' \16\ Despite the problems associated with using
the SSN as an identifier, the Federal Government routinely uses SSNs in
order to identify individuals within governmental programs. SSNs have
been included as part of Medicare's Health Insurance Claim Number,\17\
and as part of a federal award identifier used by the USDA.\18\
---------------------------------------------------------------------------
\16\ Id. at 42.
\17\ Id.
\18\ Ellen Nakashima, U.S. Exposed Personal Data: Census Bureau
Posted 63,000 Social Security Numbers Online, Wash. Post, Apr. 21,
2007, at A05, available at http://www.washingtonpost.com/wp-dyn/
content/article/2007/04/20/AR2007042002208.html.
---------------------------------------------------------------------------
IV. Identity Theft as a Result of Social Security Number Misuse
During the past fiscal year, the Department of Justice charged 507
defendants with aggravated identity theft. The DOJ highlighted a number
of these prosecutions in a recent press release.\19\ A handful of the
cases the DOJ put on display involved defendants misusing Social
Security numbers for illegal purposes.
---------------------------------------------------------------------------
\19\ Press Release, Dep't of Justice, Fact Sheet: The Department of
Justice's Efforts to Combat Identity Theft (Apr. 23, 2007), available
at http://www.usdoj.gov/opa/pr/2007/April/07_opa_278.html.
---------------------------------------------------------------------------
In one of the cases, a woman was sentenced to 75 months
imprisonment for defrauding FEMA in the wake of Hurricane Katrina.\20\
The defendant filed 28 fraudulent claims for disaster relief to FEMA
using other people's Social Security numbers. After receiving money
from FEMA, the defendant went out to buy real estate, a mobile home,
vehicles, electronics, furnishings, and other goods and services.
---------------------------------------------------------------------------
\20\ Id.
---------------------------------------------------------------------------
In another case, six defendants victimized AOL subscribers with a
``phishing'' scheme.\21\ The defendants ``spammed'' thousands of AOL
users with emails containing fake electronic greeting cards. When the
subscribers tried to open the friendly greeting, they were instead met
with a software trojan that prevented the users from accessing AOL
without entering sensitive information including bank account, address,
and Social Security numbers. The defendants used the stolen information
to make counterfeit debit cards, which they swiped at ATM machines to
get cash, and used at online and retail stores to buy goods and
services. It appears that we've gone from ``Hello, you've got mail!''
to ``Hello, you got your identity stolen!''
---------------------------------------------------------------------------
\21\ Id.
---------------------------------------------------------------------------
Another defendant was paid to fraudulently use Social Security
numbers and other confidential info to get personal phone records of
reporters and Hewlett-Packard officials, as well as their family
members.\22\ This case is a clear example of ``pretexting'' or posing
as somebody else to obtain sensitive calling records. And these are
just the cases the DOJ chose to highlight.
---------------------------------------------------------------------------
\22\ Id.
---------------------------------------------------------------------------
There's also the case of 19 year-old Irving Escobar who bought
stacks of $400 gift cards from Wal-Mart and cashed them in to buy
electronics.\23\ Escobar went on lavish shopping sprees, charging as
much as $112,000 in goods at gift stores. Escobar purchased, in total,
an estimated $1 million in goods. Amy Osteryoung, assistant statewide
prosecutor who handled the case for Florida Attorney General Bill
McCollum referred to Escobar's actions as ``[m]odern day money
laundering.'' \24\ Also, ``Investigators believe it is the boldest
tangible evidence of criminals cashing in on hacked data from TJX--the
nation's largest reported computer data breach, which TJX disclosed in
January.'' \25\ TJX says it will pay for a credit-monitoring service to
help avert identity theft for customers whose driver's license numbers
were the same as their Social Security numbers and were believed
stolen. For others, the damage has already been done.
---------------------------------------------------------------------------
\23\ Jon Swartz and Byron Acohido, TJX data theft leads to money-
laundering scam, USA Today, June 12, 2007, available at http://
www.usatoday.com/money/2007-06-11-tjx-data-theft_N.htm.
\24\ Id.
\25\ Id.
---------------------------------------------------------------------------
V. Recent Social Security Number Breaches in the Federal Government
The Social Security Administration's Office of Inspector General
said that 16 percent of the 99,000 fraud cases it investigated in the
one-year period ending Sept. 30, 2006 involved the misuse of Social
Security numbers.\26\ Considering the following cases of breaches in
Social Security number data storage, that number might be on the rise.
---------------------------------------------------------------------------
\26\ Id.
---------------------------------------------------------------------------
Recently, a woman named Marsha Bergmeier was bored and did an
Internet search for her farm's name in Illinois.\27\ She discovered a
link to fedspending.org, a Web site created by OMB Watch to monitor
federal spending. While clicking around the site, a searchable database
popped up for her, containing information about her farm loan amount
under an Agriculture Department program. Not only that, she also
discovered the list of 28,000 SSNs, including her own. Published right
there for everybody with an Internet connection to see.\28\ The site
had been up since 1996. And that's just the United States Department of
Agriculture.
---------------------------------------------------------------------------
\27\ Ellen Nakashima, U.S. Exposed Personal Data: Census Bureau
Posted 63,000 Social Security Numbers Online, supra note 18.
\28\ Id.
---------------------------------------------------------------------------
The Department of Defense uses Social Security numbers for just
about everything; \29\ from troop rosters to the dog tags dangling from
soldiers' necks. Since 2006, data about almost 30 million active and
retired service members has been stolen from four Veterans Affairs
offices. That's approximately 30 percent of the 100 million total
reported lost or stolen personal data in the United States.\30\ That's
a lot.
---------------------------------------------------------------------------
\29\ Byron Acohido and Jon Swartz, Military personnel prime targets
for ID theft, USA Today, June 15, 2007, available at http://
www.usatoday.com/tech/news/computersecurity/infotheft/2007-06-14-
military-id-thefts_N.htm?csp=34.
\30\ Id.
---------------------------------------------------------------------------
And that's a lot more than an active military service member needs
to be dealing with. With increasing frequency, scam artists are setting
their sights on military personnel. As USA Today reported, Marine
Corporal Jacob Dissmore, 22, returned from Iraq in 2006 to learn that
someone in San Diego had opened a credit card account, started a T-
Shirt business and even purchased a house with Dissmore's money using
his personal information.\31\
---------------------------------------------------------------------------
\31\ Id.
---------------------------------------------------------------------------
A retired Navy chief petty officer that keeps meticulous financial
records suspects the theft of laptops from the Veterans Affairs office
is directly responsible for suspicious activity on his accounts.\32\
Earl Laurie Jr. takes care of his private info very well; he uses a
P.O. Box, shreds his papers, and avoids online banking. Mr. Laurie
never had a problem until right after the laptop was stolen when he
started getting phone calls asking him to confirm strange credit card
applications on his account.
---------------------------------------------------------------------------
\32\ Id.
---------------------------------------------------------------------------
And the American Red Cross has even had to issue warnings to
military families. Identity thieves have stooped to the lowest level.
The families of active military officers have reportedly been receiving
phone calls from scammers pretending to be with the Red Cross
delivering unfortunate news about a soldier stationed in Iraq.\33\ The
scammers tell the families that their loved one is being airlifted to a
hospital in Germany and will not receive medical treatment unless they
offer up personal information immediately. One moment you'll think the
Red Cross is helping you out, the next thing you know you're a victim.
---------------------------------------------------------------------------
\33\ Jerry Carnes, Scammers Target Soldiers' Families, 11 Alive
News, May 30, 2007, available at http://www.11alive.com/news/
article_news.aspx?storyid=97757.
---------------------------------------------------------------------------
It doesn't stop there. Residents in every state of every member of
this Subcommittee have experienced massive data breaches in the past
year.\34\
---------------------------------------------------------------------------
\34\ Privacy Rights Clearinghouse, A Chronology of Breaches, http:/
/www.privacyrights.org/ar/ChronDataBreaches.htm.
In Michigan, Congressman Levin, the details of a
scientific study were lost on a small flash drive at the
Michigan Department of Community Health in Detroit. The small
flash drive contained the personal information and SSNs of
4,000 Michigan residents.\35\
---------------------------------------------------------------------------
\35\ Id.
---------------------------------------------------------------------------
The Medicare drug benefit applications of 268
residents from Minnesota and North Dakota were recently stolen
from an insurance agent's unlocked car. The applications
contained applicants' name, address, date of birth, SSN, and
bank routing information.\36\
---------------------------------------------------------------------------
\36\ Id.
---------------------------------------------------------------------------
The Pennsylvania Department of Transportation's
driver's license facility in Dunmore had computer equipment
containing the Social Security of over 11,000 drivers. Also
stolen were supplies used to create driver's licenses and photo
IDs.\37\
---------------------------------------------------------------------------
\37\ Id.
---------------------------------------------------------------------------
In February of last year, Congressman Davis, a
computer was stolen at the University of Alabama-Birmingham,
containing nearly 10,000 Social Security numbers and the
personal information of potential kidney donors and
recipients.\38\
---------------------------------------------------------------------------
\38\ Id.
---------------------------------------------------------------------------
In California, it is difficult to figure out which
data breach to highlight----there were just too many to pick
just one. Last year, hackers gained access to a UCLA database
containing the Social Security numbers and personal information
for over 800,000 current and former students, applicants,
parents, and staff members.\39\
---------------------------------------------------------------------------
\39\ Privacy Rights Clearinghouse, A Chronology of Breaches, supra
note 35.
---------------------------------------------------------------------------
And Texas. Everything is bigger in Texas, even the
data breaches. Texas Guaranteed Student Loan Corp. announced
last year that a total of 1.7 million people's information had
been compromised.\40\
---------------------------------------------------------------------------
\40\ Id.
---------------------------------------------------------------------------
Congresswoman Tubbs Jones, Ohio was in the news just
last week when an intern's car was broken into, and somebody
made off with the Social Security numbers of approximately
75,000 state employees.\41\
---------------------------------------------------------------------------
\41\ Id.
---------------------------------------------------------------------------
State employees in Kentucky received mail last year
from Kentucky Personnel Cabinet. The mail had their Social
Security numbers visible from the see-through plastic windows
in the envelope.\42\
---------------------------------------------------------------------------
\42\ Id.
---------------------------------------------------------------------------
And, Congressman Ryan, documents containing the
personal information of Wisconsin's state assembly members were
recently stolen from a legislative employee's car while she
exercised at a local gym.\43\
---------------------------------------------------------------------------
\43\ Id.
Social Security numbers are being stolen in every state in this
---------------------------------------------------------------------------
country.
VI. Solutions to the use of SSNs in Identity Theft
Although the Presidential Task Force on Identity Theft correctly
identified many of the problems associated with SSN usage and identify
theft, it failed to propose many of the obvious solutions. The Task
Force noted that, as long as SSNs continue to be used as forms of
authentication, thieves must be prevented from obtaining them, but it
did not come up with any substantive improvement that could bring about
that end.\44\
---------------------------------------------------------------------------
\44\ ID Theft Task Force Report at 23, supra note 8.
---------------------------------------------------------------------------
The Task Force did note that unnecessary usage of SSNs in the
public sector must be decreased \45\ and suggested that the ``[Office
of Personnel Management] should take steps to eliminate, restrict, or
conceal the use of SSNs (including assigning employee identification
numbers where practicable), in calendar year 2007.'' \46\ Furthermore
the Task Force suggested that ``[i]f necessary to implement this
recommendation, Executive Order 9397, effective November 23, 1943,
which requires federal agencies to use SSNs in `any system of permanent
account numbers pertaining to individuals,' should be partially
rescinded.'' \47\ Unfortunately, however, the Task Force did not
propose that the SSN stop being used for purposes beyond its original
intent. Instead, the Task Force conceded that ``[t]he use by federal
agencies of SSNs for the purposes of employment and taxation,
employment verification, and sharing of data for law enforcement
purposes, however, is expressly authorized by statute and should
continue to be permitted.'' \48\
---------------------------------------------------------------------------
\45\ Id. at 24.
\46\ Id.
\47\ Id.
\48\ Id.
---------------------------------------------------------------------------
Although the Task Force recommended that the Office of Personnel
Management take a leading role in issuing policy guidance on
appropriate use of SSNs \49\ and create a list of acceptable SSN
practices in order to determine best practices,\50\ the Task Force did
not lay out any basic framework for this policy guidance or any
suggested best practices. Furthermore, although the Task Force
suggested that a comprehensive record on the private sector use of SSNs
should be developed,\51\ it failed to detail how the information
comprising this record ought to be recorded or what legislative changes
would be necessary to reduce the crime of identity theft. The absence
of a legislative recommendation on this key point is significant; in
many other areas of the report, the Department of Justice recommend
legislative changes to expand its own investigative and prosecutorial
authority.
---------------------------------------------------------------------------
\49\ ID Theft Task Force Report at 26, supra note 8.
\50\ Id.
\51\ Id.
---------------------------------------------------------------------------
The task force recognizes the dangers of Social Security numbers'
dual role in identification and authentication, but it fails to
recommend that the Social Security number's role in authenticating an
identity be completely eliminated and its use in the private sector
limited. Although the Task Force adequately highlights some of the
problems associated with SSN usage, it fails to provide a meaningful
starting point for the government to act to correct the problems and it
does not recommend, as it ought to, that the private sector immediately
cease use of SSN for authentication purposes.
What else should be done?
For starters, an effective law would limit the
collection and the use of the SSN. It would be far preferable
to reduce the crime of identity theft at its source than to
create new enforcement authority for a problem that is clearly
out of control.
The use of the SSN should be limited to those
circumstances that are explicitly authorized by law. For
example, an employer should be permitted to ask an employee for
an SSN for tax-reporting purposes (as long as the SSN remains
the Taxpayer Identification Number), but a health club should
not be permitted to ask a customer for an SSN as a condition of
membership.
Prevent companies from compelling consumers to disclose
their SSN as a condition of service or sale unless there is a statutory
basis for the request.
Prohibit the sale and limit the display of the SSN by
government agencies. It is simply inconsistent with Section 7 of the
Privacy Act to allow the Federal Government to disseminate the SSN.
Penalize the fraudulent use of another person's SSN but
not the use of an SSN that is not associated with an actual individual.
This would permit, for example, a person to provide a number such as
the ``867-00-0909'' where there is no intent to commit fraud. (The
number displayed could not be an actual SSN.)
Encourage the continued development of alternative, less
intrusive means of identification. We believe that the National
Research Council should be funded to undertake further research on new
techniques that enable records management while minimizing privacy
risks.\52\
---------------------------------------------------------------------------
\52\ See also Nat'l Research Council, Who Goes There?
Authentication Through the Lens of Privacy (Stephen Kent & Lynette
Millett eds. 2003); Nat'l Research Council, Engaging Privacy and
Information Technology in a Digital Age (James Waldo, Herbert S. Lin &
Lynette Millett eds. 2007).
It is also important not to preempt innovative state laws that
reduce the risk of SSN misuse. Many states have enacted legislative
protections for the SSN. They vary from comprehensive frameworks of
protection for the SSN to highly-specific laws that shield the SSN from
disclosure in specific contexts.
For example, a 2005 Arizona law prohibits the disclosure of the SSN
to the general public, the printing of the identifier on government and
private-sector identification cards, and establishes technical
protection requirements for online transmission of SSNs.\53\ The law
also prohibits printing the SSN on materials mailed to residents of
Arizona. Exceptions to protections are limited--companies that wish to
continue to use the SSN must do so continuously, must disclose the use
of the SSN annually to consumers, and must afford consumers a right to
opt-out of continued employment of the SSN.
---------------------------------------------------------------------------
\53\ Ariz. Rev. Stat. Sec. 44-1373.
---------------------------------------------------------------------------
In 2004 Ohio law limits the collection of the SSN and its
incorporation in licenses, permits, passes, or certificates issued by
the state.\54\ The law requires the establishment of policies for safe
destruction of documents containing the SSN. Insurance companies
operating in the state must remove the SSN from consumers'
identification cards. Finally, the legislation creates penalties for
individuals who use others' personal information to injure or defraud
another person.
---------------------------------------------------------------------------
\54\ Available at http://www.state.co.us/gov_dir/leg_dir/olls/
sl2004a/sl_393.htm.
---------------------------------------------------------------------------
In Georgia, businesses are now required to safely dispose of
records that contain personal identifiers.\55\ The Georgia law requires
that business records--including data stored on computer hard drives--
must be shredded or in the case of electronic records, completely wiped
clean where they contain SSNs, driver's license numbers, dates of
birth, medical information, account balances, or credit limit
information. The Georgia law carries penalties up to $10,000.
---------------------------------------------------------------------------
\55\ Available at http://www.epic.org/privacy/ssn/sb475.html.
---------------------------------------------------------------------------
In the past year, Illinois has passed several laws to protect
consumer privacy, including measures that address identity theft, limit
the use of the Social Security number, require notification of security
breaches, and allow state residents to put a security freeze on their
credit report if they believe their personal information has been
compromised.\56\
---------------------------------------------------------------------------
\56\ Press Release, Office of the Governor, Governor Blagojevich
calls on Veterans Administration to provide immediate protection to
veterans whose personal information was stolen (May 24, 06), available
at
http://www.illinois.gov/PressReleases/
ShowPressRelease.cfm?RecNum=4920&SubjectID=26.
---------------------------------------------------------------------------
Six state legislatures, in the past two months, have passed laws
going against a new federal ID requirement.\57\ The law would require
240 million Americans to get new licenses by 2013. The new
identification cards would contain residents' SSN, home address, and
that they are in the USA legally. Implementation of this new ID program
would cost states more than $11 billion,\58\ according to the National
Conference of State Legislatures. The Federal Government has estimated
that REAL ID will cost $23.1 billion.\59\ Some state lawmakers have
gone as far to call this federal effort an attempt to create a ``
`papers-please' society.'' \60\ Without all 50 states complying, it's
not really a National ID card. In the end states will have their way.
---------------------------------------------------------------------------
\57\ Thomas Frank, 6 States defy law requiring ID cards, USA Today,
June 18, 2007, available at http://www.usatoday.com/news/nation/2007-
06-18-id-cards_N.htm? loc=interstitialskip.
\58\ Id..
\59\ Dep't of Homeland Sec., Notice of Proposed Rulemaking: Minimum
Standards for Driver's Licenses and Identification Cards Acceptable by
Federal Agencies for Official Purposes, 72 Fed. Reg. 10,819, 10,845
(Mar. 9, 2007), available at http://a257.g.akamaitech.net/7/257/2422/
01jan20071800/edocket.access.gpo.gov/2007/07-1009.htm; see generally,
EPIC, Page on National ID Cards and the REAL ID Act, http://
www.epic.org/privacy/id_cards/.
\60\ Thomas Frank, 6 States defy law requiring ID cards, supra note
57.
---------------------------------------------------------------------------
The innovative solutions that state legislatures are developing to
address privacy concerns should be encouraged. The states are
laboratories of democracy, and are moving effectively on emerging
issues. A federal privacy baseline ensures safeguards in those states
where they do not currently exist, and leaves states free to develop
better protection. Even a sensible national law will become outdated as
technology and business practices evolve.
EPIC also favors technological innovation that enables the
development of context-dependent identifiers. Such a decentralized
approach to identification is consistent with our commonsense
understanding of identification. If you're going to do banking, you
should have a bank account number. If you're going to the library, you
should have a library card number. If you're renting videos from a
video rental store, you should have a video rental store card number.
Utility bills, telephone bills, insurance, the list goes on. These
context-dependent usernames and passwords enable authentication without
the risk of a universal identification system. That way, if one number
gets compromised, all of the numbers are not spoiled and identity
thieves cannot access all of your accounts. All of your accounts can
become compartmentalized, enhancing their security.
We believe that this is also the approach favored by businesses and
cutting-edge technology firms that think carefully about the issue,
though it has taken us some work to make this clear. EPIC filed a
complaint with the Federal Trade Commission in 2001 about Microsoft
Passport, an identity scheme proposed for the Internet.\61\ Microsoft
was signing up users for a service that produced a single username and
password for all of their Web services, including credit card
information and a vast user profile. Microsoft Passport stored user
information in a central database. The problem was that while Microsoft
Passport claimed to enhance security, it actually had a lot of holes.
And, if you accidentally left your user profile up on a public computer
terminal or a malicious hacker gained access to one of your accounts,
they would have access to everything associated with your user profile.
---------------------------------------------------------------------------
\61\ EPIC maintains an archive of information about Microsoft
Passport at http://www.epic.org/privacy/consumer/microsoft/
passport.html.
---------------------------------------------------------------------------
We urged the Federal Trade Commission to investigate, and the FTC
eventually agreed with EPIC's position.\62\ Microsoft backed off
Passport, developed an approach to identity management that allowed for
multiple forms of online identification, and other companies, including
open source developers, followed a similar approach.\63\
---------------------------------------------------------------------------
\62\ Fed. Trade Comm'n, Agreement, In Re Microsoft, FTC Docket No.
C-4069 (Dec. 20, 2002).
\63\ Kim Cameron, The Laws of Identity, Identity Weblog, Dec. 9,
2004, http://www.identityblog.com/stories/2004/12/09/thelaws.html;
Windows CardSPace, http://cardspace.netfx3.com/; OpenCard, http://
www.opencard.org/.
---------------------------------------------------------------------------
I believe there is now consensus in the online community about the
need to avoid single identifiers and to promote multiple identification
schemes, and that this approach is best not only for privacy but also
for security. The critical question is whether Congress can make
physical identity systems similarly robust.
VII. The Social Security Number Protection Act, H.R. 948
H.R. 948, the Social Security number Protection Act of 2007, has
passed before the Committee on Energy and Commerce and has been
reported to the House. The purpose of H.R. 948 is to prohibit the
display and purchase of Social Security numbers in interstate commerce
pursuant to rules to be promulgated subsequent to the passage of the
bill. Although we generally favor the bill, we believe it can be
strengthened in several key areas. Most critically, there should be
clear guidance to the FTC to limit the sale and purchase of Social
Security numbers, there should be private right of action for
individual citizens to ensure that the law is effective, and there
should be no preemption of state law.
Sections 3(a)(1) through (3)(a)(3) of H.R. 948 create a facially
broad prohibition on the public display of Social Security numbers on
the Internet, the requirement to use an individual's Social Security
number as a password for access to any goods or services, and the
display of Social Security cards on any membership or identity card.
However, Section 3(c) grants the Federal Trade Commission open-ended
authority to promulgate exceptions to the prohibitions contained within
the bill. If exceptions concerning the display of Social Security
numbers and requirement of their use as passwords are necessary, then
they should be contained within the statute itself. Failing that, the
authorization granted to the FTC should be narrowly tailored to areas
in which exceptions are clearly needed. As currently formed, there is
no way to know whether the exceptions will undermine the safeguards
that are vitally important.
Although the purpose of the bill is, in part, to prohibit the sale
and purchase of Social Security numbers, Section 4(a) only authorizes
the FTC to create regulations to this end. Section 4(b)(1) requires the
FTC to issue regulations but it provides little meaningful guidance on
baselines standards the FTC should adopt. Furthermore, although Section
4(b)(2) appears to offer the Commission some substantive guidance, its
language actually defines the ceiling for the FTC's rules rather than
the floor. While the dual purposes of providing assurance that Social
Security numbers are not to be used to commit fraud and to prevent
undue harm are laudable, these should be the minimum requirements the
FTC must meet under the act and should not define the boundary of the
Commission's authority to regulate. Also troubling are the laundry list
of required exceptions contained within Section 4(b)(3). Not only are
the exceptions contained in Sections 4(b)(3)(A) through 4(b)(3)(F)
requirements of any future FTC regulation, but also Section 4(b)(3)(G)
gives the FTC open ended authority to create further exceptions
pursuant to the general considerations in Section 4(b)(2). Despite its
strongly worded purpose, the bill lacks adequate limitation on the sale
or purchase of Social Security numbers and, instead, devotes more space
to explicitly authorizing uses of Social Security numbers that were not
originally intended.
Although it is laudable that the bill creates a right of action for
states' attorneys general in Section 4(e)(2)(A), H.R. 948 fails to
authorize a private right of action. Experience has shown that a
private right of action is necessary in order to ensure vigorous
enforcement of the law. While State and Federal Governments are often
consumed with pursuing other issues and may be unable to pursue every
indiscretion to the fullest extent of the law, individuals are always
motivated to vindicate their own rights. The possibility of expansive
litigation indicates the importance of this problem; it does not
provide a reason to restrict an individual's ability to protect his
identity.
I should add further that EPIC has had significant success bringing
privacy complaints to the Federal Trade Commission. In fact, it was our
complaint regarding the practices of the data broker ChoicePoint that
led to the largest fine in the Commission's history.\64\ Nonetheless,
we would urge the Committee to include a private right of action,
specifically where an individual or company misuses an SSN in violation
of the Act. That will be critical to limit the problem of identity
theft.
---------------------------------------------------------------------------
\64\ EPIC, Past FTC Review of ChoicePoint Privacy Practices, http:/
/epic.org/privacy/ftc/google/#cpoint; see generally EPIC, ChoicePoint,
http://www.epic.org/privacy/choicepoint/.
---------------------------------------------------------------------------
Finally, while a national standard may appear attractive,
preempting state law will be a mistake. The preemption of state law
will mean simply that certain practices that contribute to the crime of
identity theft that are currently and appropriately outlawed by the
states will become legal if this bill passes in its current form.
Experience in other areas has made clear that a federal baseline for
privacy protection is the best way to both create a national standard
and to preserve innovation in the states.
VIII. Conclusion
There is little dispute that identity theft is one of the greatest
problems facing consumers in the United States today. There are many
factors that have contributed to this crime, but there is no doubt that
the misuse of the Social Security and the failure to establish privacy
safeguards are key parts of the problem. The Congress should pass
strong and effective legislation that will limit the use of the SSN,
that will provide effective means of oversight, that will not limit the
ability of the states to develop better safeguards, and that will
encourage the development of more robust systems for identification
that safeguard privacy and security.
Thank you for your interest in this issue. I will be pleased to
answer your questions.
Chairman MCNULTY. Thank you very much, Mr. Rotenberg.
Mr. Schwartz.
STATEMENT OF GILBERT T. SCHWARTZ, PARTNER, SCHWARTZ & BALLEN,
LLP, ON BEHALF OF THE FINANCIAL SERVICES COORDINATING COUNCIL
Mr. SCHWARTZ. Mr. Chairman, Ranking Member Johnson, and
Members of the Subcommittee, I am Gilbert Schwartz, and I am
pleased to appear today before the Subcommittee to present the
view of the Financial Services Coordinating Council on the
important issue of protecting the privacy of the Social
Security number from identity theft.
FSCC is composed of the American Bankers' Association,
American Council of Life Insurers, American Insurance
Association, and the Securities Industry and Financial Markets
Association. These organizations represent thousands of small
and large banks, insurance companies and securities firms that
provide financial services to virtually every household in the
United States. As was mentioned by several witnesses today,
Social Security numbers play an important and integral role in
the daily operations of financial institutions.
They are used to make sound credit decisions, for
underwriting insurance, for reporting to Federal and state
authorities and they are a central element in customer
identification programs required by the U.S.A. Patriot Act.
Most importantly, Social Security numbers are used by financial
institutions to prevent and detect fraud, root out identity
theft, and to identify and report transactions that may involve
money laundering, as well as activities involving terrorist
financing.
The FSCC strongly supports efforts by the government and
the private sector to protect Social Security numbers from
being used to commit identity theft. However, in view of the
important and essential role that they play in our financial
system, legislation should avoid overly broad and unduly
restrictive limitations on their use that could have unintended
consequences. Banks, insurance companies and securities firms
have robust systems to protect the security of financial
transactions conducted by their customers and their personal
information. Financial institutions have a long history of
using Social Security numbers responsibly. It is important to
underscore the fact that financial institutions do not sell or
publicly display Social Security numbers to the general public.
Congress addressed the issue of consumer privacy and
security safeguards for financial institutions in the Gramm-
Leach-Bliley Act. That Act provides comprehensive and rigorous
protections for consumers non-public personal information,
which includes Social Security numbers. However, the GLB Act
and implementing regulations specifically permit financial
institutions to use Social Security numbers for specified
legitimate business functions.
Federal regulators have also adopted guidance for
depository institutions in the event of unauthorized access to
consumer information. The guidance includes notification of
customers if the institution determines that misuse of
sensitive information has occurred or is reasonably possible so
that they can take steps to protect themselves against possible
identity theft.
In 2003, Congress also enacted the FACT Act to help
consumers remedy the effects of identity theft. The FSCC
believes that the continuing efforts of the agencies to
implement the FACT Act has had a positive effect on reducing
incidents of identity theft and will continue to do so as more
and more regulations are implemented by the agencies.
In addition, many states have enacted legislation to
protect sensitive customer information, such as Social Security
numbers. This legislation provides strong protections for the
use of personal information by financial institutions. We are
concerned, however, that any Federal legislation could have
unintended consequences if it restricts the ability of
financial institutions to use Social Security numbers. It could
disrupt the flow of credit and other financial services to
consumers and hurt our ability to detect fraud and prevent
identity theft. A prohibition on the sale and purchase of
Social Security numbers could also affect securitization
activities of financial institutions, as well as merger and
acquisition activities because these numbers are embedded in
the files that are required in connection with those
securitization and mergers and activities.
Many institutions also use public records in connection
with antifraud activities, as well as to identify and detect
identity theft. Limits on access to public record information
could jeopardize financial institutions' ability to protect
customers' assets and prevent illegal activities. Many
institutions are deeply involved in providing information to
the public about how to prevent from becoming a victim of
identity theft and how to assist victims of identity theft. We
strongly support these efforts by financial institutions as
well as by the government.
We also support, as I said, efforts by Congress to protect
Social Security numbers in order to prevent identity theft.
However, in view of the strong protections financial
institutions have in place to protect this information and
existing Federal and state laws applicable to the use and
disclosure of customer information, the FSCC believes that
there is no need for further restrictions on the ability of
financial institutions to use and disclose Social Security
numbers.
Mr. Chairman, we appreciate the opportunity to appear
before the Subcommittee today, and we will be glad to respond
to any questions you may have.
[The prepared statement of Mr. Schwartz follows:]
Prepared Statement of Gilbert T. Schwartz, Partner, Schwartz &
Ballen LLP, on behalf of the Financial Services Coordinating Council
Introduction
The Financial Services Coordinating Council (``FSCC'') is pleased
to present this statement to the Subcommittee on Social Security in
connection with its hearing on ``Protecting the Privacy of the Social
Security number from Identity Theft.'' The FSCC is comprised of
American Bankers Association, American Council of Life Insurers,
American Insurance Association, and Securities Industry and Financial
Markets Association. The FSCC represents thousands of large and small
banks, insurance companies and securities firms in the United States.
Together, these financial institutions provide financial services to
virtually every household in the United States.
How Financial Institutions Use Social Security Numbers
Social Security numbers are unique personal identifiers. While
originally created as a means of tracking earnings and determining
eligibility for Social Security benefits, they have evolved well beyond
their original purpose. SSNs are the most effective means of
identifying individuals and matching people with personal data. They
are the identifier of choice for both the public and private sector,
and are used widely throughout the economy and the financial system.
They are a window into the financial and personal history of virtually
every consumer. When combined with certain other personal information,
SSNs can be used to create false identities and financial mischief.
That is why SSNs are often sought by identity thieves.
The FSCC strongly supports proactive efforts by the government and
the private sector to protect SSNs from the national problem of
identity theft. However, it is also vitally important to our nation's
financial system to avoid overly broad and unduly restrictive
limitations on the use of SSNs that could have significant unintended
consequences.
SSNs play an integral role in the operations of every financial
institution in our country. Financial institutions use SSNs in
conjunction with other personal information to make sound credit
decisions, for underwriting and other insurance functions, and for
screening in connection with customer identification programs. Our
nation's credit reporting system relies on SSNs to gather information
to compile consumer credit files. This information is used by financial
institutions to make credit available to customers and to provide other
services to consumers. Most importantly, SSNs are used to prevent and
detect fraud, root out identity theft and to identify and report
transactions that may involve money laundering and activities involving
terrorist financing. They are also used by financial institutions to
comply with reporting requirements of federal and state tax and
securities laws; to transfer assets and accounts to third parties; to
comply with ``deadbeat spouse'' laws; to verify appropriate Department
of Motor Vehicle records when underwriting auto insurance; to obtain
medical information used in underwriting life, disability income, and
long-term care insurance polices; to locate missing beneficiaries to
pay insurance proceeds; to locate insurance policies for owners that
have lost their policy numbers; and to facilitate myriad administrative
functions.
As you can see, SSNs play a critically important role in the daily
functions of virtually every financial institution. The use of SSNs
increases efficiency, reduces costs and makes it possible to offer
innovative products and services that would not otherwise be available
to consumers economically. Not only are SSNs critical to the smooth
functioning of the financial system, they also serve as a means of
detecting and preventing fraudulent transactions as well as combating
identity theft. Any SSN legislation that may be considered must
recognize the essential role that SSNs play in facilitating the
delivery of financial products and services to consumers throughout the
nation. Restrictions on the ability of financial institutions to use
SSNs for everyday business purposes could have significant unintended
consequences on their ability to serve consumers. Moreover, limitations
on the use of SSNs by financial institutions may have the unintended
effect of increasing fraud and identity theft and impede law
enforcement programs designed to thwart money laundering and terrorist
financing.
How Financial Institutions Protect SSNs and Combat Identity Theft
Financial institutions take the problem of identity theft very
seriously. We have long recognized the importance of protecting our
customers' personal information, including SSNs. Public confidence in
financial institutions is based in large part on the recognition that
banks, insurance companies and securities firms are trusted
intermediaries that have established robust policies, procedures and
systems to protect the security of their customers' transactions,
financial assets and personal information. Financial institutions have
a long history of using SSNs responsibly and in a manner that protects
them from abuse. It is important to underscore that financial
institutions do not sell or display SSNs to the general public.
Congress formally addressed the issue of consumer privacy and
financial institution security safeguards in 1999 when it enacted the
Gramm-Leach-Bliley Act. The GLB Act was landmark legislation that
expanded the ability of banks, insurers and securities firms to
affiliate in order to provide more customers a full range of financial
services more efficiently. The GLB Act requires all financial
institutions throughout the nation to provide comprehensive, and
rigorous protection of consumers' nonpublic personal information,
including SSNs. The GLB Act establishes overarching Congressional
policy that every financial institution has an affirmative and
continuing obligation to respect the privacy of its customers and to
protect the security and confidentiality of its customers' nonpublic
personal information. Moreover, under the GLB Act, each customer has
the ability to instruct his or her financial institution not to
disclose the customer's personal information, including an SSN, to
nonaffiliated third parties or to the general public.
In recognition of the fact that financial institutions have
legitimate reasons to request, use and disclose personal information
such as SSNs, the GLB Act and regulations of the federal agencies and
state authorities charged with implementing the Act permit financial
institutions to use such information for legitimate business functions,
such as to effect, administer or provide a transaction requested or
authorized by the consumer or in connection with servicing a customer's
account. These laws also permit financial institutions to disclose such
information in order to prevent fraud or unauthorized transactions, as
well as to comply with federal, state or local laws.
Under the authority of the GLB Act, federal agencies require
financial institutions to develop a written information security
program that describes how they protect customer information. An
institution must:
Designate one or more employees to coordinate its
information security program;
Identify and assess the risks to customer information
in each relevant area of the company's operation and evaluate
the effectiveness of safeguards for controlling these risks;
Design and implement a safeguards program, and
monitor and test it on a regular basis;
Select service providers that can maintain
appropriate safeguards; and
Evaluate and adjust the program in light of relevant
circumstances and changes in the company's business.
Financial institutions have established information systems that
maintain and store sensitive consumer information in a safe and secure
manner. These facilities are subject to periodic audit by internal and
external auditors as well as by state and federal examiners. Federal
regulators also have adopted guidance relating to procedures depository
institutions are to follow in the event of unauthorized access to
customer information. The guidance includes notification of customers
if the institution determines that misuse of sensitive customer
information has occurred or is reasonably possible. Notice to customers
under these circumstances enables them to take steps to protect
themselves against possible identity theft.
Congress also enacted the Fair and Accurate Credit Transactions
(``FACT'') Act of 2003 which contains provisions intended to help
consumers remedy the effects of identity theft. Many of the FACT Act's
provisions have been implemented by regulations and guidance issued by
the federal agencies. The FSCC strongly believes that continuing
efforts of the agencies to implement the FACT Act have had a positive
effect on reducing incidents of identity theft.
In addition to the numerous state insurance laws implementing the
GLB Act requirements, thirty six states and the District of Columbia
have enacted security breach legislation. States have also enacted
legislation that prohibits specific uses of SSNs, including the public
display of SSNs. The FSCC believes that existing federal and state laws
and guidance provide strong protections for the use of personal
information such as SSNs by financial institutions. Accordingly, the
FSCC believes that there is no need for Congress to enact legislation
restricting the use and disclosure of SSNs by financial institutions.
Restrictions May Have Unintended Consequences
The FSCC is concerned about unintended consequences of legislation
that restricts the ability of financial institutions to use SSNs.
Unintended consequences have the potential to disrupt the flow of
financial services to consumers and to harm the smooth operation of the
U.S. financial system. Such effects could have serious consequences for
the nation's economy.
Legislation could adversely affect the ability of financial
institutions to use SSNs to verify the identities of consumers and
customers. This could disrupt the flow of information creditors receive
from credit bureaus and have adverse consequences for consumers seeking
credit, insurance, securities and other financial services. It is
essential that financial institutions obtain SSNs from consumers and
disclose the SSNs to credit bureaus in order access their credit
histories. If such access and use of SSNs is disrupted, the flow of
credit, and other financial services will be undoubtedly be curtailed.
Prohibitions or restrictions on the sale or use of SSNs could
seriously impede the ability of financial institutions to provide
seamless administrative services to customers. For example, insurers
use SSNs to verify the identity of an individual who requests a change
to his or her insurance policy, such as a change in beneficiary. If an
insurer is unable to verify the identity of the person making the
request, the potential for fraudulent transactions and identity theft
will increase.
Restrictions on the use and disclosure of SSNs could adversely
affect the ability of financial institutions to detect fraud. Banks,
insurance companies and securities firms rely on information they
obtain from various sources to verify a consumer's identity. Financial
institutions maintain sophisticated procedures, which are based upon
SSNs as a means of identification, to accurately verify the identity of
customers and to prevent and detect fraud or identity theft.
A prohibition on the sale or purchase of SSNs could be interpreted
as restricting activities such as the sale of assets among financial
institutions. Financial institutions often sell assets such as credit
card and vehicle loans in connection with their securitization
activities. Merger and acquisition activities may also result in a
transfer or sale of all of the institutions' accounts and policies.
SSNs are necessarily included in account and policy files that are
transferred in connection with these routine business transactions. Of
necessity, legislation that addresses the sale and purchase of SSNs
must exclude these and other similar legitimate transactions from the
scope of its coverage.
Restrictions on the ability to obtain SSNs could have an adverse
effect on the ability of financial institutions to comply with anti-
money laundering rules and anti-terrorism activities. Section 326 of
the USA PATRIOT Act requires many financial institutions to obtain a
taxpayer identification number, typically an SSN, before opening an
account for an individual. The financial institution also must verify
the identity of the individual. These measures are intended to prevent
the ability of money launderers and terrorists to use financial
institutions for illicit purposes. Limitations on the ability of
financial institutions to use SSNs to verify the identity of customers
could thwart their ability to prevent money laundering and financing of
terrorist activities.
Access to Public Records
We understand that legislation may also address the use of SSNs
that are available in public records. Many financial institutions use
public records in connection with their anti-fraud activities as well
as to prevent and detect identity theft. Public records facilitate the
ability of financial institutions to verify consumer identities when
opening accounts, issuing insurance policies and conducting various
transactions. They also assist in verifying an employee's background.
The ability to match SSNs ensures that the information included in
these records matches the correct individual. Limits on access to
public record information could jeopardize a financial institution's
ability to protect its customer's assets and prevent illegal
activities.
Customer Education
Financial institutions strongly support efforts to combat identity
theft. Many institutions post extensive information on their websites,
and distribute statement stuffers and brochures to inform consumers
about steps they can take to prevent from becoming victims of identity
theft. Financial institutions also maintain identity theft hotlines and
participate in community outreach programs to spread the word about
measures consumers can take to prevent identity theft. And financial
institutions strongly support efforts by the federal agencies to
educate consumers through various booklets, brochures and programs
about preventing identity theft.
Conclusion
The FSCC strongly supports efforts by Congress to protect SSNs to
prevent the national problem of identity theft. Under existing law,
financial institutions have developed robust safeguards to protect the
security of personal customer information such as SSNs. Financial
institutions use SSNs in connection with normal business functions or
to comply with critically important requirements established by
Congress. In view of the strong protections currently in place, the
FSCC believes that there is no need for further restrictions on the
ability of financial institutions to use SSNs.
Chairman MCNULTY. Thank you, Mr. Schwartz. I want to thank
all of the Members of the panel for their patience and for
their excellent testimony. Some of us are a little bit under
the gun as far as other commitments are concerned but before I
yield to my colleagues to inquire, I just want to say that what
I have heard from this panel and what I have heard from
previous panels just strengthens my belief that obviously there
are legitimate uses for the Social Security number, there are a
lot of illegitimate uses. I just happen to think that the vast
majority of entities that ask individuals for their Social
Security numbers have absolutely no need to have that
information.
I think part of the solution is education and doing what
Nancy and I did when I related our own personal story about
when we went to make a retail purchase, and we were giving them
all kinds of information about us, then they asked for the
Social Security number. They had absolutely no need to have it.
I think more people need to do what we do, which was ``Just Say
No.'' However, I think we need to go beyond that and to have
some legislation that further defines what are the legitimate
reasons for seeking to know someone's Social Security number so
that more people do not suffer the fate of Charlie W. and the
others who have had these horrible experiences, which have
disrupted their lives for years. With that, I will yield to the
Ranking Member, Mr. Johnson.
Mr. JOHNSON. What was your question?
Chairman MCNULTY. I think what I gave was my conclusion.
[Laughter.]
Mr. JOHNSON. I sense there is quite a difference between
our people who testified out there and how you believe number
use should be accomplished. It is interesting to me, we tried
to get the military to stop using as a serial number the Social
Security number, and they will not do it because it costs too
much to change it all. So, having said that, in the financial
industry, if we use private sources to verify a person's
identification instead of going through the government let's
say, what would it cost to do that? You would use the Social
Security number, I assume?
Mr. PRATT. Our Members make extensive use of the Social
Security number for--I want to distinguish between, it was in
the testimony, but between using the Social Security number to
build a database to match information together, and I think the
professor did a good job of explaining the difference between
matching and building a database and authenticating, verifying
the identity of the consumer. The SSN is used in part to build
the database and you need consistency. Even a driver's license,
for example, Mr. Chairman, if you move around the country, your
number will change of course and not everybody moves, but we
have at least 40 million consumers who are changing their
addresses every year, so the SSN remains a good database
matching tool, not perfect, and we use other matching elements
of course to build the totality of the database. It is not
unique to the Social.
On the authentication side, I think one thing that is very
important that has been said several times, if every one of the
transactions shared here had involved proper authentication,
there would not have been records of arrest and there would not
have been public records and there would not have been a
driver's license issued in that individual's name. Maybe at the
core of this hearing, I think it runs parallel with the
discussion of the Social Security number, is that you must
authenticate properly and it does involve using many different
types of tests. What you do online to authenticate an identity
is different than what you would do if I was in person speaking
with you as a loan officer and that would be yet again
different if I was on the phone.
Mr. JOHNSON. Well, focus for a minute on us having to have
employer verification of legal residence, for example, can you
do that?
Mr. PRATT. Again, identity verification is a risk
assessment.
Mr. JOHNSON. That is what I mean.
Mr. PRATT. I do not think there is any way in this country
to perfectly identify a consumer unless we are going to carry
around identifying document, which will create a whole host of
other problems, by the way, if we are carrying everything with
us.
Mr. JOHNSON. We have got too many in our pocket now.
Mr. PRATT. Yes, sir. I was asked just today to provide a
copy of my Social Security card in a lending transaction.
Mr. JOHNSON. You carry that around all the time, don't you?
Mr. PRATT. I do not have it and could not find it.
Mr. JOHNSON. Of course not.
Mr. PRATT. In fact, I recall it is a kind of fuzzy blue
card that I received. By the way, my Social Security number
matches up with my sister's almost perfectly because at my age
the family obtained all of them sequentially at the same time
and so there are two S. Pratts, and when we graduated from
college, we lived in the same address, and so there were two S.
Pratts at the same address with one digit difference in our
Social Security numbers. So I think that explains why identity
verification will never be solely the Social.
But, on the other hand, I think what Mr. Schwartz said is
right, it is part of the tool box. For example, if we can
identify in a fraud database that a SSN has been used in other
fraudulent transactions, that is not going to stop the
transaction, but the user, the authenticator, should take
additional steps and say, ``I am sorry, we cannot push you
through until we get to the point of knowing who you are, and
we need to try to find a way to know who you are and we are
going to ask you another question.''
Mr. JOHNSON. So, all you are saying is it is just another
ID method?
Mr. PRATT. It is part of the system but it is very
important to database----
Mr. JOHNSON. But wants to get rid of them totally.
Mr. PRATT. I do not see any way that you can pull the
Social Security number out of a, for example, a credit
reporting database because every other data element is going to
change. So if you pull the one stable identifier out of that
database, we are causing another kind of problem that will be
dealt with another Committee and that is the problem of
inaccurate data being used to stop transactions.
Mr. JOHNSON. We are running out of time, but I would like
to hear Dr. Anton's comment on that.
Ms. ANTON. Thank you, Congressman. We found a study in The
Journal of Public Health that showed that we can identify
people very accurately in the Social Security death master
index by simply with their first initial, last name, date of
birth and/or the birthplace, and that is without the Social
Security number. So, it is possible to identify. This is why I
was trying to make a point about not using the Social Security
number as an authenticator as well. Our names and addresses and
phone numbers have been published in the phone book for over 55
years, probably more than that, and we were not struggling with
identity theft at that time.
Mr. JOHNSON. Well, the credit companies have to be more
accurate than that, and I think it is just another source of
identification for them. Is that true?
Mr. PRATT. That is true. By the way, we have also done a
death master file analysis where you can have more than 90 John
Smith's with the last four digits of a Social Security number
that match, so our challenge is in fact to use the Social in
combination with an address, again 40 million of them changing
every year, in combination with marriages and divorces where
last names change. Candidly, our hit or miss ratio in the
financial services space may be very different than in a retail
space that does not have to deal with the Fair Credit Reporting
Act or Gramm-Leach-Bliley Act or a USA Patriot Act, Section 326
obligation.
Ms. ANTON. Not to be argumentative, but you do not need
those four digits of the Social Security number to be able to
accurately identify those people in a database.
Mr. JOHNSON. Thank you. I am out of time. I appreciate your
comments.
Chairman MCNULTY. Ms. Tubbs Jones may inquire.
Ms. TUBBS JONES. Thank you, Mr. Chairman. I want to get a
``shout out'' to an organization. In case you all do not know
what a ``shout out'' is, that means you are saying something
about somebody you know. It is done over the radio more often
than not, it is a slang term that my son has taught me, he is
24. But I am going to get a ``shout out'' to Axiom from my
congressional district, who is a Member of Mr. Pratt's
organization. Thank you, Mr. Pratt, for your testimony.
Let me also say to Mr. Gingerich I am a former common pleas
judge out of Kyle County, Ohio, and I want to celebrate the
great work that the Center for State Courts does because it is
through the work that you do that we have continually improved
the level of the judiciary in the United States of America. So,
that is a ``shout out'' for the Center for State Courts.
I am interested, I would love to be in a courtroom and let
two or three of you all really debate this in-depth because it
is very clear that there are differing opinions. Dr. Anton, so
when I go to Macy's and I am getting ready to buy something and
I do not have my credit card with me and they say, ``Okay, put
your name in there,'' and then this little machine says, ``Put
in your Social Security number,'' is that authentication?
Ms. ANTON. Yes.
Ms. TUBBS JONES. Okay, all right, just checking to see if I
am on the same terms. But I should not have to do that? What
should I have to do if I really want--no, I am kidding, what
should be the way in which they would know who I am, what else
should they be using, my birth date, not my mother's maiden
name?
Ms. ANTON. On every single one of my credit cards, I have
not signed one of them, it always says, ``See ID.'' So, if
someone steals my card, they have to see the picture on my
driver's license to make sure that it is me.
Ms. TUBBS JONES. I am with you, Dr. Anton, I do not sign my
credit cards either.
Ms. ANTON. That is how I authenticate.
Ms. TUBBS JONES. Okay, all right.
Mr. JOHNSON. But you should put on the back, ``Ask for
ID.''
Ms. TUBBS JONES. I should write that on it?
Mr. JOHNSON. Yes, you should.
Ms. TUBBS JONES. Okay, I will remember that one. I have
just about thrown them all out the door though. I really do not
have a lot of questions, I am interested in spending some time
reading your testimony and having a little more opportunity to
address it, but I want to say on behalf of all the people that
I represent, we need your input in trying to walk through this
dilemma that we are in. We are in a true dilemma because, as
Mr. Pratt and Mr. Gingerich said, the Social Security number
has become such an integral part of whatever it is we are
doing, that to yank it immediately would cause havoc. But, on
the other hand, we really need to be doing something to
prohibit its use.
I thank you, Mr. Chairman, for the time. I know my friend,
Mr. Ryan, down there really wants to talk, so I yield you my
time.
Mr. RYAN. Yes, sure, thank you. I appreciate it.
Chairman MCNULTY. Thank you, Ms. Tubbs Jones. Mr. Ryan may
inquire.
Mr. RYAN. Well, I will just pick up where you left off
then. I like making these conversations flow. Boy, this is a
good hearing, Mr. Chairman, again another good one. Correct me
if I am wrong, Dr. Anton, I liked your testimony, it was very
interesting, it helped logically set this up. Using the cart in
front of the horse or the horse in front of the cart analogy,
we have to come up with authenticating system and then an
identifier, right, so first authenticate, then operate through
society by identifying, correct? If you cannot authenticate who
you are, all the rest is academic.
Ms. ANTON. In most transactions it seems that your first
identified and then authenticated.
Mr. RYAN. Right.
Ms. ANTON. So, you do not use your name to authenticate
yourself, and you should not use your Social Security number
and you should not use your mother's maiden name. These are all
weak authenticators.
Mr. RYAN. Right.
Ms. ANTON. That is the problem.
Mr. RYAN. So, to prevent all these problems we have in
society, whether it be terrorism, illegal immigration, identity
theft, we have to have a better system for authenticating our
identity?
Ms. ANTON. Yes.
Mr. RYAN. Okay, so now what we are trying to figure out,
what should government do to do this? What is it that we can do
to facilitate this, to make that happen in the 21st century?
Then whatever we do, will it be obsolete in a couple of years,
will we throw money down a hole with ID cards that are going to
be obsolete, which we saw on the last panel, what path should
we put ourselves on so that people can get their IDs--get
themselves authenticated so that the system can work, what do
you recommend? Mr. Rotenberg, I know that you have put a lot of
work into that too, as well?
Mr. ROTENBERG. Well, thank you, Mr. Ryan, I am going to put
something on the table, which Professor Anton will understand,
but it is going to sound a little confusing. It does answer
your question, however. I think the long-term solution to this
problem, and it is an enormous problem, is to separate
authentication from identification.
Mr. RYAN. Right.
Mr. ROTENBERG. Let me give you an example of what I mean. A
young person walks into a liquor store to purchase alcohol.
There is one thing that the owner of that store needs to know
in most states, is this person over the age of 21? To have a
legal transaction in that context, there needs to be a way to
authenticate the fact that person is over the age of 21. It
turns out that his actual identity is irrelevant and in truth
from a privacy perspective and a security perspective, it would
be best if his identity was not disclosed because that
information does not need to be made available.
Mr. RYAN. Can I have my time now, Mr. Chairman?
Chairman MCNULTY. Yes.
Mr. ROTENBERG. As I said, and we have done a lot of work on
this issue over the years, it comes up a lot, particularly in
the Internet economy where you have people on Ebay, for
example, relying on the reputation of others, whose actual
identity is not known. But the reputation value of the
pseudonym they use is extraordinarily useful. If someone's
reputation is high, they will do business with them online. It
does not matter who they actually are.
I think we are going to need to get a handle on this
problem. You see what has happened is that the Social Security
number is actually at the opposite end of the ideal system. The
Social Security number is both an identifier and authenticator
and it fails completely. A good identity system actually
separates these functions. You would agree with this, would you
not?
Ms. ANTON. Yes, absolutely.
Mr. ROTENBERG. Yes.
Mr. RYAN. Now, we have the two financial services and
consumer data people, so we are going to have to figure out
here as legislators what is the way to go, what is the happy
median, where is it that you really do not need the Social
Security number even though it may be convenient and easy to
use, where do you really not need it? For instance, my bank,
just a small community bank in Wisconsin, just sent out--I do
my online banking and at first you needed to use your Social
Security number as your password, as your ID and then you had
your own password. They just sent out an email, if you want to
get back on, no more, we are getting rid of this, you come up
with your own ID and password and then that will from now on
henceforth get you access to your bank accounts.
So, it seems to me, just using that one little example,
that financial services firms and other firms can, if they
choose to do so, change this data that is required to ID and
authenticate who you are. So, where is it that, and I know each
of you are going to have a different answer to this question,
where is it that you absolutely have to have the Social
Security number and where is it that you would like to have it
but you really do not need it? I would just like to ask the
four of you who are involved in this your answer to that
question?
Mr. PRATT. I believe at the front-end of every transaction,
when you are in the process of authenticating, and I think to
that extent we agree, you must have a system of authentication,
not the same as do you have a Social Security number. Using the
Social Security number though as part of the complete set of
data that is gathered at the point of the opening of the
transaction is important because later you may close that
account and open up another account and that bank may use a
different authenticating system. Later you may close that
account and open up a different account with a different
authenticating system.
Mr. RYAN. This presumes that you cannot really authenticate
who you are, right? This presumes that there is no other better
authenticating method, right?
Mr. PRATT. Well, no, actually what it presumes is there is
no silver bullet to authentication and paralleling
authentication strategies will be criminals chasing down the
strategy, trying to pull it apart and to defeat it. That will
always happen, always has, always will. So, paralleling
authentication will be the need to have a definitive
identifier. I have authenticated you through a variety of
means, which could include using data off your consumer report
to say tell me about your mortgage, you can get this online,
for example, with whom do you have a mortgage, and you can
identify that. Approximately what is the payment you make per
month, and you can authenticate that. By doing that, you
actually end up closer to authenticating the identity of that
consumer.
But with the Social, no matter which financial institution
you are doing business with, I will be able to say that account
is going to go into this record in the Credit Bureau database.
The irony of what we have heard with some of the testimony is I
was in a hearing a floor up and was being criticized, we were
being criticized where a data match might use just an initial,
so one of the challenges is I have other Committees with other
opinions in other contexts, such as the Fair Credit Reporting
Act, where if we do not use full and complete identifying data,
I have excerpts from Federal Trade Commission reports on data
matching.
Mr. RYAN. I want to hear these other folks.
Mr. PRATT. So, I just want you to know that it is--you need
data to match and build accuracy and you need authentication
strategies to authenticate.
Mr. RYAN. Dr. Anton, Mr. Rotenberg, Mr. Schwartz.
Ms. ANTON. I would just like to note that if we published
everyone's Social Security numbers in the phone book along with
their name and telephone number but never used it as an
authenticator, we could eliminate some identity theft in this
country.
Mr. ROTENBERG. I think that would be a risky strategy.
[Laughter.]
Mr. ROTENBERG. Until everybody got on board with that plan
but food for thought. I do think we need to move away from the
Social Security number as an identifier. As I described in my
testimony, Congress understood this problem. They saw what was
happening. What preceded the Privacy Act was a very good
detailed report that said the SSN is going to become a
universal identifier if we do not put some brakes on it, and we
are living with the consequences. It is not cost-free for the
financial services to be using the SSN. It is the number one
complaint that consumers have to the FTC and the cost is over
$50 billion.
Mr. SCHWARTZ. Mr. Ryan, I would say that it would be very
difficult for the financial services industry to move away from
Social Security numbers. First, obviously, for tax reporting
purposes, the Social Security number is required. Under the USA
Patriot Act, one of the requirements of a customer
identification program is to get a Social Security number to
make certain that that person is a legitimate person, that a
Social Security number has been legitimately issued.
I agree that the authentication--and that is the reason why
your bank has moved away from that--the authentication issue is
an important one and because of the proliferation of Social
Security numbers and the availability of them, many financial
institutions are now requiring other types of vehicles for
getting access to your account.
Mr. RYAN. So, you might need it to open up the account to
begin with, but you do not need it to proceed thereafter as an
identifier?
Mr. SCHWARTZ. Well, sometimes, too, for example, if you
call and you wanted to find out what your balance is in your
account or to find out if a check has been paid or to transfer
funds, there are many Mr. Ryan's in this world who are dealing
with banks, and you do not remember your account number, for
example, I have no idea what my account number is, but that
would be one element that you would be asked for, your Social
Security number, and that----
Mr. RYAN. But it could be something else other than the
Social Security number?
Mr. SCHWARTZ. Well, what are you going to use, the bank
would not know what your account number is because you do not
know what your account number is, so that is at least one way
of getting the first level of information. Then they will ask
you, for example, what has been a recent transaction or give me
your address, your date of birth, there are other identifiers.
Mr. RYAN. All these other things.
Mr. SCHWARTZ. You do not know your date of birth?
Mr. RYAN. No, I said you could use all these other things
other than the Social Security number.
Mr. SCHWARTZ. They are, they are. If you call a bank, they
will not give you--most institutions will not give you access
to your account simply by giving your name and your Social
Security number, there will be other questions that they will
ask you to verify that you are who you say you are.
Mr. RYAN. The challenge for the industry is going to be, it
may be easy, it may be the path of least resistance to use the
SSN, but clearly not necessary. Maybe to open up an account,
maybe for taxes but not necessarily as an identifier or as an
authenticator, I guess I am using these words correctly. You
could move forward with other pieces of information that people
could navigate to use as identifiers and authenticators
prospectively once an account is opened, could you not?
Mr. SCHWARTZ. I think it would be very difficult in many
industries to do that. For example, if you have many accounts
at a bank and have many different numbers, one thing that ties
them all together is your Social Security number so that, for
example, if you call and say, ``How much do I have in my
checking account, when is my CD going to be maturing, what is
the balance on my credit card?'' If you do not know the numbers
on those accounts and you cannot give them to the person that
you are talking to. Your Social Security number is a way in
which the central information files of many institutions tie
all these accounts together.
Mr. RYAN. That is just the way the programs are running
right now.
Mr. SCHWARTZ. Excuse me?
Mr. RYAN. It is the way the programs are running right now.
Mr. SCHWARTZ. But then for each institution, you would have
separate identification numbers and then we would have the same
problem we have now, every time you go online, who can remember
what your passwords are? Most people are now using of course
their birth dates because it is easier to remember.
Mr. RYAN. I know I am being liberal with the time, but I
can see you are shaking ahead a thousand times, Dr. Anton.
Ms. ANTON. In my written testimony, I would just like to
point out that I talk about the dangers of using Social
Security numbers as primary keys in a database and that that is
another problem area, and so I just encourage your staff to
look at that.
Mr. RYAN. Thank you.
Chairman MCNULTY. Thank you very much, Mr. Ryan. If there
are no further inquiries, I want to thank our staff for the
tremendous work they did in preparing the Members for this
hearing. I want to thank all of the witnesses, all of the
guests who have been so patient for the past three hours. I
especially want to thank Senator Schumer, Congressman Barton
and Congressman Markey for leaving other markups to come here
today and to testify.
When Senator Schumer was here, he was talking about old
phrases and sayings that people might not relate to, let me use
one more, it seems to me that there are legitimate reasons why
in certain cases people should reveal their Social Security
number. They, in my opinion, are finite in number. The old
phrase I am going to use is that it seems to me today that
``every Tom, Dick and Harry'' is asking people across the
country to reveal what their Social Security number is. We
heard many individual instances today that people went through.
Mr. Barton related the story about purchasing a cell phone and
being asked for his Social Security number. Ms. Tubbs Jones had
one and I mentioned the time Nancy and I were going out to buy
an appliance.
Now, think for a moment about the information, which we
gave to this retailer. We gave them our names, our address, our
zip code, our home telephone number, a picture identification
card, and our driver's license number to buy a refrigerator.
This must stop.
After we did that, the clerk, who recognized me, asked me
for my Social Security number, and I said, ``No.'' Before I
said ``no,'' I said, ``I do not think you should be asking me
for that information. Why are you asking me that information?''
She said, ``We ask everybody.'' I said, ``No, I am not going to
do that.'' I said, ``Check with your supervisor.'' She went and
checked with her supervisor and came back and said, ``No, we do
not really need to have that.'' So I just hope that reason can
prevail as we go forward.
I hope two things as a result of today's hearing as we move
on. Number one is that before we get to any legislative fixes
at all, that people within the sound of my voice will be a bit
more careful about giving out this very sensitive information
and doing basically what Mr. O'Carroll suggested, that unless
you really know there is a legitimate reason why that person
has to have that information, ``Just say no.'' The second thing
we need to do, beyond that, is just because it has proliferated
to the point where it is really quite a crisis and has really
destroyed some lives, we need to take some legislative action
to restrict the ability of some folks to be asking for this
very sensitive information. We are going to move forward on
that.
I thanked the folks before who have been working on this
issue for years but, in my opinion, the time for talk has ended
and the time for action is now, and we intend to move forward.
Again, I want to thank all of you for your expert
testimony, for spending so much time with us today. This
hearing is concluded.
[Whereupon, at 12:50 p.m., the hearing was adjourned.]
[Submissions for the Record follow:]
LexisNexis, Letter
LexisNexis
Reed Business
July 3, 2007
The Honorable Michael R. McNulty, Chairman
Subcommittee on Social Security
Committee on Ways and Means
1102 Longworth House Office Building
Washington, DC 20515
Dear Chairman McNulty:
Reed Elsevier Inc., on behalf of its LexisNexis division,
appreciates the opportunity to submit comments for the record on Social
Security number (SSN) privacy. We would like to commend the
Subcommittee for its leadership on this important issue over the years,
and hope that our experience in this area will be useful as you develop
legislation regarding SSNs and identity theft.
Reed Elsevier is one of the world's leading publishing and
information companies, employing more than 20,000 people in the United
States. LexisNexis leads the information industry with the largest
online information service, providing critical information to legal,
business, and government professionals. Products and services provided
by LexisNexis help businesses and government manage risk through fraud
detection and prevention, identity authentication, and intelligent risk
scoring and modeling.
LexisNexis' identity authentication products help detect and
prevent identity theft and fraud by allowing financial institutions,
insurance companies, government agencies, and others to determine
whether people are who they say they are. In addition, LexisNexis
provides products and services that are used to help professionals
locate people and assets, support national security initiatives, and
facilitate background checks on prospective employees. LexisNexis staff
includes subject matter experts in identity theft, identity management,
and identity authentication.
One of the distinguishing aspects of the LexisNexis service is our
extensive collection of public records information. Use of our public
records information is an indispensable tool for gathering information
and providing accurate answers to prevent and detect fraud, verify
identities, locate individuals, perform due diligence searches, and
provide risk management solutions and employment screening for
businesses and governments worldwide. The overwhelming majority of the
information sources on the LexisNexis service are public in nature, all
of which are available to the general public through their public
libraries, the local newsstand or bookstore, or from government
offices. Many of these public records contain SSNs, which we use for
indexing, matching and verifying data to help ensure the accuracy of
the information in our databases.
LexisNexis is committed to the responsible use of information and
has been at the forefront of the privacy debate, leading industry
efforts to balance consumer privacy interests with responsible uses of
information for important and socially beneficial purposes. We
recognize that key to the SSN issue is striking the appropriate balance
between protecting consumer privacy and ensuring that important uses of
this information can continue. We share the Subcommittee's concern
about the potential misuse of data for identity theft and other harmful
purposes. Indeed, in the fight against identity theft, where verifying
an individual's identity is crucial, information from commercial
databases such as LexisNexis is absolutely essential.
Due in large part to the efforts of members of the Subcommittee and
the important record built through hearings it has held, there has been
increased recognition of the importance of striking a proper balance
between protecting privacy and ensuring continued access to SSNs by
business and government for important and socially beneficial uses.
There have been other legislative proposals before this committeeand
other committees to restrict SSNsin a way that would limit many of the
critical and societally beneficial uses of SSNs. Ironically, such
restrictions would actually inhibit many of the tools critical to
fighting identity theft and fraud. We urge the committee to ensure that
such uses are not restricted as it considers legislation in this area.
We appreciate the opportunity to provide you with the following
comments that we hope will be useful to the Subcommittee as it
considers legislative options. Our comments below focus on the
following two main areas: First, we will highlight the many important
business-to-business and business-to-government uses of SSNs. Second,
we will discuss several important issues that should be considered in
developing any legislation in this area.
I. Important and Beneficial Uses of SSNs by Business and Government
Government agencies, businesses, researchers, and others rely on
information contained in commercial databases to do their jobs.
Commercial database companies like LexisNexis play a vital role in this
effort by collecting information from numerous sources and creating
comprehensive data collections that allow users to easily search and
locate information. Without this critical public records information,
the effectiveness of these government agencies, businesses, and
researchers would be dramatically reduced.
The use of SSNs is essential for person identification and record
matching purposes and is critical in ensuring the accuracy of the
information in these databases. SSNs allow persons to be identified
accurately and ensure that records for different individuals do not get
co-mingled, providing a false result. There are more than 43,000 Robert
Jones' in the U.S. today. How else can someone distinguish one from
another? A unique identifying number like the SSN is important to
ensure that information collected about individuals is pertinent and
accurate.
The following examples describe some of the important ways in which
commercial database services, such as LexisNexis, are used by our
customers to help people, protect consumers, locate missing children,
prevent fraud, and assist law enforcement efforts:
Locating sex offenders--SSNs are used to locate
registered and unregistered sex offenders. There are more than
560,000 sex offenders in the U.S. Approximately 24 percent of
these individuals fail to comply with address registration
requirements mandated by law. LexisNexis provides products to
law enforcement entities to help them locate registered and
unregistered sex offenders. Use of SSNs for record matching and
retrieval allows law enforcement to locate sex offenders even
when the registration address has not been kept current.
Preventing and investigating terrorist activities--
The use of commercial databases like LexisNexis is an important
tool in the global battle against terrorism. Information
provided by LexisNexis was instrumental in locating suspects
wanted in connection with the September 11 terrorist attacks.
Since September 11, the Department of Justice found that
LexisNexis public records were mission critical in bolstering
cases against terrorists. As a result, agents, investigators,
attorneys, and analysts have full access to LexisNexis public
records and other information. The SSNs contained in the
LexisNexis database are a critical tool used by the FBI and
other federal law enforcement agencies to locate suspects and
witnesses and in investigating and building cases against
suspected terrorists.
Locating and recovering missing, abducted and
exploited children--LexisNexis has partnered with the National
Center for Missing and Exploited Children to help that
organization locate missing and abducted children. Locating a
missing child within the first 48 hours is critical; after that
time, the chance of recovering the child drops dramatically. In
many of these cases, it is the non-custodial parent who has
taken the child. The use of SSNs is critical in quickly
locating the non-custodial parent and recovering the missing
child.
Identifying and preventing fraud--Banks and other
financial institutions routinely rely on SSNs to accurately
match and retrieve public record information contained in
LexisNexis' databases to detect fraudulent credit card
applications. Through the use of LexisNexis, credit card
companies have significantly reduced losses due to fraud.
Insurance companies have experienced similar successes through
the ability to use SSNs in data matching and retrieval. The use
of SSNs in public records and other sources is key to
preventing fraud.
Locating witnesses and helping make arrests--Lawyers
are major users of person locator databases. Use of SSN
information in these databases, even when it is not displayed,
is critical to tracking down witnesses in connection with civil
litigation. Law enforcement agencies also are major users of
commercial databases. For example, in 1998, the FBI made over
53,000 inquiries to commercial online databases. This
information led to the arrests of 393 fugitives and the
location of nearly 2,000 suspects and more than 3,000
witnesses.\1\
---------------------------------------------------------------------------
\1\ Statement of Louis J. Freeh, Director, Federal Bureau of
Investigation, before the U.S. Senate Committee on Appropriations
Subcommittee for the Departments of Commerce, Justice, State and the
Judiciary and Related Agencies, March 24, 1999.
---------------------------------------------------------------------------
Preventing and investigating financial crime--
LexisNexis provides information to the Financial Crimes
Enforcement Network (FinCEN), which supports federal, state and
local law enforcement agencies in financial investigations and
is heavily reliant on SSNs in these investigations. In
addition, LexisNexis worked with the American Bankers
Association to develop best practices to be used by banks and
other financial institutions to prevent money laundering and
ensure compliance with the USA PATRIOT Act. The use of SSNs by
financial institutions to verify and validate information about
prospective customers is critical to the success of that
program.
Recovery of child support and other debts--Public and
private agencies rely on SSNs and other information contained
in information solutions and services products to locate
persons who are delinquent in child support payments, other
lawful debts, and to locate and attach assets in satisfying
court-ordered judgments. The Association for Children for
Enforcement of Support (ACES), a private child support recovery
organization, has stated that SSNs are the most important tool
for locating parents who have failed to pay child support. ACES
has had tremendous success using LexisNexis products to locate
nonpaying parents.
Helping locate pension fund beneficiaries--The task
of locating former employees is becoming increasingly
difficult. Americans move on average every five years,
particularly when they change jobs. Their names may change as a
result of marriage or they may list slightly different names
(e.g., leaving out a middle initial) on employment documents.
To ensure that pension fund beneficiaries receive the money
owed them, plan administrators and sponsors are required by
federal law to use a commercial locator service, such as
LexisNexis, to search for missing pension beneficiaries. These
services are by far the most cost-effective and efficient way
to find these former workers. Pension Benefit Information, a
leading service locating these workers, reports that searching
with a retiree's SSN results in an 85-90 percent success rate
in locating an individual, compared to a success rate of only 8
percent without use of this information. Loss of SSNs from
public records and commercial locator services would
dramatically increase the costs of locating former employees.
Moreover, in many cases, employers would be unable to find
former employees, resulting in a loss of pension benefits to
the individual.
II. Important Issues To Be Considered in Developing Legislation
We applaud members of the Subcommittee for recognizing legitimate
business and government uses of SSNs, and we will continue to work with
the Subcommittee to help ensure that any legislation accomplishes its
important objective of preventing the misuse of SSNs, while ensuring
the continued use of SSNs for legitimate business and government uses.
There are several important issues that should be considered by the
Subcommittee in developing any legislation in this area. Our specific
comments are focused in the following four areas:
A. Business-to-Business and Business-to-Government Exemptions
It is critical that any legislation restricting access, use or
display of SSNs contain exceptions for important business-to-business
(B-to-B) and business-to-government (B-to-G) uses. Among the exemptions
needed are those that would preserve uses permitted under the Gramm-
Leach-Bliley Act (GLBA) and the Fair Credit Reporting Act (FCRA). It is
critical to ensure the continued use of SSNs consistent with GLBA for
identity authentication and verification to assist in fraud detection,
prevention, and investigation efforts, to perform an array of
background checks, and to effectuate and enforce transactions requested
by the consumer. Similarly, an exception should be included to ensure
the continued use of SSNs for the permissible purposes under the FCRA.
Moreover, it will be important to ensure that any legislation
clarifies the scope of exemptions for law enforcement or national
security purposes to ensure that information service providers, such as
LexisNexis, can continue to access and acquire this information to be
able to provide information tools to its law enforcement customers, as
well as to users who, although not government officials, undertake law
enforcement activities. Groups with which LexisNexis works, such as the
National Center for Missing and Exploited Children, would be severely
hampered if they could no longer access databases containing SSNs to do
their jobs.
If the law enforcement/national security exemption included in
legislation is too narrowly crafted to only include government law
enforcement agencies, many of the important law enforcement and
national security applications performed by non-governmental entities
will be excluded. Finally, exceptions should be included for locating
individuals, pension fund beneficiaries, missing heirs, and individuals
delinquent in the payment of child support or other debts.
B. Public Records
The issue of SSNs in public records is highly complex, and
legislation in this area will have far-reaching implications. As
explained above, public records are an important source of information
used by LexisNexis in compiling data for our online service. We
routinely use SSNs in public records to accurately match records from
disparate data sources and to enhance the accuracy of record retrieval.
In addition, our clients, including financial institutions, insurance
companies, government agencies and others routinely rely on our public
record databases containing SSNs for identity verification and
validation purposes, to identify, prevent, and investigate identity
theft and fraud and for other important purposes.
When we refer to public records, we mean government records that
typically and historically have been made available to the public.
Examples of public records include titles to real property, real
property tax assessor records, bankruptcy records, judgments, liens,
state professional licenses (and their suspension and revocation),
corporation filings, and death records. This information traditionally
has been available to members of the general public upon request.
As the General Accounting Office confirms in its June 2007 Report
to Congressional Requesters on Social Security numbers, redacting SSNs
from public records would be a difficult and challenging process.\2\
The summary of results reports that removal or truncation of SSNs in
all public records may be ``costly and may not fully protect SSNs.''
For example, the report states that it cost Palm Beach County more than
$2 million to complete software and manual removal of SSNs and other
identifiers in approximately 40 million pages of records (Report at
25). In small cities or towns that do not have the resources to remove
or truncate SSNs in public records, many may choose to simply cut off
access to these records.
---------------------------------------------------------------------------
\2\ See GAO Report 07-752 on Social Security Numbers (June 2007)
(``Report'').
---------------------------------------------------------------------------
Public records are a unique class of information that historically
has been made available for public inspection. Therefore, we are
concerned about any limits on the dissemination of this information.
Any legislation being considered should provide an exception for an SSN
that is incidental to the sale or provision of a document lawfully
obtained from the Federal Government or state or local government made
available to the general public, or from a document that has been made
available to the general public via widely distributed media. This is
the approach taken in S. 1208 and S. 1178.
C. Rulemaking
The proposed rulemaking provisions in some of the proposals being
considered provide only limited guidance and wide discretion that could
result in excessively restricted access to SSNs. Legislation should
clearly delineate the restrictions on the sale and purchase of SSNs and
provide a complete list of exceptions. To the extent that any
rulemaking language is included, any discretionary authority should be
limited, and the factors to be considered in promulgating the
regulations limited to those specific factors necessary to balance
restrictions on use and continued use of SSNs by legitimate businesses.
D. Preemption
Given the uniquely federal nature of SSNs and their importance to
businesses engaged in interstate commerce, legislation regulating the
use of SSNs should preempt state laws. It is important that a single,
national law governing the sale, purchase, and display of SSNs be
applied consistently on a nationwide basis.
LexisNexis is committed to the responsible acquisition and use of
SSNs and other personally identifiable information. LexisNexis shares
the Subcommittee's concern about the potential misuse of this
information for identity theft and other harmful purposes.
Nevertheless, as many of the Subcommittee members and witnesses
recognized during the June 21 hearing, legitimate uses of SSN
information are absolutely essential in the fight against identity
theft and fraud and other important uses. Congress should not take any
steps that would jeopardize the usefulness of such services.We thank
the Subcommittee for having held this hearing on these important
issues, and look forward to working with the members of the
Subcommittee and others to develop an appropriate solution.
We appreciate the opportunity to submit comments and hope that our
comments will help the Subcommittee as it considers these issues and
develops legislation. If you have any questions, please call me at 202/
857-8253 or Steve Emmert of my staff at 202/857-8254.
Sincerely,
Steven M. Manzo
Vice President, Government Affairs
Bruce Hulme, Legislative Director, National Council of
Investigation and Security Services, statement
Thank you for the opportunity to provide testimony on protecting
the privacy of the Social Security number from identity theft. I am
Bruce Hulme, Legislative Director of The National Council of
Investigation & Security Services (NCISS) which represents professional
private investigators and security officers across the nation.
Our members agree that personal data, including Social Security
numbers (SSNs), should not be readily disseminated and available to
anyone with an Internet connection and a few dollars. We support
efforts to limit the sale of the SSN except where there is a legitimate
need for it. NCISS supports prohibitions on the display of Social
Security numbers on checks, drivers' licenses and employee ID badges.
These provisions were in legislation previously considered by the Ways
and Means Committee.
We support the prohibition of the sale of personal data over the
Internet to the general public. Such a prohibition, along with
limitations on the use of the number on the documents cited above,
would solve many of the issues related to identity theft. It is
critical, however, that care be taken to provide clear exceptions for
purposes that serve the public good. The exceptions in Section 3, as
reported by the Energy and Commerce Committee, are insufficient and
would result in unintended consequences.
Financial institutions, schools, state and local governments and
others have used the SSN as an identifier because it is uniquely
attached to an individual. Private investigators have utilized the SSN
for the same reason. It is the best way to assure that the John Smith
we're attempting to locate is the correct John Smith, and not one of
50,000 others.
There are many John Smiths sharing the same birthday and living in
the same town. Often the Social Security number is the only way to
distinguish people sharing a name and other identifiers.
Section 3 of HR 948 would deny private investigators access to this
unique identifier by making it unlawful to sell or purchase the number.
This will affect the accuracy of databases we access to locate the
right John Smith. The SSN is also critically important for identifying
women who often change surnames through marriage and divorce. The SSN
does not change and allows us to locate these otherwise difficult to
find witnesses. In California, database searches led directly to
witnesses who recanted testimony and helped free a man wrongly
imprisoned for twenty years. Without the ability to use the database,
it is unlikely these witnesses would have been located.
Due Process Issues
The exceptions listed in Section 3(b)(3) include one for law
enforcement. The absence of an exception for private investigators
denies a critical tool to persons accused of crime. This is
particularly important for indigent defendants because of the small
expense budgets available to public defenders and appointed counsels.
They need a cost effective way to locate witnesses. They don't have the
resources of the state. The lack of such an exception provides an
obvious due process issue where the police have access to a database
not available to defendants.
Civil Trials
These disparities can exist in civil cases as well. An individual
consumer considering a lawsuit against a major corporation will be
disadvantaged if this inexpensive tool for locating witnesses is made
unavailable. Some meritorious cases would likely never be brought.
In both civil and criminal trials, justice is served best by all
parties getting access to all possible witnesses. Access to a fair
trial is a fundamental right of American citizens. Without the ability
to identify and locate all witnesses, that right is threatened.
Investigators do not have access to the central criminal history
database that law enforcement officials do, so it is essential to have
addresses when seeking information about prior convictions. With prior
address data, investigators know which courthouse records to search.
Without the address, we may not even know in which states to look. This
information is important for more than pre-employment purposes. In both
civil and criminal trials, attorneys need to know the backgrounds of
witnesses and potential witnesses.
In testimony before this Subcommittee last year, I described how I
was able to solve a case in which a 97 year old New Yorker was robbed
of hundreds of thousands of dollars by a caregiver who attempted to
hide his ill-gotten gains with relatives in South Carolina. Had I not
been able to use a database, I never would have known to look for
records in that state in which the funds were used to purchase real
estate and for other purposes.
Fighting White Collar Crime
It is no secret that law enforcement does not have all the
resources it needs to fight white collar crime, including identity
theft. That crime is difficult to solve and often involves multiple
jurisdictions. Many victims turn to investigators for assistance. In
some instances, when accessing databases investigators have discovered
that the criminal is using multiple SSNs. Under HR 948, we would be
denied that information, which can assist other victims besides our
client. In one instance we cited in testimony last year, a private
investigator solved a case that authorities would not investigate
because the client's $80,000 in losses did not meet or exceed the law
enforcement agency's minimum threshold to investigate. Using the SSN,
the investigator discovered that a former employee had stolen the
client's identity and had three aliases and at least three SSNs.
The SSN is critical to investigators for conducting other fraud
investigations as well. It can be particularly important for matters
involving theft of intellectual property, ranging from copyrighted
music and motion pictures to design of computer chips.
These databases, using the SSN, have also been important for
locating lost heirs and enforcing child support orders. Last year, the
committee also heard from a witness about how critical the information
can be for assisting in finding pension beneficiaries.
We urge that a new exception be added to HR 948 in Section 3(b)(3):
``to identify or locate missing or abducted persons, witnesses,
criminals and fugitives, persons suspected of fraud, persons who are or
may become parties to litigation, parents delinquent in child support
payments, organ and bone marrow donors, pension fund beneficiaries,
missing heirs and persons material to due diligence inquiries.''
During consideration of S-1178, the Senate Committee on Commerce,
Science and Transportation adopted an amendment including similar
language. Such an exception would permit appropriate uses of databases.
NCISS supports strong sanctions for anyone who would misuse this data.
Our association stands ready to assist the Committee as it develops
legislation to protect Social Security numbers.
National Organization of Social Security Claimants'
Representatives, Englewood Cliffs, New Jersey, statement
I am the Executive Director of the National Organization of Social
Security Claimants' Representatives (NOSSCR). Founded in 1979, NOSSCR
is a professional association of attorneys and other advocates who
represent individuals seeking Social Security disability and
Supplemental Security Income (SSI) disability benefits. NOSSCR members
represent these individuals with disabilities in proceedings at all SSA
administrative levels, but primarily at the hearing level, and also in
federal court. NOSSCR is a national organization with a current
membership of nearly 3,900 members from the private and public sectors
and is committed to the highest quality legal representation for
claimants.
As demonstrated by the testimony at the Subcommittee hearing on
June 21, 2007, the impact of identity theft on individuals can be
catastrophic. The cost of recovering from identity theft has the
potential to be astronomical and it can take years to repair the
damage. Given the repeated warnings from agencies, including the Social
Security Administration (SSA), our Statement for the Record describes
what we believe is an unnecessary requirement by SSA that attorneys and
others who represent claimants repeatedly disclose their own Social
Security numbers (SSNs).
BACKGROUND
The Internal Revenue Service has advised SSA that it must set up a
procedure to issue Forms 1099-MISC to attorneys and eligible non-
attorneys who receive direct payment of fees for representation from
SSA.
The IRS Forms 1099-MISC will first go out in January 2009, covering
fee payments made in calendar year 2008. SSA plans to issue Forms 1099-
MISC to all appointed claimants' representatives who receive payment of
aggregate fees of $600 or more in a calendar year. Generally, the
payment amounts will be reflected in Box 7 (Nonemployee compensation)
on Form 1099-MISC. This includes representatives who are sole
proprietors and those who have made the election to the IRS to be
classified as a single-member Limited Liability Company (LLC) or
single-member Limited Liability Partnership (LLP).
In those situations where SSA is notified that the representative
is an employee or partner, and the firm or other entity provides the
necessary taxpayer information via this registration process, SSA will
issue two Forms 1099-MISC:
One Form 1099-MISC will be issued to the
representative reflecting aggregate payments made to the
representative in his or her capacity as an employee or partner
in Box 14 (Gross Proceeds Paid to an Attorney).
The other Form 1099-MISC will be issued to the firm
or other entity reflecting aggregate payments made to its
employees/partners in Box 7.
The IRS has indicated to SSA that, while it performs a matching
process for amounts reported in Box 7 of the Form 1099-MISC, it does
not match against the amounts reported in Box 14. Box 14 might be
termed ``nonactionable'' and is not used by the IRS to match with
income reported on that individual's tax return. NOSSCR has urged SSA
to work with the IRS to eliminate this ``nonactionable'' reporting,
which seems to serve no purpose.
THE REGISTRATION PROCESS
Starting January 1, 2007, SSA will make direct payment (through fee
withholding) only to those attorneys and eligible non-attorneys who
have completed the registration process.\1\ As described below, there
are three forms that must be filed. Two forms are filed one-time only.
However, one form, SSA-1695, must be filed for every new client and it
is this form that requires disclosure of the representative's own SSN.
---------------------------------------------------------------------------
\1\ SSA provides an explanation of the new registration process at
its website: http://www.ssa.gov/representation/
direct_payment_of_approval_fees_forms_1099.htm.
---------------------------------------------------------------------------
STEP ONE: All attorneys and eligible non-attorneys who want to
receive direct payment of fees must complete and submit Form SSA-1699,
``Request for Appointed Representative's Direct Payment Information.''
In addition, law firms, partnerships, corporations and multi-member
LLCs/LLPs that have attorneys and/or non-attorney representatives as
partners or employees who receive direct payment should provide tax ID
information for that business entity, using Form SSA-1694, ``Request
for Business Entity Taxpayer Information.'' Both of these forms, the
SSA-1699 and SSA-1694, are submitted one time only. They also can be
submitted online through a secure site.
STEP TWO: In contrast, attorneys and eligible non-attorneys must
submit the new Form SSA-1695, ``Identifying Information for Possible
Direct Payment of Authorized Fees,'' in every case where they become
the representative on or after January 1, 2007.
This form is completed by the individual representative, not the
firm, for each client. It must be filed in the SSA field office and in
paper form only. Unlike the other two forms (which are submitted one
time only), Form SSA-1695 cannot be filed online. The form requires not
only the client's Social Security number (SSN), but also the
representative's SSN. In addition, the firm's Employment Identification
Number (EIN) must be included. The instructions which appear at the
bottom of the form state, ``To SSA Staff: After the information on this
form is entered into the appropriate system(s), immediately shred the
form. Under no circumstances should this form be scanned, placed in a
claims file or otherwise retained.''
Our main concerns with the new registration process relate to use
of the Form SSA-1695. Attorneys and eligible non-attorneys are
understandably uneasy about the prospect of their SSNs appearing on the
SSA-1695s. We have contacted SSA about our concerns regarding
confidentiality and the increased potential for identity theft and have
recommended alternative ways to deal with the process.
First, we believe that there is no reason to require
the representative to include his or her SSN. In most cases,
the law firm employing the attorney (as a solo practitioner,
partner or associate) is the entity that is responsible for
payment of income taxes on the fees received. And, the attorney
is required to provide that law firm's EIN on the SSA-1695.
Unlike the other two new forms in the new
registration process (Forms SSA-1694 and SSA-1699), the SSA-
1695 cannot be completed online and only a paper copy can be
submitted to the SSA field office. While SSA instructions state
that district office workers must shred the forms after
processing the information, we have received reports from some
NOSSCR members that mistakes are being made and that, in some
cases, these forms are appearing in claims folders.
In our interactions with SSA, we have maintained that
the form should require only the submission of the EIN for the
firm that is liable for payment of the taxes. We also have
proposed an alternate individual identifier, such as a PIN.
CONCLUSION
We believe that these repeated disclosures of a representative's
SSN on Form SSA-1695 are unnecessary and, potentially, an invitation to
identity theft. We are constantly bombarded with warnings from many
sources, including SSA, about privacy concerns and protection of our
SSNs. From attorney bar rosters to health insurance to state
departments of motor vehicles, we are told not to maintain records
according to SSNs and to use other identifiers. Because of concerns
with possible SSN misuse, many NOSSCR members have now opted to sign up
for credit protection service.
Questions for SSA regarding this process include:
Why must the SSN be submitted in every case, through
an unsecure process, when in fact SSA already has this
information from the secure one-time filing?
If SSA must have this information on this particular
form, why can't this information be submitted in a secure
manner?
How can SSA guarantee that the representatives' SSNs
will not be subject to identity theft?
Property Records Industry Association,
Morrisville, North Carolina, statement
As you most assuredly are aware, the hottest buzzwords of the
millennium include ``Identity Theft'' and ``Personally Identifiable
Information.'' Everyone is wrestling with what is the solution to the
problem of protecting individual privacy rights while at the same time
encouraging commerce and improving compliance with government
regulations.
When serious consideration is given to the various facets of this
topic, it quickly becomes clear that there is no easy, ``one-size-fits-
all'' solution. There are many factors to be considered. However, there
is little disagreement that something needs to be done to counter the
abuses that undermine faith in existing institutions.
The Property Records Industry Association (PRIA) is a coalition of
public and private participants of the property records industry,
cooperating to formulate positions on issues of common interest. Among
other objectives, the Association works to identify problems,
opportunities and solutions that will make property records systems
more efficient, effective and responsive to the public. The Association
also works to identify areas of consensus within the industry, leading
to recommendations for national standards pertaining to recordable
documents.
PRIA began seriously engaging the issue of social security numbers
appearing in real estate documents in early 2003. As part of its Winter
Conference in March 2003, PRIA hosted a ``Privacy/Access Roundtable''
in Washington DC. At the conclusion of the Roundtable, PRIA moved to
establish a Privacy/Access Workgroup. The workgroup then initiated an
email listserv discussion around a number of privacy-in-public-records
topics. Those discussions led to various presentations and open forum
sessions at PRIA conferences in 2003 and 2004. In July of 2004, PRIA
was invited to testify before the House Ways and Means Committee Social
Security Sub-Committee regarding HR 2971, the Social Security number
Privacy and Identity Theft Prevention Act of 2003. Both PRIA Winter and
Summer conferences in 2005, 2006 and 2007 include presentations and
open forum discussions of this privacy and information security
dynamic. PRIA wrote a White Paper in January of 2006 titled, ``Privacy
and Public Records: Making Practical Policy'' and drafted Model
Legislation called the ``Social Security number and Privacy Protection
Act'' (SSNAPP Act) in July of 2006 (see Appendix A). Our focus is on
the importance of social security numbers to the real estate and public
record industry.
Identity theft
Before the turn of the last century, one would have to take a ride
on horseback to the county seat to pull the original Deed books to find
information about a parcel of real estate. This is the concept of
``practical obscurity'' of public records--personal information could
be found in a public record, but there was little risk of harm to an
individual because someone had to take the time to search the records
at the recorder's office.
Technology undeniably has had a significant impact on access to
public records. Technological developments raise concerns about how
much information is too much information and whether there should be
global access to public records.
It is a common misconception that easy access to public records has
facilitated identity theft or land fraud. While posting documents that
contain certain key information on the Internet, such as credit card
numbers, social security numbers, and signatures, can provide a
criminal with some of the information needed to commit identity fraud
or theft, there is no evidence to support any claim that this is
systematically being done to perpetuate identity theft crimes. There
are many easier, and far more efficient, ways for identity thieves to
obtain this information in today's world, as opposed to combing through
public records and hoping to find something--a ``needle in the
haystack'' approach.
That being said, a proactive approach to apply greater discretion
to what public land record information is disclosed online is a
reasonable approach to discourage the use of public land records to
perpetuate identity theft and fraud. An accommodation between
information privacy and access is appropriate and necessary.
It is important in any discussion involving the protection of
social security numbers that legislators consider the full impact of
these actions on their constituents as well as the industries that
serve them. Public land records contain information critical to the
economy of the United States because much of the information collected
by the private sector comes from public records and that information is
key to the proper function of the real estate industry. Both the public
custodians and the private business sectors that use the public records
to facilitate critical functions within the real estate transaction;
i.e. listings, mortgages, title insurance, closings, escrows and
others; need to be considered when deciding how best to protect social
security numbers from identity theft.
The Role of Public Records in Combating Identity Theft and Fraud
It is important to understand that access to public records data is
actually a very effective weapon in combating identity fraud and theft.
Social security numbers compiled from public records (including court
records) have proven to be the most reliable tool in verifying an
individual's identity, which helps prevent the rapid increase in
identity fraud victims. Commercial databases compiled using public
records for identity authentication are routinely used to detect fraud,
including credit card application fraud, insurance application fraud,
and other types of fraud. Thus, efforts to restrict the collection and
use of personal information contained in public records, though well
intended, actually may hinder efforts to prevent identity theft by
depriving businesses, government and law enforcement officials of
valuable data that is used to authenticate identities and protect the
public. Security must be balanced with access.
Prohibiting Complete Social Security Numbers on Public Land Records
As you review testimony to enhance the privacy of your
constituents, most are more than likely looking to prohibit the use and
disclosure of an individual's social security number in public records.
However, it is important to understand for which purposes and how
social security numbers are used by government and the private sector,
as well as what impact redaction and truncation have on record
custodians, business, and the public.
Privacy Focus: Social Security Numbers
A number of privacy advocates warn that the display of social
security numbers in public records must be reduced as they are a
primary piece of information in the commission of identity theft
crimes. At least forty-one states and the District of Columbia maintain
at least one record that displays an individual's social security
number, according to a U.S. Government Accountability Office (GAO)
study conducted in November 2004. Given the nature of the social
security number as a unique identifier for important records and
services, advocates are concerned that display of the numbers in public
records makes it easier for identity thieves, both domestic and
international, to obtain new credit and bank accounts in the names of
their victims.
As outlined in a white paper created by the PRIA, ``Privacy and
Public Land Records: Making Practical Policy'' available for your
review at www.pria.us, under a section entitled ``Identity Theft,'' at
this time there does not appear to be evidence supporting the claim
that information derived from public records, including social security
numbers, is systematically used to perpetuate identity theft crimes.
That being said, it is reasonable to expect that government should, and
must, institute reasonable safeguards to protect citizens from becoming
victims of identity theft as a result of public land record abuse.
Legitimate Business and Government Uses of the Social Security Number
Several legitimate business and governmental uses exist for social
security numbers. These include preventing and investigating terrorist
activities, locating and recovering missing children, identifying and
preventing fraud, locating witnesses and helping make arrests,
preventing and investigating financial crime, enforcing child support
obligations and government assistance programs, helping locate pension
fund beneficiaries, helping locate blood, bone marrow, and organ
donors, contributing to important medical research efforts,notifying
families about environmental hazards. The benefits gained from the
legitimate use of a social security number need to be balanced with the
potential for abuse.
Balancing Benefits Versus Abuse of Public Records/Access to Social
Security Numbers
The Federal Government, states and businesses are either legally
obligated, or choose to voluntarily control, the disclosure of records
containing social security numbers. While privacy advocates call for
greater control of access to social security numbers in public records,
such a restrictive approach would threaten the ability of the
government and businesses to accurately and efficiently verify the
identification of citizens or consumers and authenticate that they are
who they say they are.
Identity thieves are using a number of methods to obtain personal
identification information, including ``phishing'' scams in which
thieves send bulk or targeted emails to consumers impersonating
legitimate businesses asking consumers to provide personal information
such as social security numbers. ``Phishing'' has recently been
expanded to include ``spear-phishing.'' ``Spear-phishing'' is where
identity thieves send bulk or targeted emails falsely appearing as a
commanding officer, in the case of military personnel, or as a superior
or executive within an organization. These thieves ask that the
employee email the supervisor or executive, at the false email address,
their personal information to update records or to confirm their
personal information. Another new scam is ``pharming,'' where identity
thieves redirect visitors from legitimate websites to ``spoofed''
websites (websites which look legitimate, but are not), and then
collect personally identifiable information from these visitors.
It is important then that any legislative or regulatory attempts to
restrict the access to, the display of, or use of social security
numbers in public land records should carefully weigh the actual threat
of identity theft with the efficient and current use of social security
numbers in public land records by state and local governments, business
and citizens.
Considerations for Federal Legislation
Prior to the development of federal legislation that affects the
use of social security numbers and other data elements in public
records policymakers should consider the following points:
Before exempting any specific data element from
collection by a government entity or from disclosure to the
public, policymakers should first set out to understand what
records contain that data element and the reason for its
presence in that record. Data elements are necessary in certain
records and have a clear purpose. For example, without complete
social security numbers in certain critical documents, such as
tax liens, government and the private sector lose the ability
to match data about individuals. Studying the potential impact
of redaction or limits on collection of information is highly
recommended before making any policy changes. Policymakers
should solicit direct input from the custodians of the records
and those that use them to determine how a proposed policy will
affect the records themselves as well as the ability of
custodians to perform their duties.
Policymakers must identify, or provide, funding
mechanisms to carry out the redaction of public records so as
to avoid an unfunded mandate. In this regard, a ``go forward''
recording fee for creating electronic versions of all recorded
documents could be used to carry out the redacting process as
well.
Suggested Elements for Social Security Number Legislation
The PRIA has drafted model legislation, the Social Security number
and Privacy Protection Act (SSNAPP Act), which is included in Appendix
A and incorporates the elements below.
Legislation Relating to Public Records Should be on a ``Day-Forward''
Basis
Any legislation impacting a governmental agency's acceptance,
redaction, or truncation of documents which contain social security
numbers should be effective on a ``day-forward'' basis only. This means
that any legislation should not require redaction or expungement of
records already filed or recorded.
In particular, recorders will be faced with a nightmarish task of
redacting records that are already filed, or recorded, including those
in other mediums such as microfilm or microfiche. Depending on the
method used for redaction, the recorder may be faced with managing two
databases or two sets of redacted documents. It is possible that
mistakes or omissions could occur in the public record if recorders are
required to manage and maintain two sets of databases, or redacted and
unredacted images. Redaction of official records and updating archival
and security copies could mean having to delve into technology or
methods of preservation that are no longer available to the recorder or
archiving facility.
Immunity of Recorders
Recorders are custodians, or stewards, of the information they are
required by law to maintain. It should be the responsibility of
document preparers and individual consumers, and not recorders, to make
sure that documents presented to recorders for recording do not contain
social security numbers if the inclusion of social security numbers is
prohibited by law. Therefore, recorders should be immune from suits
relating to documents filed or recorded that include social security
numbers, and any liability should be imposed on the document preparers.
Authority to Redact Post Effective Date
Model legislation may grant recorders the authority to redact
social security numbers from documents that are recorded after the
effective date of that legislation. This authority should not affect
the integrity of the original recorded document. This can be
accomplished by masking the information available to the general
public, for example, on the Internet, using redaction software that
allows disclosure of the unredacted image on certified documents used
for official purposes, such as probate.
This provision provides an important ministerial function--that of
providing certified copies of records from government offices.
Certification of public documents requires recorders and clerks to
provide an exact copy of a recorded document. Recorders need to be
explicitly empowered to redact the social security number after the
effective date of the legislation, without compromising the integrity
of future certified copies.
Voluntary Redaction by Public Prior to Delivery for Recording
Legislation may grant members of the general public the opportunity
to remove social security numbers and other private identifying
information prior to the filing of their documents, such as provided in
Texas (Texas Property Code Section 11.008). This provision removes
discretionary issues from the government official and provides members
of the general public with a self-help remedy if they are concerned
about the privacy of their personally identifiable information. We
recommend an individual be able to remove, or request removal of, a
social security number or other personally identifiable information
from the document before or after it is recorded.
Recorders Not to Redact Information from Documents to be Recorded
Legislation may provide that recorders not have the responsibility
of redacting social security numbers or other personally identifiable
information from documents prior to recording. Recorders would continue
to record whatever they receive.
This provision continues the important ministerial, non-
discretionary function--that of creating a public record of documents
exactly as they were presented to the government offices. Certification
of public documents then complies with the recorders' and clerks'
responsibility to provide an exact copy of the document as it was when
recorded.
CONCLUSION
Practical and informed policy making is a must to further solidify
the integrity of our public records system and to achieve a meaningful
balance between the public's concern about privacy and businesses'
legitimate use of data. Enlightened policymakers have an opportunity to
resolve these issues in a way that empowers consumers, enables
business, and enhances our nation's economy.
__________
Appendix A
SOCIAL SECURITY NUMBER AND PRIVACY PROTECTION ACT
1. Definitions
(a) ``Personally Identifiable Information`` means one or more of
the following specific unique identifiers when combined with an
individual's name:
(1) Soocial security number.
(2) Driver's license number or state identification card
number.
(3) Financial institution account number, credit, debit or
charge card number.
(4) Date of birth.
(b) ``Preparer'' means the person or entity who creates, drafts,
edits, revises or last changes the documents that are recorded with the
[Recorder].
2. Inclusion of Personally Identifiable Information
The Preparer of a document shall not include an individual's
Personally Identifiable Information in a document that is prepared and
presented for recording in the office of the [Recorder]. This Section
shall not apply to documents that were executed by an individual prior
to the effective date of this Act. All documents described by this Act
are subject to inspection and copying by the public.
3. Reduction on Recorder's Publicly Available Internet Web site
If a document that includes an individual's Personally Identifiable
Information was recorded with the [Recorder] and is available on the
[Recorder's] public Internet website, the individual may request that
the [Recorder] redact such information from the Internet record. The
[Recorder] shall establish a procedure by which individuals may request
that such Personally Identifiable Information be redacted from the
Internet record available on the [Recorder]'s public Internet website,
at no fee to the requesting individual. The [Recorder] shall comply
with an individual's request to redact Personally Identifiable
Information.
4. Liability of Preparer
A Preparer who enters Personally Identifiable Information in a
document that is prepared and presented for recording is liable to the
individual whose Personally Identifiable Information appears in the
recorded public document in violation of Section 2 of this Act for
damages of up to five hundred dollars ($500.00) for each act of
recording.
5. Liability of Recorder
The [Recorder] shall not be liable for any claims arising from a
violation of this act.
6. Applicability
(a) This Act shall not apply to state or federal tax liens,
certified copies of death certificates or other documents required by
law to contain Personally Identifiable Information that are filed or
recorded in the office of the [Recorder].
7. Effective Date This Act shall be effective on___.