[Senate Report 110-235]
[From the U.S. Government Publishing Office]



110th Congress 
 1st Session                     SENATE                          Report
                                                                110-235
_______________________________________________________________________
 
                                                       Calendar No. 520

                 IDENTITY THEFT PREVENTION ACT OF 2007

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                 S.1178



                                     

       DATE deg.December 5, 2007.--Ordered to be printed
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                       one hundred tenth congress
                             first session

                   DANIEL K. INOUYE, Hawaii, Chairman
                   TED STEVENS, Alaska, Vice-Chairman
JOHN D. ROCKEFELLER IV, West         JOHN McCAIN, Arizona
    Virginia                         TRENT LOTT, Mississippi
JOHN F. KERRY, Massachusetts         KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California            GORDON H. SMITH, Oregon
BILL NELSON, Florida                 JOHN ENSIGN, Nevada
MARIA CANTWELL, Washington           JOHN E. SUNUNU, New Hampshire
FRANK R. LAUTENBERG, New Jersey      JIM DEMINT, South Carolina
MARK PRYOR, Arkansas                 DAVID VITTER, Louisiana
THOMAS CARPER, Delaware              JOHN THUNE, South Dakota
CLAIRE McCASKILL, Missouri
AMY KLOBUCHAR, Minnesota
          Margaret Cummisky, Staff Director and Chief Counsel
         Lila Helms, Deputy Staff Director and Policy Director
       Jean Toal Eisen, Senior Advisor and Deputy Policy Director
     Christine Kurth, Republican Staff Director and General Counsel
                Paul J. Nagle, Republican Chief Counsel
             Mimi Braniff, Republican Deputy Chief Counsel
                                                       Calendar No. 520
110th Congress                                                   Report
                                 SENATE
 1st Session                                                    110-235

======================================================================

                 IDENTITY THEFT PREVENTION ACT OF 2007

                                _______
                                

                December 5, 2007.--Ordered to be printed

                                _______
                                

       Mr. Inouye, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 1178]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill joint resolution deg. (S. 
1178) TITLE deg. to strengthen data protection and 
safeguards, require data breach notification, and further 
prevent identity theft, having considered the same, reports 
favorably thereon with amendments and recommends that the bill 
joint resolution deg. (as amended) do pass.

                          Purpose of the Bill

  S. 1178 would bolster data security procedures for covered 
entities that collect, dispose, maintain, sell, or transfer 
sensitive personal information. The bill would require covered 
entities to provide consumer notification under circumstances 
when that entity suffers a breach of security, and the exposure 
of that sensitive personal information would create a 
reasonable risk that an identity theft may occur. S. 1178 also 
would direct the Federal Trade Commission (FTC) to develop 
rules that would require procedures for authenticating the 
credentials of third parties to which sensitive personal 
information may be sold or otherwise transferred. To further 
protect consumers from identity theft, S. 1178 would allow 
consumers to freeze their credit report. As amended, S. 1178 
also would prohibit the solicitation, sale, or display of 
Social Security numbers by covered entities, except under 
certain specified circumstances, and would require Federal 
agencies to protect sensitive personal information and provide 
notification to affected individuals in the event of a breach 
of security that creates a reasonable risk of identity theft.

                          Background and Needs

DATA SECURITY

  In 1998, Congress responded to an explosion in identity theft 
activity by passing the Identity Theft Assumption and 
Deterrence Act.\1\ This Act addressed identity theft in 2 ways: 
First, the Act strengthened then-existing criminal law 
governing identity theft\2\ to make it a Federal crime to 
knowingly transfer or use, without lawful authority, a means of 
identification of another person with the intent to commit, or 
to aid or abet, any unlawful activity. Second, the Act required 
the FTC to develop a centralized complaint and consumer 
education service for victims of identity theft. This FTC 
clearinghouse was established and currently serves as an 
investigative tool for the FTC and Federal law enforcement to 
track and thwart identity theft.
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    \1\P.L. 105-318, 112 Stat. 3007 (Oct. 30, 1998)
    \2\18 U.S.C. 1028 (``Fraud and related activity in connection with 
identification documents'')
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  Despite the existence of several Federal and State laws 
designed to reduce identity theft, the crime continues to be 
perpetrated against American consumers at an alarming rate. A 
2003 FTC survey found that, during a one-year period, identity 
thieves victimized nearly 10 million Americans, or roughly 4.6 
percent of the domestic adult population. The FTC has further 
reported that identity theft--physical and online--accounted 
for 36 percent of the more than 674,000 consumer fraud 
complaints filed last year with the agency.
  The aggregation and distribution of consumers' sensitive 
personal information for marketing, lending, and other purposes 
has expanded significantly over the past few decades in the 
United States, enabled by increased, affordable computing 
power. Such practices have increased the opportunities for 
identity thieves to access and misappropriate sensitive 
personal information.
  Starting in 2005, a string of highly publicized data breaches 
occurred at a variety of private and public organizations 
ranging from financial institutions and commercial retailers, 
to public universities, to the Federal government. These data 
breaches involved the sensitive personal information of 
millions of consumers, including Social Security numbers and 
financial information. Many of these security breaches led to 
identity theft. The most widely publicized data breaches 
involved the unauthorized access of data held by 2 large 
information (or data) brokers. These breaches raised a question 
as to whether consumers' sensitive personal information is 
adequately protected from identity thieves by the entities that 
collect, maintain, and transfer sensitive personal information.
  While several Federal laws address data security in different 
contexts, there is no single Federal law that requires the 
protection of sensitive personal information regardless of the 
type of entity that is in possession of that information. In 
addition, no Federal law requires all entities that possess 
sensitive personal information to notify consumers when a 
breach involving such consumers' sensitive personal information 
has occurred. S. 1178 is intended to fill gaps in current 
Federal data security laws and provide a uniform preemptive 
Federal standard for the safeguarding of sensitive personal 
information for all entities not currently covered by law. The 
legislation ensures the adequate security of sensitive personal 
information, while permitting the legitimate free flow of 
information that is necessary to the U.S. economy.
  Congress has legislated data privacy and security in several 
contexts. Among other things, Congress has placed certain 
limits on the dissemination of credit report, financial, motor 
vehicle, and health information. The following is a brief 
description of existing data security laws.
  The Fair Credit Reporting Act (FCRA)\3\ was enacted, in part, 
to ensure that ``consumer reporting agencies exercise their 
grave responsibilities with fairness, impartiality, and a 
respect for the consumer's right to privacy.''\4\ The FCRA 
requires that consumer reporting agencies only disclose 
consumer credit reports if such a disclosure is for a 
``permissible purpose'' as defined in the statute.\5\
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    \3\15 U.S.C. 1681-1681u, as amended; In 2003, FCRA was enhanced by 
the Fair and Accurate Credit Transactions Act (FACT) Act. The FTC has 
not completed implementation of the FACT Act.
    \4\15 U.S.C. 1681(a)(4)
    \5\15 U.S.C. 1681b(a)(3)(A) through (F)
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  In the FCRA, a permissible purpose is generally a legitimate 
business need by the individual or entity seeking the credit 
report, which includes, among others, verification for 
employment, extension of credit or insurance, or property 
tenancy background checks. The FCRA also requires credit-
reporting agencies (CRAs) to use reasonable procedures to 
ensure that those requesting consumer credit reports are who 
they claim to be, and that they are eligible to receive the 
report for a permissible purpose.
  Title V of the Gramm-Leach-Bliley Act (GLBA)\6\ was enacted 
to ensure the privacy and security of personally identifiable 
information handled by financial institutions. Title V of the 
GLBA requires financial institutions to provide notice to 
customers of a possible disclosure of non-public personal 
information to non-affiliates and an opportunity to opt out of 
such disclosure. This non-public information includes an 
individual's address, as well as Social Security number, 
telephone number, and mother's maiden name. The prohibition 
against disclosure of this information without notice and the 
ability to opt out are subject to statutory exceptions provided 
in the GLBA. These exceptions allow for disclosure primarily 
for reasons of law enforcement, prosecution, or fraud 
prevention. The GLBA's privacy rule for re-disclosure binds 
recipients of non-public personal financial information. The 
GLBA requires financial institutions to adopt and implement 
appropriate safeguards for the personal information of their 
customers.\7\
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    \6\15 U.S.C. 6801-09
    \7\15 U.S.C. 6801(b)
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  The Health Information Portability and Accountability Act 
(HIPAA)\8\ was enacted partly to provide strong Federal 
protections for the privacy rights of patients. The HIPAA 
privacy rule prohibits health care providers from disclosing 
personal health information except when required or permitted 
under the rule. The HIPAA Privacy Rule permits health care 
providers to disclose personal health information for the 
purpose of carrying out essential health care functions such as 
patient treatment, payment for care, or health care operations 
that support treatment and payment. The rule also requires 
disclosure of personal health information when requested by the 
Department of Health and Human Services (HHS) for an 
investigation or to determine compliance with the privacy rule, 
or at the request of a patient or health care enrollee. Like 
the GLBA, the HIPAA requires health care providers to adopt and 
implement appropriate safeguards to protect personal health 
information.\9\
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    \8\42 U.S.C. 1320d et seq.
    \9\45 C.F.R. 164.530(c)
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  Section 5 of the Federal Trade Commission Act (FTCA)\10\ 
grants authority to the FTC to prevent unfair or deceptive 
trade practices in or affecting interstate commerce. Entities 
operating in interstate commerce are subject to section 5 of 
the FTCA to the extent that they deceptively make false claims 
concerning their information security policies on which 
consumers rely to their detriment. Such entities are subject to 
section 5 of the FTCA if they falsely claim to have adequate 
information security safeguards in place, and/or if they 
knowingly cause consumers substantial economic injury that 
could have been reasonably avoided.
---------------------------------------------------------------------------
    \10\15 U.S.C. 45(a)
---------------------------------------------------------------------------
  The Driver's Privacy Protection Act (DPPA)\11\ prohibits the 
disclosure of personal information by State departments of 
motor vehicles except for uses specifically stated by DPPA. It 
contains 14 permissible uses, mostly for purposes of law 
enforcement, vehicle insurance claims or policies, or judicial 
proceedings.
---------------------------------------------------------------------------
    \11\15 U.S.C. 2721-25
---------------------------------------------------------------------------
  In April 2004, the California legislature enacted SB 1386, 
which represented the first effort by a State legislature to 
address data breach notification. The law provides strict 
disclosure requirements for commercial entities or government 
agencies that experience security breaches when the breaches 
may contain the personal information of California residents. 
According to many observers, were it not for the breach 
notification requirements of the California law, most of the 
data security breaches that were highly publicized in 2005 
would not have become publicly known. Thirty-four other States 
and the District of Columbia have passed data breach 
legislation. Two prevalent themes among these initiatives are 
consumer notification requirements in the event of a data 
breach and consumer redress in the event of such breach.

CREDIT FREEZE

  The Fair and Accurate Credit Transaction Act (FACTA) of 
2003,\12\ added new sections to the FCRA that were intended to 
provide consumers with tools to combat the effects of identity 
theft. FACTA allows a consumer who seeks to mitigate or prevent 
the occurrence of identity theft to contact CRAs and place a 
``fraud alert'' on their credit file. Once placed, any entity 
that attempts to extend credit to the consumer is required to 
contact the consumer by telephone and take other reasonable 
steps to ensure that the credit application is not that of an 
identity thief. Failure to contact the consumer in such 
instances subjects the entity to civil penalty. The fraud alert 
is effective initially for 90 days and can be extended for up 
to 7 years for victims of identity theft by providing a police 
report or an affidavit proving a theft occurred.
---------------------------------------------------------------------------
    \12\P. L. 108-159, 111 Stat. 1952
---------------------------------------------------------------------------
  S. 1178 would take an added step to protect consumers by 
allowing them to place a ``freeze'' on their credit report for 
a fee of no more than $10. A freeze effectively would preclude 
(with limited exceptions) unauthorized third parties from 
accessing a credit report. Victims of identity theft, 
individuals age 65 and older, and individuals on active duty or 
in the ready reserve component of an armed force of the United 
States, as well as their spouses, would be permitted to place 
freezes on their credit report without a fee.
  The credit freeze provision of the bill provides consumers 
with a proactive tool to combat the threat of identity theft. 
Currently, more than 35 States and the District of Columbia 
have enacted credit freeze laws.

                         Summary of Provisions

  S. 1178, the Identity Theft Prevention Act, would require 
covered entities to comply with the existing requirements of 
the FTC rules on Standards for Safeguarding Customer 
Information and Disposal of Consumer Report Information and 
Records (Safeguards Rule),\13\ which require covered entities 
to develop, implement, maintain, and enforce written programs 
for the security of sensitive personal information to ensure 
security of and protect against any anticipated threats or 
unauthorized access to consumers' sensitive personal 
information.
---------------------------------------------------------------------------
    \12\16 C.F.R. Part 314. The FTC was required to promulgate this 
rule in GLBA, 15 U.S.C. Subchapter I, Sec. 6801-6809 (Disclosure of 
Nonpublic Personal Information).
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  The bill would apply the Safeguards Rule to entities not 
currently subject to the rule and require those entities that 
handle sensitive personal information to provide notice to 
affected consumers in the event of a security breach. S. 1178 
also would allow consumers to place, remove, and temporarily 
remove a security freeze on their credit, which would prevent 
credit from being extended to third parties without 
authorization from the consumer. In addition, S. 1178 would 
prohibit (with limited exceptions) the sale or purchase of 
consumers' Social Security numbers. This provision would 
prohibit employers, educational institutions, and others from 
using Social Security numbers for any employee benefit plan, 
card, or tag that is provided by employers, educational 
institutions, and others, for the purpose of identification. 
The use of Social Security numbers as identifiers on State 
driver's licenses would be prohibited as well. S. 1178 also 
would require Federal agencies to develop, implement, maintain, 
and enforce a written program for the security of sensitive 
personal information and to notify affected individuals in the 
event of a breach of security that creates a reasonable risk of 
identity theft. These requirements would be enforced by the 
inspector general of the respective Federal agency.

                          Legislative History

  On April 10, 2007, the Committee held an oversight hearing, 
chaired by Chairman Inouye, on the FTC during which all 5 FTC 
Commissioners testified on various issues including data 
security and identity theft. On May 10, 2005, and June 16, 
2005, the Committee held hearings to examine the issues 
pertaining to data security. At those hearings, representatives 
of private companies, industry trade associations, public 
interest groups, State Attorneys General, and each of the FTC 
Commissioners testified before the Committee.
  On April 20, 2007, Chairman Inouye introduced S. 1178, ``The 
Identity Theft Prevention Act,'' which was referred to the 
Committee. Senators Stevens, Pryor, and Smith were original co-
sponsors of the bill.
  On April 25, 2007, the Committee met in open executive 
session and by voice vote ordered S. 1178 reported with 
amendments. The managers' package of amendments included 8 
items: 1) Senator Dorgan's amendment to add separate provisions 
dealing with Social Security numbers; 2) Chairman Inouye's 
technical amendment; 3) Senator Carper's second degree 
amendment to the Inouye technical amendment to apply sensitive 
personal information safeguard and notification obligations to 
the agencies of the Federal government; 4) Senator Pryor's 
second degree amendment to the Inouye technical to clarify the 
reference to consumer credit reporting entities in the 
notification process; 5) Senators Cantwell and Stevens' 
amendment to move up the completion date for the study of the 
correlation, if any, between methamphetamine use and identity 
theft crimes; 6) Senator Cantwell's amendment to allow State 
Attorneys General to recover reasonable costs and attorneys 
fees if they prevail; 7) Senators Snowe and Kerry's amendment 
to require the Chairman of the FTC to consult representatives 
of the small business community in selecting the members of the 
Information Security and Consumer Privacy Advisory Committee; 
and 8) Senators Snowe and Kerry's amendment to clarify that 
companies that use e-mails as the primary form of communication 
are allowed to use e-mail to send security breach notices.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:
S. 1178--Identity Theft Protection Act
    Summary: S. 1178 would require private companies and 
federal agencies to develop and enforce a system to safeguard 
the personal information of consumers and to notify consumers 
whenever there has been a breach in the security system. Under 
the bill, consumers also would have the option to freeze their 
credit reports in the event of a threat to their personal 
information. The bill also would restrict the use, display, and 
sale of Social Security numbers (SSNs). The Federal Trade 
Commission (FTC) would enforce those restrictions and 
requirements. Assuming appropriation of amounts specifically 
authorized in the bill, CBO estimates that implementing S. 1178 
would cost $2 million in 2008 and $8 million over the 2008-2012 
period.
    Enacting S. 1178 could increase federal revenues as a 
result of the collection of additional civil and criminal 
penalties assessed for violations of data security regulations. 
Collections of criminal penalties are recorded on the budget as 
revenues, deposited in the Crime Victims
    Fund, and later spent. CBO estimates, however, that any 
additional revenues that would result from enacting the bill 
would not be significant because of the relatively small number 
of cases likely to be involved.
    S. 1178 contains a number of intergovernmental mandates as 
defined in the Unfunded
    Mandates Reform Act (UMRA): some would preempt state law 
and others would place new requirements on state, local, and 
tribal governments (particularly on educational organizations 
and schools). The preemptions of state law would not impose 
significant direct costs on states. The other requirements of 
the bill could result in additional spending for the affected 
public entities, but CBO estimates that the costs of those 
mandates would not exceed the threshold established in UMRA 
($66 million in 2007, adjusted annually for inflation).
    S. 1178 would impose private-sector mandates on consumer 
credit-reporting agencies and other entities that acquire, 
maintain, or utilize sensitive personal information, including
    Social Security numbers. Because of uncertainty about the 
number of entities that are already in compliance with most of 
the mandates in the bill, CBO cannot estimate the incremental 
cost of complying with those mandates and cannot determine 
whether the aggregate direct cost of all the mandates in the 
bill would exceed the annual threshold established by UMRA for 
private-sector mandates ($131 million in 2007, adjusted 
annually for inflation).
    Estimated Cost to the Federal Government: The estimated 
budgetary impact of S. 1178 is shown in the following table. 
The costs of this legislation fall within budget function 370 
(commerce and housing credit).


------------------------------------------------------------------------
                By fiscal year, in millions of dollars--
-------------------------------------------------------------------------
                                   2008    2009    2010    2011    2012
------------------------------------------------------------------------
            CHANGES IN SPENDING SUBJECT TO APPROPRIATION \1\

Authorization Level.............       2       2       2       2       0
Estimated Outlays...............       2       2       2       2      0
------------------------------------------------------------------------
\1\ Enacting S. 1178 also could affect revenues from the assessment of
  civil criminal penalties; and it could affect direct spending from the
  expenditure of any criminal penalties assessed. CBO estimates that any
  such effects would be less than $500,000 a year.

    Basis of Estimate: For this estimate, CBO assumes that the 
bill will be enacted in 2007 and that the specified amounts 
will be appropriated for each year. CBO estimates that 
implementing the bill would cost $2 million in 2008 and $8 
million over the 2008-2012 period to issue regulations and 
enforce the bill's new provisions restricting the use of 
personal information.
    Section 12 would require federal agencies to develop, 
implement, maintain, and enforce programs for the security of 
personal information an agency possesses. In the event of a 
security breach involving a reasonable risk of identity theft, 
S. 1178 would require government agencies to notify an 
individual whose information may have been compromised. 
Notification would be in the form of individual notice (written 
notice to a home mailing address or via e-mail) as well as 
through an Internet Web site and the mass media. The 
legislation also would require the agency to provide affected 
individuals with a description of the accessed information, a 
toll-free number to contact the agency, the names and toll-free 
telephone numbers of the major credit reporting agencies, and a 
toll-free telephone number and Web site that the individual can 
use to obtain information on identity theft.
    This provision would codify the current practice of the 
federal government regarding data security and security breach 
notification. The Federal Information Security Management Act 
of 2002 provides requirements for securing the federal 
government's information systems, including the protection of 
personal privacy. The National Institute of Standards and 
Technology develops information security standards and 
guidelines for other federal agencies, and the Office of 
Management and Budget (OMB) oversees information technology 
security policies and practices. OMB estimates that federal 
agencies spend around $5.5 billion a year to secure the 
government's information systems.
    While existing laws generally do not require agencies to 
notify affected individuals of data breaches, this has been the 
practice of agencies that have experienced security breaches. 
Therefore, CBO expects that implementing this provision would 
probably not lead to a significant increase in spending. 
Nonetheless, the federal government is also one of the largest 
providers, collectors, consumers, and disseminators of 
personnel information in the United States. Although CBO cannot 
anticipate the number of security breaches nor the extent of 
any such occurances, a significant breach of security involving 
a major collector of personnel information-such as the Internal 
Revenue Service or the Social Security Administration-could 
involve millions of individuals, and there would be significant 
costs to notify individuals of such a security breach.
    Estimated impact on state, local, and tribal governments: 
S. 1178 contains a number of intergovernmental mandates, but 
CBO estimates that the costs of those mandates would not exceed 
the threshold established in UMRA ($66 million in 2007, 
adjusted annually for inflation).
Safeguarding personal information and notifying individuals of security 
        breaches
    The bill would establish new requirements for safeguarding 
personal information and put in place a new federal requirement 
for notifying individuals and the Federal Trade Commission in 
the event that personal information is compromised. Those new 
federal requirements would apply to educational organizations 
and schools, including public school systems and universities. 
(It would not apply to state, local, or tribal governments 
broadly.)
    Under current law, educational institutions that receive 
federal funds already are required to safeguard certain 
personal information and must comply with standards required 
under the Family Educational Rights and Privacy Act and 
established by the Department of Education.
    Depending on the differences between the rules promulgated 
by the FTC and those already required by the department, 
educational institutions may have to make changes to their 
current systems. The bill also would require schools to notify 
affected individuals of any breach of security in which 
personal information of more than 1,000 individuals may have 
been compromised and to maintain a toll-free number for 
contacting the school. If schools are required to change 
procedures for handling information, implement new controls on 
computer systems, provide additional information to the FTC, or 
provide notifications, they could face added costs. However, 
existing regulations cover, at least in a broad manner, many of 
the issues that S. 1178 addresses; additional costs likely 
would not exceed the threshold.
Preemptions of state and local laws
    S. 1178 would preempt a number of state and local laws that 
establish rules for safeguarding personal information and that 
restrict the use of SSNs. The bill would preempt state laws 
that require schools or other entities that collect personal 
information to notify individuals in the event of a security 
breach, and it would preempt state laws that do not afford 
individuals greater protection regarding the release of private 
information by credit-reporting agencies. The bill also would 
establish a federal law that would place a number of 
restrictions on the display, collection, sale, and transfer of 
SSNs and would preempt similar state and local laws. Those 
preemptions would be intergovernmental mandates as defined in 
UMRA, but they would impose no duty on states that would result 
in additional spending.
    The bill would place notification requirements on state 
attorneys general that prosecute cases involving breaches of 
security or violations of the new rules governing Social 
Security numbers. Since state laws would be preempted by the 
bill, the new federal law would be the primary avenue for 
prosecuting cases. Consequently, the notification requirements 
would be an intergovernmental mandate, but CBO estimates that 
the costs of such notifications would be small.
Social Security Numbers
    In some cases, the bill's restrictions on the collection, 
sale, or use of SSNs would place requirements on state and 
local governments, including schools. The bill would prohibit 
states from displaying SSNs on driver's licenses, but this 
practice is already prohibited by federal law as part of the 
Intelligence Reform and Terrorism Prevention Act of 2004. The 
bill also would prohibit state and local governments from 
allowing prisoners access to SSNs of other individuals. While 
those prohibitions would be intergovernmental mandates, they 
would place no new requirement on states that would result in 
significant additional spending.
    The bill would prohibit schools from displaying SSNs on 
identification cards or tags. Federal law currently places some 
restrictions on the use of SSNs by colleges, universities, and 
other schools that receive federal funding. While the specific 
prohibition on the use of SSNs on identification materials 
would be new, indications from organizations that represent 
public schools and universities are that few schools, if any, 
still use SSNs as identifiers. Consequently, CBO estimates any 
additional costs as a result of this requirement would be 
small.
    Estimated impact on the private sector: S. 1178 would 
impose private-sector mandates on credit-reporting agencies and 
other entities that acquire, maintain, or utilize sensitive 
personal information, including SSNs. Because of uncertainty 
about the number of entities that are already in compliance 
with most of the mandates in the bill, CBO cannot estimate the 
incremental cost of complying with those mandates. Therefore, 
CBO cannot determine the total direct cost of the mandates 
contained in the bill or whether such costs would exceed the 
annual threshold established by UMRA for private-sector 
mandates ($131 million in 2007, adjusted annually for 
inflation).
Security program
    Section 2 of S. 1178 would require covered entities to 
implement and enforce a written program to secure sensitive 
personal information, which includes a person's name, address, 
or telephone number in combination with their social security 
number. Covered entities include businesses, employers, 
educational and nonprofit institutions that acquire, maintain, 
and utilize sensitive personal information. According to 
industry and government sources, many states already have laws 
requiring business entities to utilize data security programs. 
Moreover, it is the current practice of many businesses to use 
security measures to protect sensitive data. However, because 
of uncertainty about the number of entities that are already in 
compliance with the data security mandates, CBO cannot estimate 
the incremental cost of complying with those mandates. 
Additionally, this section would require the FTC to promulgate 
regulations that would require procedures for authenticating 
the credentials of any third party to which a covered entity 
transfers or sells sensitive personal information. CBO cannot 
estimate the cost of complying with this mandate because the 
cost would depend on the rules to be established by the FTC.
Notification of security breach risk
    In the case of a security breach affecting 1,000 or more 
persons, section 3 would require covered entities to report the 
breach to the Federal Trade Commission and notify all consumer 
reporting agencies. If the required investigation of the breach 
finds that there is a reasonable risk of identity theft, the 
entity also would be required to notify all affected 
individuals. According to industry and government sources, 
millions of individuals' sensitive personally identifiable 
information is illegally accessed every year. However, 
according to those sources, a majority of states already have 
laws requiring notification in the event of a security breach. 
In addition, it is the current practice of many business 
entities to notify individuals in the event of a security 
breach. Because of uncertainty about the number of entities 
that are already in compliance with the notification mandates, 
CBO cannot estimate the incremental cost of complying with the 
notification requirement under the bill.
Security freeze on credit reports
    Section 4 would allow consumers to place a security freeze 
on their credit report by making a request to a consumer credit 
reporting agency. The credit reporting agency would be 
prevented from releasing the credit report to any third parties 
without prior authorization from the consumer. The agency also 
would be required to notify all other consumer reporting 
agencies of the security freeze at the consumer's request. 
According to industry sources, most states currently have 
credit freeze laws in place. Because of uncertainty about the 
number of entities that are already in compliance with the 
security freeze mandate, CBO cannot estimate the incremental 
cost of complying with the notification requirement under the 
bill.
Social Security Number protection
    Section 11 would prevent covered entities from soliciting a 
social security number from an individual unless no other 
identifier can be used reasonably. This section also would 
prevent covered entities from displaying SSNs, or any part of 
such a number, on any card or tag used for identification, such 
as student or employee identification cards. CBO estimates that 
the cost imposed on all covered entities would be small, since 
relatively few covered entities still use SSNs in this manner.
    Estimate prepared by: Federal Costs: Susan Willie and 
Matthew Pickford Impact on State, Local, and Tribal 
Governments: Leo Lex Impact on the Private Sector: Fatimot 
Ladipo.
    Estimate approved by: Peter H. Fontaine Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

  In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       NUMBER OF PERSONS COVERED

  The notice and safeguards provisions would apply to all sole 
proprietorships, partnerships, corporations, trusts, estates, 
cooperatives, sole proprietors, associations, or other 
commercial entities, and any charitable, educational, or 
nonprofit organizations that acquire, maintain, or utilize 
sensitive personal information. The security freeze protections 
in section 4 would be available to every person with a consumer 
credit report and would be enforced against every consumer 
reporting agency. The Social Security number protections would 
protect every person with a Social Security number, and be 
enforceable against all non-governmental entities that sell, 
transmit, or use Social Security numbers.

                            ECONOMIC IMPACT

  S. 1178 would require covered entities to develop, implement, 
maintain, and enforce a written program for the security of 
sensitive personal information in their possession. In 
addition, covered entities would be required to notify 
consumers in the event of a breach of sensitive personal 
information that creates a reasonable risk of identity theft. 
While some covered entities may already have safeguards and 
notification procedures in place, nonetheless, the legislation 
may create compliance costs for such entities in the form of 
equipment upgrades or personnel addition in order to ensure 
that their practices satisfy the new Federal requirements.

                                PRIVACY

  S. 1178 would likely bolster consumer privacy by ensuring 
that covered entities that handle sensitive personal 
information take appropriate measures to safeguard such 
information.

                               PAPERWORK

  The legislation would increase paperwork requirements for 
private industry and the Federal government to the extent that 
such paperwork is necessary to comply with the information 
safeguards, breach notification, and credit freeze 
requirements, as well as the Social Security number use 
prohibitions of this Act. The bill would require 2 reports 
submitted to Congress by the FTC. The first, a report by the 
FTC containing the findings of an advisory committee 
established by the FTC Chairman pursuant to this Act. And, the 
second, a report by the FTC developed in conjunction with the 
Department of Justice (DOJ) on the correlation between 
methamphetamine use and identity theft crimes.

                      Section-by-Section Analysis

Section 1. Short title
  This section would provide that the legislation be cited as 
the ``Identity Theft Prevention Act.''
Section 2. Protection of sensitive personal information
  Section 2 would require covered entities to include 
administrative, technical, and physical safeguards within the 
written program to ensure security, protect against any 
anticipated threats, and protect against unauthorized access to 
sensitive personal information. The Committee notes that the 
implementation and enforcement of the data security policy is 
as important as the data security policy itself. Covered 
entities that are in full compliance with the current FTC 
Safeguards Rule would be deemed in compliance with this 
section. The Act also would require that, within 1 year of 
enactment, the FTC promulgate regulations that would require 
procedures for authenticating the credentials of third parties 
to which sensitive personal information is to be transferred or 
sold.
  The Committee's purposes for allowing covered entities the 
option of complying with the existing FTC Safeguards Rule are 
twofold: First, to provide covered entities regulatory 
consistency without an interim gap that would require such 
entities to modify their safeguards procedures more than once 
in order to comply; and, second, to take into account the 
impact of mandating safeguards rules on small businesses, 
particularly sole proprietors. With respect to the latter 
purpose, the Committee draws a parallel between the Safeguards 
Rule and S. 1178 to the extent that small businesses should be 
afforded flexibility to comply with S. 1178 in a manner that is 
dependent on their size and complexity, the nature and scope of 
their activities, and the sensitivity of the information that 
they handle.
  Accordingly, in promulgating the regulations required under 
section 3(c), the FTC should consider the impact that such 
regulations would have on small businesses, as the FTC did when 
developing the existing Safeguards Rule.
  The Committee encourages the FTC in its promulgation of rules 
to fulfill the requirements of section 2 to take into account 
the use of technological safeguards and effective alternative 
methods to reduce the chances of identity theft.
Section 3. Notification of security breach risk
  Section 3 would require a covered entity that, after using 
due diligence, determines that a breach of security has created 
a reasonable risk of identity theft exists, to notify each 
individual affected by the breach of security. In determining 
whether a reasonable risk of identity theft exists, a covered 
entity shall consider factors about the nature of the breach, 
such as if the data is usable or could be made usable by an 
unauthorized third party and whether the data is in the 
possession and control of an unauthorized third party. If a 
covered entity cannot make a determination of whether the 
breach of security creates a reasonable risk of identity theft, 
it may request guidance from the FTC or relevant enforcement 
agency and the relevant agency would be required to respond in 
writing within 5 business days after receiving the request.
  This section also would require covered entities that suffer 
a breach of security that affects 1,000 or more individuals to 
report the breach to the FTC or other appropriate market 
regulator and notify all CRAs of the breach. The FTC would be 
required in such an instance to post a report of the breach of 
security on the agency's website without personally identifying 
any individual affected by the breach. The report would include 
the number of individuals impacted by the breach of security. 
In the event that the breach of security affects fewer than 
1,000, but more than 50, individuals, and a covered entity 
determines that the breach of security does not create a 
reasonable risk of identity theft, it shall report the breach 
to the FTC or appropriate market regulator under section 5 of 
this Act. The report would be required to contain the number of 
individuals affected, and the type of information that was 
exposed, as a result of the breach of security.
  If a covered entity determines that notification to consumers 
of the breach of security is warranted, the entity would be 
required to contact individuals affected by the breach through 
a written or electronic notice. Where there is a direct 
relationship between the affected individual and an entity, the 
entity shall provide notice of the breach to the individual 
even if the entity is not the covered entity subject to the 
breach of security. For example, if a retailer hires a third 
party to maintain the sensitive personal data of its customers 
and the third party is subject to a breach of security, then 
the retailer shall notify the affected customers of the breach.
  If a covered entity lacks the contact information for 
affected individuals, the entity would have the option to 
provide a substitute notice through electronic mail, a posting 
on the website of the entity, and via appropriate Statewide or 
regional media. In the event that this substitute notice is 
necessary, the covered entity would be required to include in 
such notice the name of the individual whose information was 
subject to the security breach, the name of the entity 
suffering the breach, a description of the sensitive personal 
information that was compromised, the date indicating the 
discovery of the breach, and the toll-free numbers necessary to 
contact the entity, CRAs, and the FTC.
  Section 3 would require a covered entity to give notice to 
consumers when required by this Act in the most expeditious 
manner practicable, but not later than 25 business days 
following the discovery of the breach, unless a Federal or 
State law enforcement agency determines that the timely 
provision of notice would materially impede a civil or criminal 
investigation, or a Federal national security or homeland 
security agency determines that notice would threaten national 
security or homeland security.
  This section would not apply to electronic communications of 
a third party stored by a cable operator, information service, 
or telecommunications carrier in the network of such operator, 
service, or carrier in the course of transferring or 
transmitting such communication.
Section 4. Security freeze
  Section 4 would allow a consumer to place a security freeze 
on his or her credit report by making a request to a CRA in 
writing, by telephone, or through a secure electronic 
connection made available by the CRA. The security freeze would 
prevent a consumer's credit report from being released to a 
third party without express authorization from the consumer. 
The placing of a freeze on a credit report may not be taken 
into account in calculating the credit score of the consumer. 
The Committee encourages the CRAs to provide consumers the most 
expedient means to place and lift security freezes.
  The consumer whose credit report was frozen would be 
permitted to remove a security freeze on his or her credit 
report only upon request to the CRA. The CRA would be permitted 
to remove a security freeze upon the consumer's request, or if 
the CRA believes the report was frozen due to a material 
misrepresentation of fact. A consumer may have a security 
freeze temporarily lifted upon request to the CRA. Such request 
shall specify the time period of the temporary lift or 
specifying a specific third party to which access to the 
consumer's credit report may be granted.
  A CRA would have up to 3 business days after receiving a 
request by a consumer to place a security freeze, and 3 days 
after receiving a request to lift a freeze permanently. A CRA 
would be required to temporarily suspend a security freeze 
within 1 business day after receiving a request.
  This section would allow a consumer who places, removes, or 
temporarily suspends a security freeze to request that the CRA 
that initiates the action on the security freeze notify all 
other CRAs of the request within 1 day. A CRA that is notified 
of such a request shall ensure the validity of the request, 
including the identity of the requesting consumer within 3 
business days after receiving the notification, and comply with 
the request no later than 3 days after validating the request.
  Under this section, a CRA would be required to send written 
confirmation to a consumer within 10 days after placing, 
removing, or temporarily suspending a security freeze. A CRA 
may not place, remove, or temporarily suspend a security freeze 
unless the consumer provides proper identification within the 
meaning of section 610(a)(1) of the FCRA. A CRA may not change 
the name, date of birth, Social Security number, or address in 
a frozen credit report without sending a written confirmation 
to the consumer with 30 days after the change is made.
  Section 4 would not apply to the use of a credit report by 
any of the following: a person or entity with which the 
consumer has had a prior business relationship for the purpose 
of reviewing an account or collecting the financial obligation 
owing from an account or contract; any Federal, State or local 
agency, law enforcement agency, trial court, or private 
collection agency acting pursuant to a court order, warrant, or 
subpoena; a child support agency or its agents acting pursuant 
to subtitle D of title IV of the Social Security Act; HHS or 
any similar State agency acting to investigate Medicare or 
Medicaid fraud; the Internal Revenue Service or a State 
municipal taxing authority to investigate or collect delinquent 
taxes or unpaid court orders or any of their other statutory 
responsibilities; any person administering a credit file 
monitoring subscription to which the consumer has subscribed; 
any person or entity for the purpose of providing a consumer 
with his or her credit report or credit score at the consumer's 
request; or any person who seeks access during the time period 
that a security freeze is temporarily suspended for the purpose 
of facilitating the extension of credit or another permissible 
use.
  This section would allow a CRA to charge a fee, not in excess 
of $10, for placing a security freeze. A CRA could not charge a 
consumer for up to 2 requests per year per credit reporting 
agency for temporary suspension of a credit freeze. CRAs would 
be permitted to charge no more than $5 for each additional 
temporary suspension. A CRA could not charge for removing a 
security freeze permanently. Notwithstanding the foregoing, 
CRAs could not charge a fee for placing, removing, or 
temporarily suspending a consumer's credit report if the 
consumer: is a victim of identity theft; is age 65 or older; is 
on active duty or in the ready reserve component of an armed 
force of the United States; or is the spouse of an individual 
on active duty or in the ready reserve component.
  Section 4 would exempt any CRA that acts only as a reseller 
of credit information by assembling and merging information 
contained in the data base of another CRA and does not maintain 
a permanent data base of credit information from which new 
consumer reports are produced. This section, further, would 
exempt check services or fraud prevention services companies 
and a deposit account information services companies from 
having to place a security freeze in a credit report.
Section 5. Information security and consumer privacy advisory committee
  Section 5 would require the Chairman of the FTC to establish 
a 5 member Information Security and Consumer Privacy Advisory 
Committee comprised of at least 1 member from the following 
groups: a non-profit consumer advocacy group; a business 
organization that collects personally identifiable information; 
and state attorney general's office. The advisory committee 
would collect, review, disseminate, and advise on guidance to 
protect sensitive personal information. The advisory committee 
would be required to submit to Congress a report on its 
findings within 12 months after its establishment.
Section 6. Related crime study
  Section 6 would require the FTC, in conjunction with the DOJ, 
to conduct a study within 9 months of enactment of this Act to 
examine the correlation, if any, between methamphetamine use 
and identity theft crimes, as well as the needs of law 
enforcement to address methamphetamine crimes related to 
identity theft and the Federal government's role in addressing 
and deterring identity theft crimes. The FTC would be required 
to submit a report of its findings and recommendations to 
Congress not later than 9 months after the date of enactment.
Section 7. Prohibition on technology mandates
  This section would make clear that nothing in this Act should 
be construed as authorizing the FTC to issue regulations that 
require or impose a specific technology, product, or 
technological standard.
Section 8. Enforcement
  Section 8 would provide new authority for the FTC to take 
action against covered entities that fail to develop, 
implement, maintain, or enforce a written program for the 
security of sensitive personal information as unfair or 
deceptive acts or practices proscribed under section 
18(a)(1)(B) of the FTCA (15 U.S.C. 57a(a)(1)(B)). This 
authority is analogous to the authority that the FTC currently 
possesses under Title V of the GLBA with respect to financial 
institutions.
  This section also would provide that compliance with this Act 
with respect to certain entities be enforced by the agency 
traditionally regulating the entity under the statute of 
jurisdiction.
  In addition, any covered entity to which title V of the GLBA 
(15 U.S.C. 6801 et seq.) or section 607(a) of the FCRA (15 
U.S.C. 1681e(a)) applies would be deemed in compliance with 
sections 2 and 3 of this Act to the extent that the person is 
in compliance with the provisions of those Acts, which require 
the protection of sensitive personal information and 
notification in the event of a breach of security.
  It is not the intent of this Committee to impose 
prohibitively onerous safeguards and notification requirements 
on small businesses. Thus, it is the Committee's expectation 
that the FTC or appropriate market regulator should consider 
the size of the business and its ability to comply as 1 of many 
factors when enforcing this Act.
Section 9. Enforcement by State Attorneys General
  Section 9 would allow a State to bring an action under this 
Act in State or Federal court on behalf of its residents. The 
State would be required to notify the FTC or the appropriate 
Federal market regulator of the action at least 60 days prior 
to bringing the action. In the event that such notice is not 
feasible, the State would be required to provide notice 
immediately upon instituting the action. The FTC or appropriate 
Federal market regulator would be authorized to intervene in 
such civil action. If the FTC or appropriate Federal market 
regulator institutes an action for a violation of this Act, no 
State attorney general, or official or agency of the State, 
would be permitted to bring an action during the pendency of 
that action against any defendant named in the complaint. If a 
State prevails in a civil action under the Act, it could 
recover reasonable costs and attorney fees from the defendant.
  Nothing in this section would prevent the attorney general of 
a State from exercising the powers conferred on the Attorney 
General by the laws of such State with respect to the 
conducting of investigations, compelling of witnesses, and 
production of evidence.
Section 10. Preemption of State law
  Section 10 of this Act would preempt any State or local law 
that requires a covered entity to develop implement, maintain 
or enforce information security programs to which this Act 
applies and any State or local law that requires a covered 
entity to notify individuals of breaches of security related to 
their sensitive personal information. This section, further, 
would preempt State and local laws with respect to CRAs' 
compliance with a consumer's request to place, remove, or 
temporarily suspend the prohibition on the release of 
information from a consumer's credit report only to the extent 
that they conflict with the provisions of this Act. State laws 
that afford greater protections with respect to CRAs' 
compliance with a consumer's request to place, remove, or 
temporarily suspend the prohibition on the release of 
information from a consumer's credit report are not 
inconsistent with the Act. Section 10 would preempt any State 
or local law prohibiting or limiting collection, solicitation, 
sale, provision, or display of Social Security numbers of the 
type described in section 11.
Section 11. Social Security number protection
  Section 11(a) would prohibit the solicitation of a Social 
Security number from an individual unless there is a specific 
use of the number for which no other identifying number 
reasonably can be used. Section 11(a) would provide certain 
exceptions for the solicitation of a Social Security number, 
including: for use in an identification, verification, 
accuracy, or identity proofing process; for any purpose 
permitted under section 502(e) of the GLBA (15 U.S.C. 6802(e)) 
or the FCRA (15 U.S.C. 1681 et seq.); to comply with a 
requirement of Federal, State, or local law; for the purpose of 
verifying or obtaining proof of identity by a CRA; to the 
extent necessary for verifying the accuracy of information 
submitted to a company, organization, or others; to identify or 
locate missing or abducted children, witnesses, criminals and 
fugitives, parties to lawsuits, parents delinquent in child 
support payments, organ and bone marrow donors, pension fund 
beneficiaries, and missing heirs; or to the extent necessary to 
prevent, detect, or investigate fraud, unauthorized 
transactions, or to facilitate the enforcement of an obligation 
of, or collection of, a debt from a consumer.
  Section 11(b) would prohibit employers, educational 
institutions, and others from using Social Security numbers for 
any employee card, or tag that is provided by employers, 
educational institutions, and others for the purpose of 
identification. This subsection also would prohibit the use of 
Social Security numbers as driver identifiers on State driver's 
licenses.
  Section 11(c) would amend the Social Security Act (42 U.S.C. 
405(c)(2)(C)) to prohibit any Federal, State, or judicial 
agency from employing or entering into a contract to utilize 
inmates who would have access to the Social Security numbers of 
other individuals. This prohibition would go into effect 90 
days after the date of enactment.
  Section 11(d) would prohibit any person from selling, 
purchasing, or providing a Social Security number to the 
general public or to display Social Security numbers to the 
general public. The subsection would provide exceptions to this 
prohibition: to the extent necessary for law enforcement or 
national security purposes; to the extent necessary for public 
health purposes and emergency situations to protect the health 
or safety of an individual; to the extent that the sale or 
display is required or permitted under Federal or State law; 
for any purpose permitted under section 502(e) of the GLBA (15 
U.S.C. 6802(e)) or the FCRA (15 U.S.C. 1681 et seq.); to the 
extent necessary for verifying the accuracy of information 
submitted to a company, organization, or others; to the extent 
necessary to identify or locate missing or abducted children, 
witnesses to a lawsuit, criminals, parents delinquent in child 
support payments, organ donors, missing heirs, and for similar 
legal, medical, or family related purposes, provided that 
person providing or obtaining the information does not do so 
for marketing purposes; to the extent necessary to prevent, 
detect, or investigate fraud, unauthorized transactions, or to 
facilitate the enforcement of an obligation of, or collection 
of a debt from a consumer, provided that person providing or 
obtaining the information does not do so for marketing 
purposes; to the extent incidental to a merger or acquisition 
of a business; to the extent necessary for certain research 
conducted by the Federal, State, or local government; or to the 
extent incidental to the sale of a Federal, State, or local 
government document made available to the general public, which 
includes the Social Security number. Section 11(d) further 
would allow the sale or purchase of an individual's Social 
Security number if written consent is obtained.
Section 12. Protection of information at Federal agencies
  Section 12 would require each Federal agency to develop, 
implement, maintain, and enforce a written program for the 
security of sensitive personal information. Federal agencies 
would be required to investigate any suspected breach of 
security affecting sensitive personal information and to notify 
individuals if the breach creates a reasonable risk of identity 
theft. The inspector general of each Federal agency would 
enforce compliance with the requirements of this section.
Section 13. Definitions
  Section 13 would provide for a number of notable definitions, 
as follows:
  Breach of Security: The unauthorized access to, and 
acquisition of, data in any form or format containing sensitive 
personal information that compromises the security or 
confidentiality of such information.
  Consumer Credit Reporting Agency: Any person engaging in the 
practice of assembling or evaluating consumer credit 
information or other information on consumers for the purpose 
of furnishing credit reports to third parties.
  Covered Entity: A sole proprietorship, partnership, 
corporation, trust, estate, cooperative, sole propriety, 
association, or other commercial entity, and any charitable, 
educational, or nonprofit organization, that acquires, 
maintains, or utilizes sensitive personal information.
  Credit Report: A consumer report as defined in section 603(d) 
of the FCRA (15 U.S.C. 1681a(p)), as well as any associated 
credit score, that is used for the purpose of serving as a 
factor in establishing a consumer's eligibility for credit for 
personal, family, or household purposes.
  Identity Theft: The unauthorized acquisition, purchase, sale, 
or use by any person of an individual's sensitive personal 
information that violates section 1028 of title 18, United 
States Code, or any provision of State law; or that results in 
harm to the individual whose sensitive personal information was 
used.
  Reasonable Risk of Identity Theft: The preponderance of the 
evidence available to the covered entity that has experienced a 
breach of security establishes that identity theft for 1 or 
more individuals from the breach of security is foreseeable.
  Sensitive Personal Information: An individual's name, 
address, or phone number combined with 1 or more data elements 
as listed in this definition. The term ``sensitive personal 
information'' also includes an account identifier combined with 
a password or other security code, which permits access to an 
account from which an individual can conduct certain financial 
transactions or gain access to information that could be used 
to identity theft. Sensitive personal information would not 
include information that has been made available to the general 
public by the Federal, State, or local government or that has 
been widely distributed in the media. In an enforcement action 
brought under this Act, the covered entity shall have the 
burden of proving that it had obtained the information at issue 
from a source permitted under this definition. The FTC would be 
authorized through a rulemaking to designate or delete data 
elements or identifying information that may be used to 
effectuate identity theft as sensitive personal information.
Section 14. Authorization of appropriations
  Section 14 would authorize $2,000,000 to be appropriated to 
the FTC to carry out this Act for fiscal years 2007 through 
2011.
Section 15. Effective dates
  This section would require covered entities under section 
2(a) to implement the information safeguards program within 6 
months after the date of enactment of this Act.
  Under this Act, the FTC would be required to initiate 
rulemakings under sections 2(c), 3, and 4, including a 
rulemaking proceeding to determine what constitutes proper 
identification under 610(a)(1) of the FCRA (15 U.S.C. 
1681(h)(a)(1)) within 45 days after enactment and promulgate 
final rules within 1 year after the date of enactment. The 
provisions of sections 2(c), 3, and 4 would take effect 6 
months after each of the final rules are promulgated. Section 
10 would take effect at the same time as sections 2(c), 3, and 
4. All other provisions of this Act would take effect upon its 
enactment.

                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new material is printed 
in italic, existing law in which no change is proposed is shown 
in roman):

                          SOCIAL SECURITY ACT

SEC. 205. EVIDENCE AND PROCEDURE FOR ESTABLISHMENT OF BENEFITS.

                            [42 U.S.C. 405]

  (a) Rules and regulations; procedures.--The Commissioner of 
Social Security shall have full power and authority to make 
rules and regulations and to establish procedures, not 
inconsistent with the provisions of this title, which are 
necessary or appropriate to carry out such provisions, and 
shall adopt reasonable and proper rules and regulations to 
regulate and provide for the nature and extent of the proofs 
and evidence and the method of taking and furnishing the same 
in order to establish the right to benefits hereunder.
  (b) Administrative determination of entitlement to benefits; 
findings of fact; hearings; investigations; evidentiary 
hearings in reconsiderations of disability benefit 
terminations.--
          (1) The Commissioner of Social Security is directed 
        to make findings of fact, and decisions as to the 
        rights of any individual applying for a payment under 
        this title. Any such decision by the Commissioner of 
        Social Security which involves a determination of 
        disability and which is in whole or in part unfavorable 
        to such individual shall contain a statement of the 
        case, in understandable language, setting forth a 
        discussion of the evidence, and stating the 
        Commissioner's determination and the reason or reasons 
        upon which it is based. Upon request by any such 
        individual or upon request by a wife, divorced wife, 
        surviving divorced mother, surviving divorced father 
        husband, divorced husband, widower, surviving divorced 
        husband, child, or parent who makes a showing in 
        writing that his or her rights may be prejudiced by any 
        decision the Commissioner of Social Security has 
        rendered, the Commissioner shall give such applicant 
        and such other individual reasonable notice and 
        opportunity for a hearing with respect to such 
        decision, and, if a hearing is held, shall, on the 
        basis of evidence adduced at the hearing, affirm, 
        modify, or reverse the Commissioner's findings of fact 
        and such decision. Any such request with respect to 
        such a decision must be filed within sixty days after 
        notice of such decision is received by the individual 
        making such request. The Commissioner of Social 
        Security is further authorized, on the Commissioner's 
        own motion, to hold such hearings and to conduct such 
        investigations and other proceedings as the 
        Commissioner may deem necessary or proper for the 
        administration of this title. In the course of any 
        hearing, investigation or other proceeding, the 
        Commissioner may administer oaths and affirmations, 
        examine witnesses and receive evidence. Evidence may be 
        received at any hearing before the Commissioner of 
        Social Security even though inadmissible under rules of 
        evidence applicable to court procedure.
          (2) In any case where--
                  (A) an individual is a recipient of 
                disability insurance benefits, or of child's, 
                widow's, or widower's insurance benefits based 
                on disability,
                  (B) the physical or mental impairment on the 
                basis of which such benefits are payable is 
                found to have ceased, not to have existed, or 
                to no longer be disabling, and
                  (C) as a consequence of the finding described 
                in subparagraph (B), such individual is 
                determined by the Commissioner of Social 
                Security not to be entitled to such benefits, 
                any reconsideration of the finding described in 
                subparagraph (B), in connection with a 
                reconsideration by the Commissioner of Social 
                Security (before any hearing under paragraph 
                (1) on the issue of such entitlement) of the 
                Commissioner's determination described in 
                subparagraph (C), shall be made only after 
                opportunity for an evidentiary hearing, with 
                regard to the finding described in subparagraph 
                (B), which is reasonably accessible to such 
                individual. Any reconsideration of a finding 
                described in subparagraph (B) may be made 
                either by the State agency or the Commissioner 
                of Social Security where the finding was 
                originally made by the State agency, and shall 
                be made by the Commissioner of Social Security 
                where the finding was originally made by the 
                Commissioner of Social Security. In the case of 
                a reconsideration by a State agency of a 
                finding described in subparagraph (B) which was 
                originally made by such State agency, the 
                evidentiary hearing shall be held by an 
                adjudicatory unit of the State agency other 
                than the unit that made the finding described 
                in subparagraph (B). In the case of a 
                reconsideration by the Commissioner of Social 
                Security of a finding described in subparagraph 
                (B) which was originally made by the 
                Commissioner of Social Security, the 
                evidentiary hearing shall be held by a person 
                other than the person or persons who made the 
                finding described in subparagraph (B).
          (3)(A) A failure to timely request review of an 
        initial adverse determination with respect to an 
        application for any benefit under this title or an 
        adverse determination on reconsideration of such an 
        initial determination shall not serve as a basis for 
        denial of a subsequent application for any benefit 
        under this title if the applicant demonstrates that the 
        applicant, or any other individual referred to in 
        paragraph (1), failed to so request such a review 
        acting in good faith reliance upon incorrect, 
        incomplete, or misleading information, relating to the 
        consequences of reapplying for benefits in lieu of 
        seeking review of an adverse determination, provided by 
        any officer or employee of the Social Security 
        Administration or any State agency acting under section 
        221.
          (B) In any notice of an adverse determination with 
        respect to which a review may be requested under 
        paragraph (1), the Commissioner of Social Security 
        shall describe in clear and specific language the 
        effect on possible entitlement to benefits under this 
        title of choosing to reapply in lieu of requesting 
        review of the determination.
  (c) Records of wages and self-employment income.--
          (1) For the purposes of this subsection--
                  (A) The term ``year'' means a calendar year 
                when used with respect to wages and a taxable 
                year when used with respect to self-employment 
                income.
                  (B) The term ``time limitation'' means a 
                period of 3 years, 3 months, and 15 days.
                  (C) The term ``survivor'' means an 
                individual's spouse, surviving divorced wife, 
                surviving divorced husband, surviving divorced 
                mother, surviving divorced father, child, or 
                parent, who survives such individual.
                  (D) The term ``period'' when used with 
                respect to self-employment income means a 
                taxable year and when used with respect to 
                wages means--
                          (i) a quarter if wages were reported 
                        or should have been reported on a 
                        quarterly basis on tax returns filed 
                        with the Secretary of the Treasury or 
                        his delegate under section 6011 of the 
                        Internal Revenue Code of 1986 or 
                        regulations thereunder (or on reports 
                        filed by a State under section 218(e) 
                        (as in effect prior to December 31, 
                        1986) or regulations thereunder),
                          (ii) a year if wages were reported or 
                        should have been reported on a yearly 
                        basis on such tax returns or reports, 
                        or
                          (iii) the half year beginning January 
                        1 or July 1 in the case of wages which 
                        were reported or should have been 
                        reported for calendar year 1937.
          (2)(A) On the basis of information obtained by or 
        submitted to the Commissioner of Social Security, and 
        after such verification thereof as the Commissioner 
        deems necessary, the Commissioner of Social Security 
        shall establish and maintain records of the amounts of 
        wages paid to, and the amounts of self-employment 
        income derived by, each individual and of the periods 
        in which such wages were paid and such income was 
        derived and, upon request, shall inform any individual 
        or his survivor, or the legal representative of such 
        individual or his estate, of the amounts of wages and 
        self-employment income of such individual and the 
        periods during which such wages were paid and such 
        income was derived, as shown by such records at the 
        time of such request.
          (B)(i) In carrying out the Commissioner's duties 
        under subparagraph (A) and subparagraph (F), the 
        Commissioner of Social Security shall take affirmative 
        measures to assure that social security account numbers 
        will, to the maximum extent practicable, be assigned to 
        all members of appropriate groups of categories of 
        individuals by assigning such numbers (or ascertaining 
        that such numbers have already been assigned):
                  (I) to aliens at the time of their lawful 
                admission to the United States either for 
                permanent residence or under other authority of 
                law permitting them to engage in employment in 
                the United States and to other aliens at such 
                time as their status is so changed as to make 
                it lawful for them to engage in such 
                employment;
                  (II) to any individual who is an applicant 
                for or recipient of benefits under any program 
                financed in whole or in part from Federal funds 
                including any child on whose behalf such 
                benefits are claimed by another person; and
                  (III) to any other individual when it appears 
                that he could have been but was not assigned an 
                account number under the provisions of 
                subclauses (I) or (II) but only after such 
                investigation as is necessary to establish to 
                the satisfaction of the Commissioner of Social 
                Security, the identity of such individual, the 
                fact that an account number has not already 
                been assigned to such individual, and the fact 
                that such individual is a citizen or a 
                noncitizen who is not, because of his alien 
                status, prohibited from engaging in employment; 
                and, in carrying out such duties, the 
                Commissioner of Social Security is authorized 
                to take affirmative measures to assure the 
                issuance of social security numbers:
                  (IV) to or on behalf of children who are 
                below school age at the request of their 
                parents or guardians; and
                  (V) to children of school age at the time of 
                their first enrollment in school.
          (ii) The Commissioner of Social Security shall 
        require of applicants for social security account 
        numbers such evidence as may be necessary to establish 
        the age, citizenship, or alien status, and true 
        identity of such applicants, and to determine which (if 
        any) social security account number has previously been 
        assigned to such individual. With respect to an 
        application for a social security account number for an 
        individual who has not attained the age of 18 before 
        such application, such evidence shall include the 
        information described in subparagraph (C)(ii).
          (iii) In carrying out the requirements of this 
        subparagraph, the Commissioner of Social Security shall 
        enter into such agreements as may be necessary with the 
        Attorney General and other officials and with State and 
        local welfare agencies and school authorities 
        (including nonpublic school authorities).
  (C)(i) It is the policy of the United States that any State 
(or political subdivision thereof) may, in the administration 
of any tax, general public assistance, driver's license, or 
motor vehicle registration law within its jurisdiction, utilize 
the social security account numbers issued by the Commissioner 
of Social Security for the purpose of establishing the 
identification of individuals affected by such law, and may 
require any individual who is or appears to be so affected to 
furnish to such State (or political subdivision thereof) or any 
agency thereof having administrative responsibility for the law 
involved, the social security account number (or numbers, if he 
has more than 1 such number) issued to him by the Commissioner 
of Social Security.
  (ii) In the administration of any law involving the issuance 
of a birth certificate, each State shall require each parent to 
furnish to such State (or political subdivision thereof) or any 
agency thereof having administrative responsibility for the law 
involved, the social security account number (or numbers, if 
the parent has more than 1 such number) issued to the parent 
unless the State (in accordance with regulations prescribed by 
the Commissioner of Social Security) finds good cause for not 
requiring the furnishing of such number. The State shall make 
numbers furnished under this subclause available to the 
Commissioner of Social Security and the agency administering 
the State's plan under part D of title IV in accordance with 
Federal or State law and regulation. Such numbers shall not be 
recorded on the birth certificate. A State shall not use any 
social security account number, obtained with respect to the 
issuance by the State of a birth certificate, for any purpose 
other than for the enforcement of child support orders in 
effect in the State, unless section 7(a) of the Privacy Act of 
1974 does not prohibit the State from requiring the disclosure 
of such number, by reason of the State having adopted, before 
January 1, 1975, a statute or regulation requiring such 
disclosure.
  (iii)(I) In the administration of section 9 of the Food Stamp 
Act of 1977 (7 U.S.C 2018) involving the determination of the 
qualifications of applicants under such Act, the Secretary of 
Agriculture may require each applicant retail store or 
wholesale food concern to furnish to the Secretary of 
Agriculture the social security account number of each 
individual who is an officer of the store or concern and, in 
the case of a privately owned applicant, furnish the social 
security account numbers of the owners of such applicant. No 
officer or employee of the Department of Agriculture shall have 
access to any such number for any purpose other than the 
establishment and maintenance of a list of the names and social 
security account numbers of such individuals for use in 
determining those applicants who have been previously 
sanctioned or convicted under section 12 or 15 of such Act (7 
U.S.C. 2021 or 2024).
  (II) The Secretary of Agriculture may share any information 
contained in any list referred to in subclause (I) with any 
other agency or instrumentality of the United States which 
otherwise has access to social security account numbers in 
accordance with this subsection or other applicable Federal 
law, except that the Secretary of Agriculture may share such 
information only to the extent that such Secretary determines 
such sharing would assist in verifying and matching such 
information against information maintained by such other agency 
or instrumentality. Any such information shared pursuant to 
this subclause may be used by such other agency or 
instrumentality only for the purpose of effective 
administration and enforcement of the Food Stamp Act of 1977 or 
for the purpose of investigation of violations of other Federal 
laws or enforcement of such laws.
  (III) The Secretary of Agriculture, and the head of any other 
agency or instrumentality referred to in this subclause, shall 
restrict, to the satisfaction of the Commissioner of Social 
Security, access to social security account numbers obtained 
pursuant to this clause only to officers and employees of the 
United States whose duties or responsibilities require access 
for the purposes described in subclause (II).
  (IV) The Secretary of Agriculture, and the head of any agency 
or instrumentality with which information is shared pursuant to 
clause (II), shall provide such other safeguards as the 
Commissioner of Social Security determines to be necessary or 
appropriate to protect the confidentiality of the social 
security account numbers.
  (iv) In the administration of section 506 of the Federal Crop 
Insurance Act, the Federal Crop Insurance Corporation may 
require each policyholder and each reinsured company to furnish 
to the insurer or to the Corporation the social security 
account number of such policyholder, subject to the 
requirements of this clause. No officer or employee of the 
Federal Crop Insurance Corporation shall have access to any 
such number for any purpose other than the establishment of a 
system of records necessary for the effective administration of 
such Act. The Manager of the Corporation may require each 
policyholder to provide to the Manager, at such times and in 
such manner as prescribed by the Manager, the social security 
account number of each individual that holds or acquires a 
substantial beneficial interest in the policyholder. For 
purposes of this clause, the term ``substantial beneficial 
interest'' means not less than 5 percent of all beneficial 
interest in the policyholder. The Secretary of Agriculture 
shall restrict, to the satisfaction of the Commissioner of 
Social Security, access to social security account numbers 
obtained pursuant to this clause only to officers and employees 
of the United States or authorized persons whose duties or 
responsibilities require access for the administration of the 
Federal Crop Insurance Act. The Secretary of Agriculture shall 
provide such other safeguards as the Commissioner of Social 
Security determines to be necessary or appropriate to protect 
the confidentiality of such social security account numbers. 
For purposes of this clause the term ``authorized person'' 
means an officer or employee of an insurer whom the Manager of 
the Corporation designates by rule, subject to appropriate 
safeguards including a prohibition against the release of such 
social security account number (other than to the Corporation) 
by such person.
  (v) If and to the extent that any provision of Federal law 
heretofore enacted is inconsistent with the policy set forth in 
clause (i), such provision shall, on and after the date of the 
enactment of this subparagraph, be null, void, and of no 
effect. If and to the extent that any such provision is 
inconsistent with the requirement set forth in clause (ii), 
such provision shall, on and after the date of the enactment of 
such subclause, be null, void, and of no effect.
  (vi)(I) For purposes of clause (i) of this subparagraph, an 
agency of a State (or political subdivision thereof) charged 
with the administration of any general public assistance, 
driver's license, or motor vehicle registration law which did 
not use the social security account number for identification 
under a law or regulation adopted before January 1, 1975, may 
require an individual to disclose his or her social security 
number to such agency solely for the purpose of administering 
the laws referred to in clause (i) above and for the purpose of 
responding to requests for information from an agency 
administering a program funded under part A of title IV or an 
agency operating pursuant to the provisions of part D of such 
title.
  (II) Any State or political subdivision thereof (and any 
person acting as an agent of such an agency or 
instrumentality), in the administration of any driver's license 
or motor vehicle registration law within its jurisdiction, may 
not display a social security account number issued by the 
Commissioner of Social Security (or any derivative of such 
number) on any driver's license, motor vehicle registration, or 
personal identification card (as defined in section 7212(a)(2) 
of the 9/11 Commission Implementation Act of 2004), or include, 
on any such license, registration, or personal identification 
card, a magnetic strip, bar code, or other means of 
communication which conveys such number (or derivative 
thereof).
  (vii) For purposes of this subparagraph, the term ``State'' 
includes the District of Columbia, the Commonwealth of Puerto 
Rico, the Virgin Islands, Guam, the Commonwealth of the 
Northern Marianas, and the Trust Territory of the Pacific 
Islands.
  (viii)(I) Social security account numbers and related records 
that are obtained or maintained by authorized persons pursuant 
to any provision of law, enacted on or after October 1, 1990, 
shall be confidential, and no authorized person shall disclose 
any such social security account number or related record.
  (II) Paragraphs (1), (2), and (3) of section 7213(a) of the 
Internal Revenue Code of 1986 shall apply with respect to the 
unauthorized willful disclosure to any person of social 
security account numbers and related records obtained or 
maintained by an authorized person pursuant to a provision of 
law enacted on or after October 1, 1990, in the same manner and 
to the same extent as such paragraphs as such paragraphs apply 
with respect to unauthorized disclosures of returns and return 
information described in such paragraphs. Paragraph (4) of such 
7213(a) of such Code shall apply with respect to the willful 
offer of any item of material value in exchange for any such 
social security account number or related record in the same 
manner and to the same extent as such paragraph applies with 
respect to offers (in exchange for any return or return 
information) described in such paragraph.
  (III) For purposes of this clause, the term ``authorized 
person'' means an officer or employee of the United States, an 
officer or employee of any State, political subdivision of a 
State, or agency of a State or political subdivision of a 
State, and any other person (or officer or employee thereof), 
who has or had access to social security account numbers or 
related records pursuant to any provision of law enacted on or 
after October 1, 1990. For purposes of this subclause, the term 
``officer or employee'' includes a former officer or employee.
  (IV) For purposes of this clause, the term ``related record'' 
means any record, list, or compilation that indicates, directly 
or indirectly, the identity of any individual with respect to 
whom a social security account number or a request for a social 
security account number is maintained pursuant to this clause.
  (ix) In the administration of the provisions of chapter 81 of 
title 5, United States Code, and the Longshore and Harbor 
Workers' Compensation Act (33 U.S.C. 901 et seq.), the 
Secretary of Labor may require by regulation that any person 
filing a notice of injury or a claim for benefits under such 
provisions provide as part of such notice or claim such 
person's social security account number, subject to the 
requirements of this clause. No officer or employee of the 
Department of Labor shall have access to any such number for 
any purpose other than the establishment of a system of records 
necessary for the effective administration of such provisions. 
The Secretary of Labor shall restrict, to the satisfaction of 
the Commissioner of Social Security, access to social security 
account numbers obtained pursuant to this clause to officers 
and employees of the United States whose duties or 
responsibilities require access for the administration or 
enforcement of such provisions. The Secretary of Labor shall 
provide such other safeguards as the Commissioner of Social 
Security determines to be necessary or appropriate to protect 
the confidentiality of the social security account numbers.
  (x) No executive, legislative, or judicial agency or 
instrumentality of the Federal Government or of a State or 
political subdivision thereof (or person acting as an agent of 
such an agency or instrumentality) may employ, or enter into a 
contract for the use or employment of, prisoners in any 
capacity that would allow such prisoners access to the social 
security account numbers of other individuals. For purposes of 
this clause, the term `prisoner' means an individual who is 
confined in a jail, prison, or other penal institution or 
correctional facility, serving community service as a term of 
probation or parole, or serving a sentence through a work-
furlough program.
  (D)(i) It is the policy of the United States that--
          (I) any State (or any political subdivision of a 
        State) and any authorized blood donation facility may 
        utilize the social security account numbers issued by 
        the Commissioner of Social Security for the purpose of 
        identifying blood donors, and
          (II) any State (or political subdivision of a State) 
        may require any individual who donates blood within 
        such State (or political subdivision) to furnish to 
        such State (or political subdivision), to any agency 
        thereof having related administrative responsibility, 
        or to any authorized blood donation facility the social 
        security account number (or numbers, if the donor has 
        more than 1 such number) issued to the donor by the 
        Commissioner of Social Security.
  (ii) If and to the extent that any provision of Federal law 
enacted before the date of the enactment of this subparagraph 
is inconsistent with the policy set forth in clause (i), such 
provision shall, on and after such date, be null, void, and of 
no effect.
  (iii) For purposes of this subparagraph--
          (I) the term ``authorized blood donation facility'' 
        means an entity described in section 1141(h)(1)(B), and
          (II) the term ``State'' includes the District of 
        Columbia, the Commonwealth of Puerto Rico, the Virgin 
        Islands, Guam, the Commonwealth of the Northern 
        Marianas, and the Trust Territory of the Pacific 
        Islands.
  (E)(i) It is the policy of the United States that--
          (I) any State (or any political subdivision of a 
        State) may utilize the social security account numbers 
        issued by the Commissioner of Social Security for the 
        additional purposes described in clause (ii) if such 
        numbers have been collected and are otherwise utilized 
        by such State (or political subdivision) in accordance 
        with applicable law, and
          (II) any district court of the United States may use, 
        for such additional purposes, any such social security 
        account numbers which have been so collected and are so 
        utilized by any State.
  (ii) The additional purposes described in this clause are the 
following:
          (I) Identifying duplicate names of individuals on 
        master lists used for jury selection purposes.
          (II) Identifying on such master lists those 
        individuals who are ineligible to serve on a jury by 
        reason of their conviction of a felony.
  (iii) To the extent that any provision of Federal law enacted 
before the date of the enactment of this subparagraph is 
inconsistent with the policy set forth in clause (i), such 
provision shall, on and after that date, be null, void, and of 
no effect.
  (iv) For purposes of this subparagraph, the term ``State'' 
has the meaning such term has in subparagraph (D).
  (F) The Commissioner of Social Security shall require, as a 
condition for receipt of benefits under this title, that an 
individual furnish satisfactory proof of a social security 
account number assigned to such individual by the Commissioner 
of Social Security or, in the case of an individual to whom no 
such number has been assigned, that such individual make proper 
application for assignment of such a number.
  (G) The Commissioner of Social Security shall issue a social 
security card to each individual at the time of the issuance of 
a social security account number to such individual. The social 
security card shall be made of banknote paper, and (to the 
maximum extent practicable) shall be a card which cannot be 
counterfeited.
  (H) The Commissioner of Social Security shall share with the 
Secretary of the Treasury the information obtained by the 
Commissioner pursuant to the second sentence of subparagraph 
(B)(ii) and to subparagraph (C)(ii) for the purpose of 
administering those sections of the Internal Revenue Code of 
1986 which grant tax benefits based on support or residence of 
children.
          (3) The Commissioner's records shall be evidence for 
        the purpose of proceedings before the Commissioner of 
        Social Security or any court of the amounts of wages 
        paid to, and self-employment income derived by, an 
        individual and of the periods in which such wages were 
        paid and such income was derived. The absence of an 
        entry in such records as to wages alleged to have been 
        paid to, or as to self-employment income alleged to 
        have been derived by, an individual in any period shall 
        be evidence that no such alleged wages were paid to, or 
        that no such alleged income was derived by, such 
        individual during such period.
          (4) Prior to the expiration of the time limitation 
        following any year the Commissioner of Social Security 
        may, if it is brought to the Commissioner's attention 
        that any entry of wages or self-employment income in 
        the Commissioner's records for such year is erroneous 
        or that any item of wages or self-employment income for 
        such year has been omitted from such records, correct 
        such entry or include such omitted item in the 
        Commissioner's records, as the case may be. After the 
        expiration of the time limitation following any year--
                  (A) the Commissioner's records (with changes, 
                if any, made pursuant to paragraph (5)) of the 
                amounts of wages paid to, and self-employment 
                income derived by, an individual during any 
                period in such year shall be conclusive for the 
                purposes of this title;
                  (B) the absence of an entry in the 
                Commissioner's records as to the wages alleged 
                to have been paid by an employer to an 
                individual during any period in such year shall 
                be presumptive evidence for the purposes of 
                this title that no such alleged wages were paid 
                to such individuals in such period; and
                  (C) the absence of an entry in the 
                Commissioner's records as to the self-
                employment income alleged to have been derived 
                by an individual in such year shall be 
                conclusive for the purposes of this title that 
                no such alleged self-employment income was 
                derived by such individual in such year unless 
                it is shown that he filed a tax return of his 
                self-employment income for such year before the 
                expiration of the time limitation following 
                such year, in which case the Commissioner of 
                Social Security shall include in the 
                Commissioner's records the self-employment 
                income of such individual for such year.
          (5) After the expiration of the time limitation 
        following any year in which wages were paid or alleged 
        to have been paid to, or self-employment income was 
        derived or alleged to have been derived by, an 
        individual, the Commissioner of Social Security may 
        change or delete any entry with respect to wages or 
        self-employment income in the Commissioner's records of 
        such year for such individual or include in the 
        Commissioner's records of such year for such individual 
        any omitted item of wages or self-employment income but 
        only--
                  (A) if an application for monthly benefits or 
                for a lump-sum death payment was filed within 
                the time limitation following such year; except 
                that no such change, deletion, or inclusion may 
                be made pursuant to this subparagraph after a 
                final decision upon the application for monthly 
                benefits or lump-sum death payment;
                  (B) if within the time limitation following 
                such year an individual or his survivor makes a 
                request for a change or deletion, or for an 
                inclusion of an omitted item, and alleges in 
                writing that the Commissioner's records of the 
                wages paid to, or the self-employment income 
                derived by, such individual in such year are in 
                1 or more respects erroneous; except that no 
                such change, deletion, or inclusion may be made 
                pursuant to this subparagraph after a final 
                decision upon such request. Written notice of 
                the Commissioner's decision on any such request 
                shall be given to the individual who made the 
                request;
                  (C) to correct errors apparent on the face of 
                such records;
                  (D) to transfer items to records of the 
                Railroad Retirement Board if such items were 
                credited under this title when they should have 
                been credited under the Railroad Retirement Act 
                of 1937 or 1974, or to enter items transferred 
                by the Railroad Retirement Board which have 
                been credited under the Railroad Retirement Act 
                of 1937 or 1974 when they should have been 
                credited under this title;
                  (E) to delete or reduce the amount of any 
                entry which is erroneous as a result of fraud;
                  (F) to conform his records to--
                          (i) tax returns or portions thereof 
                        (including information returns and 
                        other written statements) filed with 
                        the Commissioner of Internal Revenue 
                        under title VIII of the Social Security 
                        Act, under subchapter E of chapter 1 or 
                        subchapter A of chapter 9 of the 
                        Internal Revenue Code of 1939, under 
                        chapter 2 or 21 of the Internal Revenue 
                        Code of 1954 or the Internal Revenue 
                        Code of 1986, or under regulations made 
                        under authority of such title, 
                        subchapter, or chapter;
                          (ii) wage reports filed by a State 
                        pursuant to an agreement under section 
                        218 or regulations of the Commissioner 
                        of Social Security thereunder; or
                          (iii) assessments of amounts due 
                        under an agreement pursuant to section 
                        218 (as in effect prior to December 31, 
                        1986), if such assessments are made 
                        within the period specified in 
                        subsection (q) of such section (as so 
                        in effect), or allowances of credits or 
                        refunds of overpayments by a State 
                        under an agreement pursuant to such 
                        section; except that no amount of self-
                        employment income of an individual for 
                        any taxable year (if such return or 
                        statement was filed after the 
                        expiration of the time limitation 
                        following the taxable year) shall be 
                        included in the Commissioner's records 
                        pursuant to this subparagraph;
                  (G) to correct errors made in the allocation, 
                to individuals or periods, of wages or self-
                employment income entered in the records of the 
                Commissioner of Social Security;
                  (H) to include wages paid during any period 
                in such year to an individual by an employer;
                  (I) to enter items which constitute 
                remuneration for employment under subsection 
                (o), such entries to be in accordance with 
                certified reports of records made by the 
                Railroad Retirement Board pursuant to section 
                5(k)(3) of the Railroad Retirement Act of 1937 
                or section 7(b)(7) of the Railroad Retirement 
                Act of 1974; or
                  (J) to include self-employment income for any 
                taxable year, up to, but not in excess of, the 
                amount of wages deleted by the Commissioner of 
                Social Security as payments erroneously 
                included in such records as wages paid to such 
                individual, if such income (or net earnings 
                from self-employment), not already included in 
                such records as self-employment income, is 
                included in a return or statement (referred to 
                in subparagraph (F)) filed before the 
                expiration of the time limitation following the 
                taxable year in which such deletion of wages is 
                made.
          (6) Written notice of any deletion or reduction under 
        paragraph (4) or (5) shall be given to the individual 
        whose record is involved or to his survivor, except 
        that (A) in the case of a deletion or reduction with 
        respect to any entry of wages such notice shall be 
        given to such individual only if he has previously been 
        notified by the Commissioner of Social Security of the 
        amount of his wages for the period involved, and (B) 
        such notice shall be given to such survivor only if he 
        or the individual whose record is involved has 
        previously been notified by the Commissioner of Social 
        Security of the amount of such individual's wages and 
        self-employment income for the period involved.
          (7) Upon request in writing (within such period, 
        after any change or refusal of a request for a change 
        of the Commissioner's records pursuant to this 
        subsection, as the Commissioner of Social Security may 
        prescribe), opportunity for hearing with respect to 
        such change or refusal shall be afforded to any 
        individual or his survivor. If a hearing is held 
        pursuant to this paragraph the Commissioner of Social 
        Security shall make findings of fact and a decision 
        based upon the evidence adduced at such hearing and 
        shall include any omitted items, or change or delete 
        any entry, in the Commissioner's records as may be 
        required by such findings and decision.
          (8) A translation into English by a third party of a 
        statement made in a foreign language by an applicant 
        for or beneficiary of monthly insurance benefits under 
        this title shall not be regarded as reliable for any 
        purpose under this title unless the third party, under 
        penalty of perjury--
                  (A) certifies that the translation is 
                accurate; and
                  (B) discloses the nature and scope of the 
                relationship between the third party and the 
                applicant or recipient, as the case may be.
          (9) Decisions of the Commissioner of Social Security 
        under this subsection shall be reviewable by commencing 
        a civil action in the United States district court as 
        provided in subsection (g).
  (d) Issuance of subpenas in administrative proceedings.--For 
the purpose of any hearing, investigation, or other proceeding 
authorized or directed under this title, or relative to any 
other matter within the the Commissioner's jurisdiction 
hereunder, the Commissioner of Social Security shall have power 
to issue subpenas requiring the attendance and testimony of 
witnesses and the production of any evidence that relates to 
any matter under investigation or in question before the 
Commissioner of Social Security. Such attendance of witnesses 
and production of evidence at the designated place of such 
hearing, investigation, or other proceeding may be required 
from any place in the United States or in any Territory or 
possession thereof. Subpenas of the Commissioner of Social 
Security shall be served by anyone authorized by the 
Commissioner (1) by delivering a copy thereof to the individual 
named therein, or (2) by registered mail or by certified mail 
addressed to such individual at his last dwelling place or 
principal place of business. A verified return by the 
individual so serving the subpena setting forth the manner of 
service, or, in the case of service by registered mail or by 
certified mail, the return post-office receipt therefor signed 
by the individual so served, shall be proof of service. 
Witnesses so subpenaed shall be paid the same fees and mileage 
as are paid witnesses in the district courts of the United 
States.
  (e) Judicial enforcement of subpenas; contempt.--In case of 
contumacy by, or refusal to obey a subpena duly served upon, 
any person, any district court of the United States for the 
judicial district in which said person charged with contumacy 
or refusal to obey is found or resides or transacts business, 
upon application by the Commissioner of Social Security, shall 
have jurisdiction to issue an order requiring such person to 
appear and give testimony, or to appear and produce evidence, 
or both; any failure to obey such order of the court may be 
punished by said court as contempt thereof.
  (f) [Repealed]
  (g) Judicial review.--Any individual, after any final 
decision of the Commissioner of Social Security made after a 
hearing to which he was a party, irrespective of the amount in 
controversy, may obtain a review of such decision by a civil 
action commenced within sixty days after the mailing to him of 
notice of such decision or within such further time as the 
Commissioner of Social Security may allow. Such action shall be 
brought in the district court of the United States for the 
judicial district in which the plaintiff resides, or has his 
principal place of business, or, if he does not reside or have 
his principal place of business within any such judicial 
district, in the District Court of the United States for the 
District of Columbia. As part of the Commissioner's answer the 
Commissioner of Social Security shall file a certified copy of 
the transcript of the record including the evidence upon which 
the findings and decision complained of are based. The court 
shall have power to enter, upon the pleadings and transcript of 
the record, a judgment affirming, modifying, or reversing the 
decision of the Commissioner of Social Security, with or 
without remanding the cause for a rehearing. The findings of 
the Commissioner of Social Security as to any fact, if 
supported by substantial evidence, shall be conclusive, and 
where a claim has been denied by the Commissioner of Social 
Security or a decision is rendered under subsection (b) hereof 
which is adverse to an individual who was a party to the 
hearing before the Commissioner of Social Security, because of 
failure of the claimant or such individual to submit proof in 
conformity with any regulation prescribed under subsection (a) 
hereof, the court shall review only the question of conformity 
with such regulations and the validity of such regulations. The 
court may, on motion of the Commissioner of Social Security 
made for good cause shown before the Commissioner files the 
Commissioner's answer, remand the case to the Commissioner of 
Social Security for further action by the Commissioner of 
Social Security, and it may at any time order additional 
evidence to be taken before the Commissioner of Social 
Security, but only upon a showing that there is new evidence 
which is material and that there is good cause for the failure 
to incorporate such evidence into the record in a prior 
proceeding; and the Commissioner of Social Security shall, 
after the case is remanded, and after hearing such additional 
evidence if so ordered, modify or affirm the Commissioner's 
findings of fact or the Commissioner's decision, or both, and 
shall file with the court any such additional and modified 
findings of fact and decision, and, in any case in which the 
Commissioner has not made a decision fully favorable to the 
individual, a transcript of the additional record and testimony 
upon which the Commissioner's action in modifying or affirming 
was based. Such additional or modified findings of fact and 
decision shall be reviewable only to the extent provided for 
review of the original findings of fact and decision. The 
judgment of the court shall be final except that it shall be 
subject to review in the same manner as a judgment in other 
civil actions. Any action instituted in accordance with this 
subsection shall survive notwithstanding any change in the 
person occupying the office of Commissioner of Social Security 
or any vacancy in such office.
  (h) Finality of Commissioner's decision.--The findings and 
decisions of the Commissioner of Social Security after a 
hearing shall be binding upon all individuals who were parties 
to such hearing. No findings of fact or decision of the 
Commissioner of Social Security shall be reviewed by any 
person, tribunal, or governmental agency except as herein 
provided. No action against the United States, the Commissioner 
of Social Security, or any officer or employee thereof shall be 
brought under section 1331 or 1346 of title 28, United States 
Code, to recover on any claim arising under this title.
  (i) Certification for payment.--Upon final decision of the 
Commissioner of Social Security, or upon final judgment of any 
court of competent jurisdiction, that any person is entitled to 
any payment or payments under this title, the Commissioner of 
Social Security shall certify to the Managing Trustee the name 
and address of the person so entitled to receive such payment 
or payments, the amount of such payment or payments, and the 
time at which such payment or payments should be made, and the 
Managing Trustee, through the Fiscal Service of the Department 
of the Treasury, and prior to any action thereon by the General 
Accounting Office, shall make payment in accordance with the 
certification of the Commissioner of Social Security (except 
that in the case of (A) an individual who will have completed 
10 years of service (or 5 or more years of service, all of 
which accrues after December 31, 1995) creditable under the 
Railroad Retirement Act of 1937 or the Railroad Retirement Act 
of 1974, (B) the wife or husband of such an individual, (C) any 
survivor of such an individual if such survivor is entitled, or 
could upon application become entitled, to an annuity under 
section 2 of the Railroad Retirement Act of 1974, and (D) any 
other person entitled to benefits under section 202 of this Act 
on the basis of the wages and self-employment income of such an 
individual (except a survivor of such an individual where such 
individual did not have a current connection with the railroad 
industry, as defined in the Railroad Retirement Act of 1974, at 
the time of his death), such certification shall be made to the 
Railroad Retirement Board which shall provide for such payment 
or payments to such person on behalf of the Managing Trustee in 
accordance with the provisions of the Railroad Retirement Act 
of 1974): Provided, That where a review of the Commissioner's 
decision is or may be sought under subsection (g) the 
Commissioner of Social Security may withhold certification of 
payment pending such review. The Managing Trustee shall not be 
held personally liable for any payment or payments made in 
accordance with a certification by the Commissioner of Social 
Security.
  (j) Representative payees.--
          (1)(A) If the Commissioner of Social Security 
        determines that the interest of any individual under 
        this title would be served thereby, certification of 
        payment of such individual's benefit under this title 
        may be made, regardless of the legal competency or 
        incompetency of the individual, either for direct 
        payment to the individual, or for his or her use and 
        benefit, to another individual, or an organization, 
        with respect to whom the requirements of paragraph (2) 
        have been met (hereinafter in this subsection referred 
        to as the individual's ``representative payee''). If 
        the Commissioner of Social Security or a court of 
        competent jurisdiction determines that a representative 
        payee has misused any individual's benefit paid to such 
        representative payee pursuant to this subsection or 
        section 807 or 1631(a)(2), the Commissioner of Social 
        Security shall promptly revoke certification for 
        payment of benefits to such representative payee 
        pursuant to this subsection and certify payment to an 
        alternative representative payee or, if the interest of 
        the individual under this title would be served 
        thereby, to the individual.
          (B) In the case of an individual entitled to benefits 
        based on disability, the payment of such benefits shall 
        be made to a representative payee if the Commissioner 
        of Social Security determines that such payment would 
        serve the interest of the individual because the 
        individual also has an alcoholism or drug addiction 
        condition (as determined by the Commissioner) and the 
        individual is incapable of managing such benefits.
          (2)(A) Any certification made under paragraph (1) for 
        payment of benefits to an individual's representative 
        payee shall be made on the basis of--
                  (i) an investigation by the Commissioner of 
                Social Security of the person to serve as 
                representative payee, which shall be conducted 
                in advance of such certification and shall, to 
                the extent practicable, include a face-to-face 
                interview with such person, and
                  (ii) adequate evidence that such 
                certification is in the interest of such 
                individual (as determined by the Commissioner 
                of Social Security in regulations).
          (B)(i) As part of the investigation referred to in 
        subparagraph (A)(i), the Commissioner of Social 
        Security shall--
                  (I) require the person being investigated to 
                submit documented proof of the identity of such 
                person, unless information establishing such 
                identity has been submitted with an application 
                for benefits under this title, title VIII, or 
                title XVI,
                  (II) verify such person's social security 
                account number (or employer identification 
                number),
                  (III) determine whether such person has been 
                convicted of a violation of section 208, 811, 
                or 1632,
                  (IV) obtain information concerning whether 
                such person has been convicted of any other 
                offense under Federal or State law which 
                resulted in imprisonment for more than 1 year,
                  (V) obtain information concerning whether 
                such person is a person described in section 
                202(x)(1)(A)(iv), and
                  (VI) determine whether certification of 
                payment of benefits to such person has been 
                revoked pursuant to this subsection, the 
                designation of such person as a representative 
                payee has been revoked pursuant to section 
                807(a), or payment of benefits to such person 
                has been terminated pursuant to section 
                1631(a)(2)(A)(iii) by reason of misuse of funds 
                paid as benefits under this title, title VIII, 
                or title XVI.
          (ii) The Commissioner of Social Security shall 
        establish and maintain a centralized file, which shall 
        be updated periodically and which shall be in a form 
        which renders it readily retrievable by each servicing 
        office of the Social Security Administration. Such file 
        shall consist of--
                  (I) a list of the names and social security 
                account numbers (or employer identification 
                numbers) of all persons with respect to whom 
                certification of payment of benefits has been 
                revoked on or after January 1, 1991, pursuant 
                to this subsection, whose designation as a 
                representative payee has been revoked pursuant 
                to section 807(a), or with respect to whom 
                payment of benefits has been terminated on or 
                after such date pursuant to section 
                1631(a)(2)(A)(iii), by reason of misuse of 
                funds paid as benefits under this title, title 
                VIII, or title XVI, and
                  (II) a list of the names and social security 
                account numbers (or employer identification 
                numbers) of all persons who have been convicted 
                of a violation of section 208, 811, or 1632.
          (iii) Notwithstanding the provisions of section 552a 
        of title 5, United States Code, or any other provision 
        of Federal or State law (other than section 6103 of the 
        Internal Revenue Code of 1986 and section 1106(c) of 
        this Act), the Commissioner shall furnish any Federal, 
        State, or local law enforcement officer, upon the 
        written request of the officer, with the current 
        address, social security account number, and photograph 
        (if applicable) of any person investigated under this 
        paragraph, if the officer furnishes the Commissioner 
        with the name of such person and such other identifying 
        information as may reasonably be required by the 
        Commissioner to establish the unique identity of such 
        person, and notifies the Commissioner that--
                  (I) such person is described in section 
                202(x)(1)(A)(iv),
                  (II) such person has information that is 
                necessary for the officer to conduct the 
                officer's official duties, and
                  (III) the location or apprehension of such 
                person is within the officer's official duties.
          (C)(i) Benefits of an individual may not be certified 
        for payment to any other person pursuant to this 
        subsection if--
                  (I) such person has previously been convicted 
                as described in subparagraph (B)(i)(III),
                  (II) except as provided in clause (ii), 
                certification of payment of benefits to such 
                person under this subsection has previously 
                been revoked as described in subparagraph 
                (B)(i)(VI) the designation of such person as a 
                representative payee has been revoked pursuant 
                to section 807(a), or payment of benefits to 
                such person pursuant to section 
                1631(a)(2)(A)(ii) has previously been 
                terminated as described in section 
                1631(a)(2)(B)(ii)(VI),
                  (III) except as provided in clause (iii), 
                such person is a creditor of such individual 
                who provides such individual with goods or 
                services for consideration,
                  (IV) such person has previously been 
                convicted as described in subparagraph 
                (B)(i)(IV), unless the Commissioner determines 
                that such certification would be appropriate 
                notwithstanding such conviction, or
                  (V) such person is a person described in 
                section 202(x)(1)(A)(iv).
          (ii) The Commissioner of Social Security shall 
        prescribe regulations under which the Commissioner of 
        Social Security may grant exemptions to any person from 
        the provisions of clause (i)(II) on a case-by-case 
        basis if such exemption is in the best interest of the 
        individual whose benefits would be paid to such person 
        pursuant to this subsection.
          (iii) Clause (i)(III) shall not apply with respect to 
        any person who is a creditor referred to therein if 
        such creditor is--
                  (I) a relative of such individual if such 
                relative resides in the same household as such 
                individual,
                  (II) a legal guardian or legal representative 
                of such individual,
                  (III) a facility that is licensed or 
                certified as a care facility under the law of a 
                State or a political subdivision of a State,
                  (IV) a person who is an administrator, owner, 
                or employee of a facility referred to in 
                subclause (III) if such individual resides in 
                such facility, and the certification of payment 
                to such facility or such person is made only 
                after good faith efforts have been made by the 
                local servicing office of the Social Security 
                Administration to locate an alternative 
                representative payee to whom such certification 
                of payment would serve the best interests of 
                such individual, or
                  (V) an individual who is determined by the 
                Commissioner of Social Security, on the basis 
                of written findings and under procedures which 
                the Commissioner of Social Security shall 
                prescribe by regulation, to be acceptable to 
                serve as a representative payee.
          (iv) The procedures referred to in clause (iii)(V) 
        shall require the individual who will serve as 
        representative payee to establish, to the satisfaction 
        of the Commissioner of Social Security, that--
                  (I) such individual poses no risk to the 
                beneficiary,
                  (II) the financial relationship of such 
                individual to the beneficiary poses no 
                substantial conflict of interest, and
                  (III) no other more suitable representative 
                payee can be found.
          (v) In the case of an individual described in 
        paragraph (1)(B), when selecting such individual's 
        representative payee, preference shall be given to--
                  (I) a certified community-based nonprofit 
                social service agency (as defined in paragraph 
                (10)),
                  (II) a Federal, State, or local government 
                agency whose mission is to carry out income 
                maintenance, social service, or health care-
                related activities,
                  (III) a State or local government agency with 
                fiduciary responsibilities, or
                  (IV) a designee of an agency (other than of a 
                Federal agency) referred to in the preceding 
                subclauses of this clause, if the Commissioner 
                of Social Security deems it appropriate, unless 
                the Commissioner of Social Security determines 
                that selection of a family member would be 
                appropriate.
          (D)(i) Subject to clause (ii), if the Commissioner of 
        Social Security makes a determination described in the 
        first sentence of paragraph (1) with respect to any 
        individual's benefit and determines that direct payment 
        of the benefit to the individual would cause 
        substantial harm to the individual, the Commissioner of 
        Social Security may defer (in the case of initial 
        entitlement) or suspend (in the case of existing 
        entitlement) direct payment of such benefit to the 
        individual, until such time as the selection of a 
        representative payee is made pursuant to this 
        subsection.
          (ii)(I) Except as provided in subclause (II), any 
        deferral or suspension of direct payment of a benefit 
        pursuant to clause (i) shall be for a period of not 
        more than 1 month.
          (II) Subclause (I) shall not apply in any case in 
        which the individual is, as of the date of the 
        Commissioner's determination, legally incompetent, 
        under the age of 15 years, or described in paragraph 
        (1)(B).
          (iii) Payment pursuant to this subsection of any 
        benefits which are deferred or suspended pending the 
        selection of a representative payee shall be made to 
        the individual or the representative payee as a single 
        sum or over such period of time as the Commissioner of 
        Social Security determines is in the best interest of 
        the individual entitled to such benefits.
          (E)(i) Any individual who is dissatisfied with a 
        determination by the Commissioner of Social Security to 
        certify payment of such individual's benefit to a 
        representative payee under paragraph (1) or with the 
        designation of a particular person to serve as 
        representative payee shall be entitled to a hearing by 
        the Commissioner of Social Security to the same extent 
        as is provided in subsection (b), and to judicial 
        review of the Commissioner's final decision as is 
        provided in subsection (g).
          (ii) In advance of the certification of payment of an 
        individual's benefit to a representative payee under 
        paragraph (1), the Commissioner of Social Security 
        shall provide written notice of the Commissioner's 
        initial determination to certify such payment. Such 
        notice shall be provided to such individual, except 
        that, if such individual--
                  (I) is under the age of 15,
                  (II) is an unemancipated minor under the age 
                of 18, or
                  (III) is legally incompetent, then such 
                notice shall be provided solely to the legal 
                guardian or legal representative of such 
                individual.
          (iii) Any notice described in clause (ii) shall be 
        clearly written in language that is easily 
        understandable to the reader, shall identify the person 
        to be designated as such individual's representative 
        payee, and shall explain to the reader the right under 
        clause (i) of such individual or of such individual's 
        legal guardian or legal representative--
                  (I) to appeal a determination that a 
                representative payee is necessary for such 
                individual,
                  (II) to appeal the designation of a 
                particular person to serve as the 
                representative payee of such individual, and
                  (III) to review the evidence upon which such 
                designation is based and submit additional 
                evidence.
          (3)(A) In any case where payment under this title is 
        made to a person other than the individual entitled to 
        such payment, the Commissioner of Social Security shall 
        establish a system of accountability monitoring whereby 
        such person shall report not less often than annually 
        with respect to the use of such payments. The 
        Commissioner of Social Security shall establish and 
        implement statistically valid procedures for reviewing 
        such reports in order to identify instances in which 
        such persons are not properly using such payments.
          (B) Subparagraph (A) shall not apply in any case 
        where the other person to whom such payment is made is 
        a State institution. In such cases, the Commissioner of 
        Social Security shall establish a system of 
        accountability monitoring for institutions in each 
        State.
          (C) Subparagraph (A) shall not apply in any case 
        where the individual entitled to such payment is a 
        resident of a Federal institution and the other person 
        to whom such payment is made is the institution.
          (D) Notwithstanding subparagraphs (A), (B), and (C), 
        the Commissioner of Social Security may require a 
        report at any time from any person receiving payments 
        on behalf of another, if the Commissioner of Social 
        Security has reason to believe that the person 
        receiving such payments is misusing such payments.
          (E) In any case in which the person described in 
        subparagraph (A) or (D) receiving payments on behalf of 
        another fails to submit a report required by the 
        Commissioner of Social Security under subparagraph (A) 
        or (D), the Commissioner may, after furnishing notice 
        to such person and the individual entitled to such 
        payment, require that such person appear in person at a 
        field office of the Social Security Administration 
        serving the area in which the individual resides in 
        order to receive such payments.
          (F) The Commissioner of Social Security shall 
        maintain a centralized file, which shall be updated 
        periodically and which shall be in a form which will be 
        readily retrievable by each servicing office of the 
        Social Security Administration, of--
                  (i) the address and the social security 
                account number (or employer identification 
                number) of each representative payee who is 
                receiving benefit payments pursuant to this 
                subsection, section 807, or section 1631(a)(2), 
                and
                  (ii) the address and social security account 
                number of each individual for whom each 
                representative payee is reported to be 
                providing services as representative payee 
                pursuant to this subsection, section 807, or 
                section 1631(a)(2).
          (G) Each servicing office of the Administration shall 
        maintain a list, which shall be updated periodically, 
        of public agencies and certified community-based 
        nonprofit social service agencies (as defined in 
        paragraph (10)) which are qualified to serve as 
        representative payees pursuant to this subsection or 
        section 807 or 1631(a)(2) and which are located in the 
        area served by such servicing office.
          (4)(A)(i) Except as provided in the next sentence, a 
        qualified organization may collect from an individual a 
        monthly fee for expenses (including overhead) incurred 
        by such organization in providing services performed as 
        such individual's representative payee pursuant to this 
        subsection if such fee does not exceed the lesser of--
                  (I) 10 percent of the monthly benefit 
                involved, or
                  (II) $25.00 per month ($50.00 per month in 
                any case in which the individual is described 
                in paragraph (1)(B)). A qualified organization 
                may not collect a fee from an individual for 
                any month with respect to which the 
                Commissioner of Social Security or a court of 
                competent jurisdiction has determined that the 
                organization misused all or part of the 
                individual's benefit, and any amount so 
                collected by the qualified organization for 
                such month shall be treated as a misused part 
                of the individual's benefit for purposes of 
                paragraphs (5) and (6). The Commissioner of 
                Social Security shall adjust annually (after 
                1995) each dollar amount set forth in subclause 
                (II) under procedures providing for adjustments 
                in the same manner and to the same extent as 
                adjustments are provided for under the 
                procedures used to adjust benefit amounts under 
                section 215(i)(2)(A), except that any amount so 
                adjusted that is not a multiple of $1.00 shall 
                be rounded to the nearest multiple of $1.00.
          (ii) In the case of an individual who is no longer 
        currently entitled to monthly insurance benefits under 
        this title but to whom all past-due benefits have not 
        been paid, for purposes of clause (i), any amount of 
        such past-due benefits payable in any month shall be 
        treated as a monthly benefit referred to in clause 
        (i)(I). Any agreement providing for a fee in excess of 
        the amount permitted under this subparagraph shall be 
        void and shall be treated as misuse by such 
        organization of such individual's benefits.
          (B) For purposes of this paragraph, the term 
        ``qualified organization'' means any State or local 
        government agency whose mission is to carry out income 
        maintenance, social service, or health care-related 
        activities, any State or local government agency with 
        fiduciary responsibilities, or any certified community-
        based nonprofit social service agency (as defined in 
        paragraph (10)), if such agency, in accordance with any 
        applicable regulations of the Commissioner of Social 
        Security--
                  (i) regularly provides services as the 
                representative payee, pursuant to this 
                subsection or section 807 or 1631(a)(2), 
                concurrently to 5 or more individuals,
                  (ii) demonstrates to the satisfaction of the 
                Commissioner of Social Security that such 
                agency is not otherwise a creditor of any such 
                individual. The Commissioner of Social Security 
                shall prescribe regulations under which the 
                Commissioner of Social Security may grant an 
                exception from clause (ii) for any individual 
                on a case-by-case basis if such exception is in 
                the best interests of such individual.
          (C) Any qualified organization which knowingly 
        charges or collects, directly or indirectly, any fee in 
        excess of the maximum fee prescribed under subparagraph 
        (A) or makes any agreement, directly or indirectly, to 
        charge or collect any fee in excess of such maximum 
        fee, shall be fined in accordance with title 18, United 
        States Code, or imprisoned not more than 6 months, or 
        both.
          (5) In cases where the negligent failure of the 
        Commissioner of Social Security to investigate or 
        monitor a representative payee results in misuse of 
        benefits by the representative payee, the Commissioner 
        of Social Security shall certify for payment to the 
        beneficiary or the beneficiary's alternative 
        representative payee an amount equal to such misused 
        benefits. In any case in which a representative payee 
        that--
                  (A) is not an individual (regardless of 
                whether it is a ``qualified organization'' 
                within the meaning of paragraph (4)(B)); or
                  (B) is an individual who, for any month 
                during a period when misuse occurs, serves 15 
                or more individuals who are beneficiaries under 
                this title, title VIII, title XVI, or any 
                combination of such titles; misuses all or part 
                of an individual's benefit paid to such 
                representative payee, the Commissioner of 
                Social Security shall certify for payment to 
                the beneficiary or the beneficiary's 
                alternative representative payee an amount 
                equal to the amount of such benefit so misused. 
                The provisions of this paragraph are subject to 
                the limitations of paragraph (7)(B). The 
                Commissioner of Social Security shall make a 
                good faith effort to obtain restitution from 
                the terminated representative payee.
          (6)(A) In addition to such other reviews of 
        representative payees as the Commissioner of Social 
        Security may otherwise conduct, the Commissioner shall 
        provide for the periodic onsite review of any person or 
        agency located in the United States that receives the 
        benefits payable under this title (alone or in 
        combination with benefits payable under title VIII or 
        title XVI) to another individual pursuant to the 
        appointment of such person or agency as a 
        representative payee under this subsection, section 
        807, or section 1631(a)(2) in any case in which--
                  (i) the representative payee is a person who 
                serves in that capacity with respect to 15 or 
                more such individuals;
                  (ii) the representative payee is a certified 
                community-based nonprofit social service agency 
                (as defined in paragraph (10) of this 
                subsection or section 1631(a)(2)(I)); or
                  (iii) the representative payee is an agency 
                (other than an agency described in clause (ii)) 
                that serves in that capacity with respect to 50 
                or more such individuals.
          (B) Within 120 days after the end of each fiscal 
        year, the Commissioner shall submit to the Committee on 
        Ways and Means of the House of Representatives and the 
        Committee on Finance of the Senate a report on the 
        results of periodic onsite reviews conducted during the 
        fiscal year pursuant to subparagraph (A) and of any 
        other reviews of representative payees conducted during 
        such fiscal year in connection with benefits under this 
        title. Each such report shall describe in detail all 
        problems identified in such reviews and any corrective 
        action taken or planned to be taken to correct such 
        problems, and shall include--
                  (i) the number of such reviews;
                  (ii) the results of such reviews;
                  (iii) the number of cases in which the 
                representative payee was changed and why;
                  (iv) the number of cases involving the 
                exercise of expedited, targeted oversight of 
                the representative payee by the Commissioner 
                conducted upon receipt of an allegation of 
                misuse of funds, failure to pay a vendor, or a 
                similar irregularity;
                  (v) the number of cases discovered in which 
                there was a misuse of funds;
                  (vi) how any such cases of misuse of funds 
                were dealt with by the Commissioner;
                  (vii) the final disposition of such cases of 
                misuse of funds, including any criminal 
                penalties imposed; and
                  (viii) such other information as the 
                Commissioner deems appropriate.
          (7)(A) If the Commissioner of Social Security or a 
        court of competent jurisdiction determines that a 
        representative payee that is not a Federal, State, or 
        local government agency has misused all or part of an 
        individual's benefit that was paid to such 
        representative payee under this subsection, the 
        representative payee shall be liable for the amount 
        misused, and such amount (to the extent not repaid by 
        the representative payee) shall be treated as an 
        overpayment of benefits under this title to the 
        representative payee for all purposes of this Act and 
        related laws pertaining to the recovery of such 
        overpayments. Subject to subparagraph (B), upon 
        recovering all or any part of such amount, the 
        Commissioner shall certify an amount equal to the 
        recovered amount for payment to such individual or such 
        individual's alternative representative payee.
          (B) The total of the amount certified for payment to 
        such individual or such individual's alternative 
        representative payee under subparagraph (A) and the 
        amount certified for payment under paragraph (5) may 
        not exceed the total benefit amount misused by the 
        representative payee with respect to such individual.
          (8) For purposes of this subsection, the term 
        ``benefit based on disability'' of an individual means 
        a disability insurance benefit of such individual under 
        section 223 or a child's, widow's, or widower's 
        insurance benefit of such individual under section 202 
        based on such individual's disability.
          (9) For purposes of this subsection, misuse of 
        benefits by a representative payee occurs in any case 
        in which the representative payee receives payment 
        under this title for the use and benefit of another 
        person and converts such payment, or any part thereof, 
        to a use other than for the use and benefit of such 
        other person. The Commissioner of Social Security may 
        prescribe by regulation the meaning of the term ``use 
        and benefit'' for purposes of this paragraph.
          (10) For purposes of this subsection, the term 
        ``certified community-based nonprofit social service 
        agency'' means a community-based nonprofit social 
        service agency which is in compliance with 
        requirements, under regulations which shall be 
        prescribed by the Commissioner, for annual 
        certification to the Commissioner that it is bonded in 
        accordance with requirements specified by the 
        Commissioner and that it is licensed in each State in 
        which it serves as a representative payee (if licensing 
        is available in the State) in accordance with 
        requirements specified by the Commissioner. Any such 
        annual certification shall include a copy of any 
        independent audit on the agency which may have been 
        performed since the previous certification.
  (k) Payments to incompetents.--Any payment made after 
December 31, 1939, under conditions set forth in subsection (j) 
any payment made before January 1, 1940, to, or on behalf of, a 
legally incompetent individual, and any payment made after 
December 31, 1939, to a legally incompetent individual without 
knowledge by the Commissioner of Social Security of 
incompetency prior to certification of payment, if otherwise 
valid under this title, shall be a complete settlement and 
satisfaction of any claim, right, or interest in and to such 
payment.
  (l) Delegation of powers and duties by Commissioner of Social 
Security.--The Commissioner of Social Security is authorized to 
delegate to any member, officer, or employee of the Social 
Security Administration designated by the Commissioner any of 
the powers conferred upon the Commissioner by this section, and 
is authorized to be represented by the Commissioner's own 
attorneys in any court in any case or proceeding arising under 
the provisions of subsection (e).
  (m) [Repealed]
  (n) Joint payments.--The Commissioner of Social Security may, 
in the Commissioner's discretion, certify to the Managing 
Trustee any 2 or more individuals of the same family for joint 
payment of the total benefits payable to such individuals for 
any month, and if 1 of such individuals dies before a check 
representing such joint payment is negotiated, payment of the 
amount of such unnegotiated check to the surviving individual 
or individuals may be authorized in accordance with regulations 
of the Secretary of the Treasury; except that appropriate 
adjustment or recovery shall be made under section 204(a) with 
respect to so much of the amount of such check as exceeds the 
amount to which such surviving individual or individuals are 
entitled under this title for such month.
  (o) Crediting of compensation under the Railroad Retirement 
Act.--If there is no person who would be entitled, upon 
application therefor, to an annuity under section 5 of the 
Railroad Retirement Act of 1974, or to a lump-sum payment under 
section 6(b) of such Act, with respect to the death of an 
employee (as defined in such Act), then, notwithstanding 
section 210(a)(10) of this Act, compensation (as defined in 
such Railroad Retirement Act, but excluding compensation 
attributable as having been paid during any month on account of 
military service creditable under section 3(i) of such Act if 
wages are deemed to have been paid to such employee during such 
month under subsection (a) or (e) of section 217 of this Act) 
of such employee shall constitute remuneration for employment 
for purposes of determining (A) entitlement to and the amount 
of any lump-sum death payment under this title on the basis of 
such employee's wages and self-employment income and (B) 
entitlement to and the amount of any monthly benefit under this 
title, for the month in which such employee died or for any 
month thereafter, on the basis of such wages and self-
employment income. For such purposes, compensation (as so 
defined) paid in a calendar year before 1978 shall, in the 
absence of evidence to the contrary, be presumed to have been 
paid in equal proportions with respect to all months in the 
year in which the employee rendered services for such 
compensation.
  (p) Special rules in case of Federal service.--
          (1) With respect to service included as employment 
        under section 210 which is performed in the employ of 
        the United States or in the employ of any 
        instrumentality which is wholly owned by the United 
        States, including service, performed as a member of a 
        uniformed service, to which the provisions of 
        subsection (l)(1) of such section are applicable, and 
        including service, performed as a volunteer or 
        volunteer leader within the meaning of the Peace Corps 
        Act, to which the provisions of section 210(o) are 
        applicable, the Commissioner of Social Security shall 
        not make determinations as to the amounts of 
        remuneration for such service, or the periods in which 
        or for which such remuneration was paid, but shall 
        accept the determinations with respect thereto of the 
        head of the appropriate Federal agency or 
        instrumentality, and of such agents as such head may 
        designate, as evidenced by returns filed in accordance 
        with the provisions of section 3122 of the Internal 
        Revenue Code of 1954 and certifications made pursuant 
        to this subsection. Such determinations shall be final 
        and conclusive. Nothing in this paragraph shall be 
        construed to affect the Commissioner's authority to 
        determine under sections 209 and 210 whether any such 
        service constitutes employment, the periods of such 
        employment, and whether remuneration paid for any such 
        service constitutes wages.
          (2) The head of any such agency or instrumentality is 
        authorized and directed, upon written request of the 
        Commissioner of Social Security, to make certification 
        to the Commissioner with respect to any matter 
        determinable for the Commissioner of Social Security by 
        such head or his agents under this subsection, which 
        the Commissioner of Social Security finds necessary in 
        administering this title.
          (3) The provisions of paragraphs (1) and (2) shall be 
        applicable in the case of service performed by a 
        civilian employee, not compensated from funds 
        appropriated by the Congress, in the Army and Air Force 
        Exchange Service, Army and Air Force Motion Picture 
        Service, Navy Exchanges, Marine Corps Exchanges, or 
        other activities, conducted by an instrumentality of 
        the United States subject to the jurisdiction of the 
        Secretary of Defense, at installations of the 
        Department of Defense for the comfort, pleasure, 
        contentment, and mental and physical improvement of 
        personnel of such Department; and for purposes of 
        paragraphs (1) and (2) the Secretary of Defense shall 
        be deemed to be the head of such instrumentality. The 
        provisions of paragraphs (1) and (2) shall be 
        applicable also in the case of service performed by a 
        civilian employee, not compensated from funds 
        appropriated by the Congress, in the Coast Guard 
        Exchanges or other activities, conducted by an 
        instrumentality of the United States subject to the 
        jurisdiction of the Secretary of Transportation, at 
        installations of the Coast Guard for the comfort, 
        pleasure, contentment, and mental and physical 
        improvement of personnel of the Coast Guard; and for 
        purposes of paragraphs (1) and (2) the Secretary of 
        Transportation shall be deemed to be the head of such 
        instrumentality.
  (q) Expedited benefit payments.--
          (1) The Commissioner of Social Security shall 
        establish and put into effect procedures under which 
        expedited payment of monthly insurance benefits under 
        this title will, subject to paragraph (4) of this 
        subsection, be made as set forth in paragraphs (2) and 
        (3) of this subsection.
          (2) In any case in which--
                  (A) an individual makes an allegation that a 
                monthly benefit under this title was due him in 
                a particular month but was not paid to him, and
                  (B) such individual submits a written request 
                for the payment of such benefit--
                          (i) in the case of an individual who 
                        received a regular monthly benefit in 
                        the month preceding the month with 
                        respect to which such allegation is 
                        made, not less than 30 days after the 
                        15th day of the month with respect to 
                        which such allegation is made (and in 
                        the event that such request is 
                        submitted prior to the expiration of 
                        such 30-day period, it shall be deemed 
                        to have been submitted upon the 
                        expiration of such period), and
                          (ii) in any other case, not less than 
                        90 days after the later of (I) the date 
                        on which such benefit is alleged to 
                        have been due, or (II) the date on 
                        which such individual furnished the 
                        last information requested by the 
                        Commissioner of Social Security (and 
                        such written request will be deemed to 
                        be filed on the day on which it was 
                        filed, or the ninetieth day after the 
                        first day on which the Commissioner of 
                        Social Security has evidence that such 
                        allegation is true, whichever is 
                        later), the Commissioner of Social 
                        Security shall, if the Commissioner 
                        finds that benefits are due, certify 
                        such benefits for payment, and payment 
                        shall be made within 15 days 
                        immediately following the date on which 
                        the written request is deemed to have 
                        been filed.
          (3) In any case in which the Commissioner of Social 
        Security determines that there is evidence, although 
        additional evidence might be required for a final 
        decision, that an allegation described in paragraph 
        (2)(A) is true, the Commissioner may make a preliminary 
        certification of such benefit for payment even though 
        the 30-day or 90-day periods described in paragraph 
        (2)(B)(i) and (B)(ii) have not elapsed.
          (4) Any payment made pursuant to a certification 
        under paragraph (3) of this subsection shall not be 
        considered an incorrect payment for purposes of 
        determining the liability of the certifying or 
        disbursing officer.
          (5) For purposes of this subsection, benefits payable 
        under section 228 shall be treated as monthly insurance 
        benefits payable under this title. However, this 
        subsection shall not apply with respect to any benefit 
        for which a check has been negotiated, or with respect 
        to any benefit alleged to be due under either section 
        223, or section 202 to a wife, husband, or child of an 
        individual entitled to or applying for benefits under 
        section 223, or to a child who has attained age 18 and 
        is under a disability, or to a widow or widower on the 
        basis of being under a disability.
  (r) Use of death certificates to correct program 
information.--
          (1) The Commissioner of Social Security shall 
        undertake to establish a program under which--
                  (A) States (or political subdivisions 
                thereof) voluntarily contract with the 
                Commissioner of Social Security to furnish the 
                Commissioner of Social Security periodically 
                with information (in a form established by the 
                Commissioner of Social Security in consultation 
                with the States) concerning individuals with 
                respect to whom death certificates (or 
                equivalent documents maintained by the States 
                or subdivisions) have been officially filed 
                with them; and
                  (B) there will be (i) a comparison of such 
                information on such individuals with 
                information on such individuals in the records 
                being used in the administration of this Act, 
                (ii) validation of the results of such 
                comparisons, and (iii) corrections in such 
                records to accurately reflect the status of 
                such individuals.
          (2) Each State (or political subdivision thereof) 
        which furnishes the Commissioner of Social Security 
        with information on records of deaths in the State or 
        subdivision under this subsection may be paid by the 
        Commissioner of Social Security from amounts available 
        for administration of this Act the reasonable costs 
        (established by the Commissioner of Social Security in 
        consultations with the States) for transcribing and 
        transmitting such information to the Commissioner of 
        Social Security.
          (3) In the case of individuals with respect to whom 
        federally funded benefits are provided by (or through) 
        a Federal or State agency other than under this Act, 
        the Commissioner of Social Security shall to the extent 
        feasible provide such information through a cooperative 
        arrangement with such agency, for ensuring proper 
        payment of those benefits with respect to such 
        individuals if--
                  (A) under such arrangement the agency 
                provides reimbursement to the Commissioner of 
                Social Security for the reasonable cost of 
                carrying out such arrangement, and
                  (B) such arrangement does not conflict with 
                the duties of the Commissioner of Social 
                Security under paragraph (1).
          (4) The Commissioner of Social Security may enter 
        into similar agreements with States to provide 
        information for their use in programs wholly funded by 
        the States if the requirements of subparagraphs (A) and 
        (B) of paragraph (3) are met.
          (5) The Commissioner of Social Security may use or 
        provide for the use of such records as may be corrected 
        under this section, subject to such safeguards as the 
        Commissioner of Social Security determines are 
        necessary or appropriate to protect the information 
        from unauthorized use or disclosure, for statistical 
        and research activities conducted by Federal and State 
        agencies.
          (6) Information furnished to the Commissioner of 
        Social Security under this subsection may not be used 
        for any purpose other than the purpose described in 
        this subsection and is exempt from disclosure under 
        section 552 of title 5, United States Code, and from 
        the requirements of section 552a of such title.
          (7) The Commissioner of Social Security shall include 
        information on the status of the program established 
        under this section and impediments to the effective 
        implementation of the program in the 1984 report 
        required under section 704 of the Act.
          (8)(A) The Commissioner of Social Security shall, 
        upon the request of the official responsible for a 
        State driver's license agency pursuant to the Help 
        America Vote Act of 2002--
                  (i) enter into an agreement with such 
                official for the purpose of verifying 
                applicable information, so long as the 
                requirements of subparagraphs (A) and (B) of 
                paragraph (3) are met; and
                  (ii) include in such agreement safeguards to 
                assure the maintenance of the confidentiality 
                of any applicable information disclosed and 
                procedures to permit such agency to use the 
                applicable information for the purpose of 
                maintaining its records.
          (B) Information provided pursuant to an agreement 
        under this paragraph shall be provided at such time, in 
        such place, and in such manner as the Commissioner 
        determines appropriate.
          (C) The Commissioner shall develop methods to verify 
        the accuracy of information provided by the agency with 
        respect to applications for voter registration, for 
        whom the last 4 digits of a social security number are 
        provided instead of a driver's license number.
          (D) For purposes of this paragraph--
                  (i) the term ``applicable information'' means 
                information regarding whether--
                          (I) the name (including the first 
                        name and any family forename or 
                        surname), the date of birth (including 
                        the month, day, and year), and social 
                        security number of an individual 
                        provided to the Commissioner match the 
                        information contained in the 
                        Commissioner's records, and
                          (II) such individual is shown on the 
                        records of the Commissioner as being 
                        deceased; and
                  (ii) the term ``State driver's license 
                agency'' means the State agency which issues 
                driver's licenses to individuals within the 
                State and maintains records relating to such 
                licensure.
          (E) Nothing in this paragraph may be construed to 
        require the provision of applicable information with 
        regard to a request for a record of an individual if 
        the Commissioner determines there are exceptional 
        circumstances warranting an exception (such as safety 
        of the individual or interference with an 
        investigation).
          (F) Applicable information provided by the Commission 
        pursuant to an agreement under this paragraph or by an 
        individual to any agency that has entered into an 
        agreement under this paragraph shall be considered as 
        strictly confidential and shall be used only for the 
        purposes described in this paragraph and for carrying 
        out an agreement under this paragraph. Any officer or 
        employee or former officer or employee of a State, or 
        any officer or employee or former officer or employee 
        of a contractor of a State who, without the written 
        authority of the Commissioner, publishes or 
        communicates any applicable information in such 
        individual's possession by reason of such employment or 
        position as such an officer, shall be guilty of a 
        felony and upon conviction thereof shall be fined or 
        imprisoned, or both, as described in section 208.
  (s) Notice requirements.--The Commissioner of Social Security 
shall take such actions as are necessary to ensure that any 
notice to 1 or more individuals issued pursuant to this title 
by the Commissioner of Social Security or by a State agency--
          (1) is written in simple and clear language, and
          (2) includes the address and telephone number of the 
        local office of the Social Security Administration 
        which serves the recipient. In the case of any such 
        notice which is not generated by a local servicing 
        office, the requirements of paragraph (2) shall be 
        treated as satisfied if such notice includes the 
        address of the local office of the Social Security 
        Administration which services the recipient of the 
        notice and a telephone number through which such office 
        can be reached.
  (t) Same-day personal interviews at field offices in cases 
where time is of the essence.--In any case in which an 
individual visits a field office of the Social Security 
Administration and represents during the visit to an officer or 
employee of the Social Security Administration in the office 
that the individual's visit is occasioned by--
          (1) the receipt of a notice from the Social Security 
        Administration indicating a time limit for response by 
        the individual, or
          (2) the theft, loss, or nonreceipt of a benefit 
        payment under this title, the Commissioner of Social 
        Security shall ensure that the individual is granted a 
        face-to-face interview at the office with an officer or 
        employee of the Social Security Administration before 
        the close of business on the day of the visit.
  (u) Redetermination of entitlement in cases of fraud or 
similar fault.--
          (1)(A) The Commissioner of Social Security shall 
        immediately redetermine the entitlement of individuals 
        to monthly insurance benefits under this title if there 
        is reason to believe that fraud or similar fault was 
        involved in the application of the individual for such 
        benefits, unless a United States attorney, or 
        equivalent State prosecutor, with jurisdiction over 
        potential or actual related criminal cases, certifies, 
        in writing, that there is a substantial risk that such 
        action by the Commissioner of Social Security with 
        regard to beneficiaries in a particular investigation 
        would jeopardize the criminal prosecution of a person 
        involved in a suspected fraud.
          (B) When redetermining the entitlement, or making an 
        initial determination of entitlement, of an individual 
        under this title, the Commissioner of Social Security 
        shall disregard any evidence if there is reason to 
        believe that fraud or similar fault was involved in the 
        providing of such evidence.
          (2) For purposes of paragraph (1), similar fault is 
        involved with respect to a determination if--
                  (A) an incorrect or incomplete statement that 
                is material to the determination is knowingly 
                made; or
                  (B) information that is material to the 
                determination is knowingly concealed.
          (3) If, after redetermining pursuant to this 
        subsection the entitlement of an individual to monthly 
        insurance benefits, the Commissioner of Social Security 
        determines that there is insufficient evidence to 
        support such entitlement, the Commissioner of Social 
        Security may terminate such entitlement and may treat 
        benefits paid on the basis of such insufficient 
        evidence as overpayments.

                                  
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