Social Security Numbers: More Could be Done to Protect SSNs	 
(30-MAR-06, GAO-06-586T).					 
                                                                 
In 1936, the Social Security Administration established the	 
Social Security number (SSN) to track worker's earnings for	 
Social Security benefit purposes. Since its creation, the SSN has
evolved beyond its original purpose and has become the identifier
of choice for public and private sector entities. Today, the SSN 
is a key piece of information often sought by identity thieves.  
Once the SSN is obtained fraudulently, it can then be used to	 
create false identities for financial misuse or assuming another 
individual's identity. Congress and some states have recognized  
the importance of restricting the use and display of SSNs. GAO	 
has issued a number of reports and testimonies about the various 
aspects of SSN use in both public and private sectors and what	 
could be done to further protect individual's SSNs. Accordingly, 
this testimony focuses on describing (1) the use of SSNs by	 
government agencies and certain private sector entities, (2) the 
federal laws that regulate the use and disclosure of SSNs, and	 
(3) the gaps that remain in protecting the SSN and what more	 
could be done.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-586T					        
    ACCNO:   A50517						        
  TITLE:     Social Security Numbers: More Could be Done to Protect   
SSNs								 
     DATE:   03/30/2006 
  SUBJECT:   Crime prevention					 
	     Fraud						 
	     Identification cards				 
	     Identity theft					 
	     Identity verification				 
	     Information disclosure				 
	     Information security				 
	     Information security management			 
	     Social security number				 
	     Strategic planning 				 

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GAO-06-586T

     

     * Background
     * Both Government and Private Sector Entities Collect and Use
          * Government Entities Are Required by Laws and Regulations to
          * SSNs Are Widely Available in Public Records Held by States,
          * Private Sector Entities Obtain SSNs from Public and Private
     * No Single Law Governs the Use and Disclosure of SSNs Althoug
     * More Could Be Done To Protect SSNs
          * Prior Work Found Gaps in the Protections of SSNs
          * GAO Has Proposed Matters for Congressional Consideration and
     * Conclusions
     * GAO Contacts and Staff Acknowledgments
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Testimony

Before the Subcommittee on Social Security, Committee on Ways and Means,
House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery Expected at 2:00 p.m. EST

Thursday, March 30, 2006

SOCIAL SECURITY NUMBERS

More Could Be Done to Protect SSNs

Statement of Cynthia M. Fagnoni, Managing Director Education, Workforce,
and Income Security Issues

GAO-06-586T

Mr. Chairman and Members of the Committees:

I am pleased to be here today to discuss ways to better protect the Social
Security Number (SSN). The SSN was created as a means to track workers'
earnings and eligibility for Social Security benefits. However, the SSN
has evolved beyond its original intended purpose and has become the
identifier of choice for public and private sector entities, and is used
for numerous non-Social Security purposes. This is significant because
SSNs, along with a name and date of birth, are the pieces of information
most often sought by identity thieves. Once an SSN is obtained
fraudulently, it can then be used to create false identities for financial
misuse, assuming another individual's identity, fraudulently obtaining
credit, violating immigration laws, or fleeing the criminal justice
system. Recent statistics suggest that the incidence of identity theft is
rapidly growing. The Federal Trade Commission (FTC) estimated that over a
1-year period nearly 10 million people-or 4.6 percent of the adult U.S.
population-discovered that they were victims of some form of identity
theft, translating into estimated losses exceeding $50 billion. FTC also
reported that most victims of identity theft do not report the crime, and,
therefore, the total number of identity theft incidences is unknown.

Over the last few years Congress and some states have recognized the
importance of restricting the use and display of SSNs by both public and
private sectors. As a result, federal and state laws have begun to be
enacted that to some degree protect individual's personal information,
including SSNs. GAO has issued a number of reports and testified before
this Subcommittee about the various aspects of SSN use in both the public
and private sectors. (See related GAO products at the end of this
testimony.) Accordingly, you asked us to speak about some of our findings
regarding SSN use and protections. My remarks today will focus on (1) the
use of SSNs by government agencies and certain private sector entities,
(2) the federal laws that regulate the use and disclosure of SSNs, and (3)
the gaps that remain in protecting the SSN and what more could be done.

In summary, SSN use is widespread by both the public and private sectors.
Agencies at all levels of government frequently collect and use SSNs to
administer their programs, verify applicants' eligibility for services and
benefits, and perform research and evaluations of their programs. In
addition, SSNs are available in a variety of public records held by
states, local jurisdictions, and courts, appearing in records that
document common life events and transactions, such as marriages and home
purchases. Certain private sector entities also use SSNs. Information
resellers, credit reporting agencies (CRAs), and health care organizations
routinely obtain SSNs from various public and private sources, and use
SSNs for various purposes, such as to build tools that verify an
individual's identity or match existing records. In addition, private
sector entities that engage in third party contracting sometimes share
SSNs with their contractors for limited purposes.

There is no one law that comprehensively regulates SSN use and
protections. However, certain federal laws have been enacted to restrict
the use and disclosure of consumers' personal information, including SSNs,
but these laws tend to be industry-specific and do not apply broadly. In
addition, certain states had begun to enact their own legislation
restricting the use and display of SSNs by public and private sector
entities, which has subsequently led other states to start enacting
similar regulation. Finally, Congress is currently considering several
proposals to restrict SSN use and display, similar to state legislation.

Although some action has been taken at the federal and state level to
protect SSNs, more could be done. In our prior work, we found gaps in the
practices for protecting SSNs by government agencies and across industry
sectors. As a result, we made recommendations to federal agencies to
address the issues we found and proposed matters for Congress to consider.
For example, we found that certain measures that could help protect SSNs
are not uniformly in place at all levels of government. In addition, there
are gaps in the federal law and oversight in different industries that
share SSNs with their contractors, and there are few restrictions placed
on certain entities' abilities to obtain and use SSNs in the course of
their business. Finally, SSNs are widely exposed in a variety of public
records and are still subject to exposure on identity cards issued under
federal auspices. To address some of these issues, we made recommendations
and proposed matters for congressional consideration. For example, to
address gaps in the government uses of SSNs and the exposure of SSNs in
public records and on identification cards, we advised Congress to convene
a group of government officials to develop a unified approach to
safeguarding SSNs. To address the gaps in federal laws that would apply to
industries that share SSNs with their contractors, we recommended Congress
consider options to restrict the use and display of SSNs to third party
contractors.

                                   Background

The Social Security Act of 1935 authorized the Social Security
Administration (SSA) to establish a record-keeping system to manage the
Social Security program, which resulted in the creation of the SSN.1
Through a process known as "enumeration," unique numbers are created for
every person as a work and retirement benefit record. Today, SSA issues
SSNs to most U.S. citizens, but they are also available to non-citizens
lawfully admitted to the United States with permission to work. Lawfully
admitted noncitizens may also qualify for a SSN for nonwork purposes when
a federal, state, or local law requires that they have a SSN to obtain a
particular welfare benefit or service. SSA staff collect and verify
information from such applicants regarding their age, identity,
citizenship, and immigration status.

With the enhancement of computer technologies in recent years, private
sector businesses are increasingly computerizing their records; as a
result, these enhancements have spawned new businesses activities
involving the aggregation of person information. Information resellers,
sometimes referred to as information brokers, are businesses that
specialize in amassing consumer information including SSNs for
informational services. They may provide their services to a variety of
customers, either to specific businesses clients or through the Internet
to anyone willing to pay a fee. Consumer reporting agencies, also known as
credit bureaus, are agencies that collect and sell information about the
creditworthiness of individuals. CRAs collect information that is
considered relevant to a person's credit history, and obtain SSNs from
their customers or businesses that furnish data to them, as well as from
private and public sources. Organizations that provide health care
services also commonly use consumers' SSNs. They obtain SSNs from
individuals themselves and companies that offer health care plans.

In recent years, companies have increasingly relied on the use of
contractors to perform certain activities and functions related to their
business operations. This trend has often been referred to as outsourcing.
However, no commonly recognized definition of outsourcing exists, and
there has been confusion over whether it encompasses only activities a
company performed in-house or includes any activity a company may contract
out. According to outsourcing experts, approximately 90 percent of
businesses contract out some activity because they find either it is more
economical to do so or other companies are better able to perform these
activities. Some of the activities companies outsource will require that
contractors be provided personal information about the companies'
customers in order to perform those activities, in some cases, this
information includes SSNs.

1The Social Security Act of 1935 created the Social Security Board, which
was renamed the Social Security Administration in 1946.

Due to the pervasive use of SSNs, individuals are routinely asked to
disclose their SSNs, along with other personal identifying information,
for numerous purposes. In some instances where individuals provide their
SSNs to government entities, documents containing the SSN are routinely
made available to the public for inspection. The widespread disclosure of
SSNs in public records has raised concern because it can put individuals
at increased risk of identity theft. In addition, given the explosion in
the Internet use and the ease with which personally identifiable
information is accessible, individuals looking to steal someone's identity
are increasingly able to do so. According to FTC, it receives roughly
15,000 to 20,000 contacts per week on its hotline and Web site, or through
the mail from victims and consumers who want to avoid becoming victims.

 Both Government and Private Sector Entities Collect and Use SSNs for a Variety
                                  of Purposes

Government entities are generally required by law to collect SSNs to
determine individuals' eligibility for services and benefits. SSNs are
also widely available in public records maintained by state and local
governments and the courts. Certain private sector entities, such as
information resellers, CRAs, and healthcare organizations obtain SSNs from
public and private sources, or directly from their customers, and use them
for various purposes. In addition, banks, securities firms,
telecommunication firms, and tax preparers engage in third party
contracting and sometimes share SSNs with their contractors for limited
purposes.

Government Entities Are Required by Laws and Regulations to Collect SSNs, and
Use Them for Various Purposes

As required by a number of federal laws and regulations, agencies at all
levels of government frequently collect and use SSNs to administer their
programs, to link data for verifying applicants' eligibility for services
and benefits, and to conduct program evaluations.2 For example, the
Personal Responsibility and Work Opportunity Act of 1996 mandates that,
among other things, states have laws in place to require the collection of
SSNs on driver's license applications. Such laws and regulations have
contributed to the widespread use of SSNs by government agencies, because
the SSN serves as a unique identifier.

Government agencies use SSNs for a variety of purposes. We have found that
agencies typically used SSNs to manage their records and to facilitate
data sharing to verify an applicant's eligibility for services and
benefits.3 For example, agencies use SSNs

           o  for internal administrative purposes, which included activities
           such as identifying, retrieving, and updating records;
           o  to collect debts owed the government and conduct or support
           research and evaluations as well as using employees' SSNs for
           activities such as payroll, wage reporting, and providing employee
           benefits;
           o  to ensure program integrity, such as matching records with
           state and local correctional facilities to identify individuals
           for whom the agency should terminate benefit payments; and
           o  for statistics, research, and evaluation;4

2GAO, Social Security: Government and Commercial Use of the Social
Security Number Is Widespread, GAO/HEHS-99-28 (Washington, D.C.: February
16, 1999) and GAO, Social Security Numbers: Government Benefits from SSN
Use, but Could Provide Better Safeguards, GA0-02-352 (Washington, D.C.:
May 31, 2002).

3GA0-02-352.

4The Bureau of the Census is authorized by statute to collect a variety of
information and is prohibited from making it available, except in certain
circumstances.

SSNs Are Widely Available in Public Records Held by States, Local Jurisdictions,
and Courts, but Many of These Agencies Are Taking Steps to Limit Display

SSNs are publicly available throughout the United States, primarily at the
state and local levels of government.5 Based on a survey of federal,
state, and local governments, we reported in 2004 that state agencies in
41 states and the District of Columbia were displaying SSNs in public
records; this was also true in 75 percent of U.S. counties.6 We also found
that while the number and type of records in which SSNs were displayed
varied greatly across states and counties, SSNs were most often found in
court and property records.

Public records displaying SSNs are stored in multiple formats that vary by
different levels of government. State government offices tended to store
such records electronically, while most local government records were
stored on microfiche or microfilm. However, our survey found that public
access to such records was often limited to inspection of the individual
paper copy or request by mail.7

We found that few state agencies make public records available on the
Internet, although some do so. However, few state or local offices
reported any plans to significantly expand Internet access to public
records that display SSNs. Based on our survey results, only four state
agencies indicated plans to make such records available on the Internet,
and one agency planned to remove records displaying SSNs from Internet
access.

Private Sector Entities Obtain SSNs from Public and Private Sources and Use Them
for Various Purposes

Private sector entities such as information resellers, CRAs, and health
care organizations generally obtain SSNs from various public and private
sources. Large or well known information resellers have told us they
obtain SSNs from various public records, such as records of bankruptcies,
tax liens, civil judgments, criminal histories, deaths, real estate
transactions, voter registrations, and professional licenses. They also
said that they sometimes obtain batch files of electronic copies of
jurisdictional public records where available. However, some reseller
officials said they are more likely to rely on SSNs obtained directly from
their clients, who would voluntarily provide such information for a
specific service or product, than those found in public records.8

5Not all records held by government or public agents are "public" in terms
of their availability to any inquiring person. For example, adoption
records are generally sealed. Personnel records are often not readily
available to the public, although newspapers may publish the salaries of
high, elected officials. There is no common definition of public records.
However, we define public records as those records generally made
available to the public for inspection in their entirety by a federal,
state, or local government agency. Such documents are typically accessed
in a public reading room, clerk's office, or on the Internet.

6GAO, Social Security Numbers: Governments Could Do More To Reduce Display
in Public Records and on Identity Cards, GAO-05-59 (Washington, D.C.:
November 9, 2004).

7 GAO-05-59 .

Like information resellers, CRAs also obtain SSNs from public and private
sources. CRA officials have told us that they obtained SSNs from public
sources, such as bankruptcy records. We also found that these companies
obtained SSNs from other information resellers, especially those that
specialized in obtaining information from public records. However, CRAs
are more likely to obtain SSNs from businesses that subscribe to their
services, such as banks, insurance companies, mortgage companies, debt
collection agencies, child support enforcement agencies, credit grantors,
and employment screening companies. Therefore, individuals who provide
these businesses with their SSNs for reasons such as applying for credit
would subsequently have their charges and payment transactions,
accompanied by the SSN, reported to the CRAs.

Health care organizations, including health care insurance plans and
providers, are less likely to obtain SSN data from public sources. Health
care organizations typically obtained SSNs either from individuals
themselves or from companies that offer health care plans. For example,
subscribers or policyholders enrolled in a health care plan provide their
SSN as part of their health care plan application to their company or
employer group. In addition to health care plans, health care
organizations also included health care providers, such as hospitals. Such
entities often collected SSNs as part of the process of obtaining
information on insured people. However, health care provider officials
told us that, particularly with hospitals, the medical record number is
the primary identifier, rather than the SSN.

We found that the primary use of the SSN by information resellers, CRAs,
and health care organizations alike was to help verify the identity of an
individual. Large information resellers said they generally use the SSN as
an identity verification tool. They also use it for internal matching
purposes of its databases, as a factor in identifying individuals for
their product reports, or for conducting investigations for their clients
for resident screening or employment screening. CRAs use SSNs as the
primary identifier of individuals that enables them to match the
information they receive from their business clients with information
stored in their databases on individuals. Because these companies have
various commercial, financial, and government agencies furnishing data to
them, the SSN is the primary factor that ensures that incoming data is
matched correctly with an individual's information on file. We found that
in some cases CRAs and information resellers can sometimes be the same
entity, a fact that blurs the distinction between the two types of
businesses but does not affect the use of SSNs by these entities. Finally,
health care organizations also use the SSN to help verify the identity of
individuals. These organizations use SSNs, along with other information
such as name, address, and date of birth, as a factor in determining a
member's identity.

8GAO, Social Security Numbers: Private Sector Entities Routinely Obtain
and Use SSNs, and Laws Limit the Disclosure of This Information, GAO-04-11
(Washington, D.C.: January 22, 2004).

Private sector companies also share customers' SSNs with their
contractors. Banks, investment firms, telecommunication companies, and tax
preparation companies we interviewed routinely obtain SSNs from their
customers for authentication and identification purposes.9 All these
companies contracted out various services, such as data processing,
administrative, and customer service functions. Although these companies
may share consumer information, such as SSNs, with contractors that
provide services to their customers, company officials said that they only
share such information with their contractors for limited purposes,
generally when it is necessary or unavoidable.

The companies we contacted provided us with standard contract forms they
use in contracting with service providers to safeguard customers' personal
information, such as SSNs, from misuse.10 In general, the types of
provisions these companies included in their standard contract forms
included electronic and physical data protections, audit rights, data
breach notifications, subcontractor restrictions, and data handling and
disposal requirements. We found that most of the companies we interviewed
had established some type of due diligence or credentialing process to
verify the reliability of potential contractors prior to and during
contract negotiations. Furthermore, we found that some industry
associations have voluntarily developed guidance for their members
regarding the sharing of personal information with third parties.

9GAO, Social Security Numbers: Stronger Protections Needed When
Contractors Have Access to SSNs, GAO-06-238 (Washington, D.C.: January 23,
2006).

10 GAO-06-238 .

No Single Law Governs the Use and Disclosure of SSNs Although Various Laws Have
                      Been Enacted That Help Protect SSNs

Although no single law comprehensively governs the use and disclosure of
SSNs, certain federal laws restrict the use and disclosure of personal
information, including SSNs, by government agencies or private sector
entities. These laws, however, tend to be directed at specific industries
or governmental agencies and often do not apply broadly across public and
private sectors or across private sector industries. For example, the
overall use and disclosure of SSNs by the federal government is restricted
under the Privacy Act, which, broadly speaking, seeks to balance the
government's need to maintain information about individuals with the
rights of individuals to be protected against unwarranted invasions of
their privacy. The Privacy Act requires that any federal, state, or local
government agency, when requesting an SSN from an individual, tell
individuals whether disclosing their SSN is mandatory or voluntary, cite
the statutory or other authority under which the request is being made,
and state what uses it will make of the individual's SSN.

Other federal laws have also placed restrictions on private sector
entities' use and disclosure of consumers' personal information, including
SSNs. These include the Fair Credit Reporting Act (FCRA), the Fair and
Accurate Credit Transaction Act (FACTA), the Gramm-Leach-Bliley Act
(GLBA), the Drivers Privacy Protection Act (DPPA), and the Health
Insurance Portability and Accountability Act (HIPAA). As shown in table 1,
some of these federal laws either restrict certain private sector entities
from disclosing personally identifiable information to specific purposes
or with whom the information is shared. In addition, certain industries,
such as the financial services industry, are required to protect
individuals' personal information to a greater degree than entities in
other industries.

Table 1: Aspects of Federal Laws That Affect Private Sector Disclosure of
Personal Information

Federal Laws                 Restrictions                                  
Fair Credit Reporting Act    Limits access to credit data that includes    
                                SSNs to those who have a permissible purpose  
                                under the law.                                
Fair and Accurate Credit     Amends FCRA to allow, among others things,    
Transactions Act             consumers who request a copy of their credit  
                                report to also request that the first 5       
                                digits of their SSN (or similar               
                                identification number) not be included in the 
                                file; requires consumer reporting agencies    
                                and any business that use a consumer report   
                                to adopt procedures for proper disposal.      
Gramm-Leach-Bliley Act       Creates a new definition of personal          
                                information that includes SSNs and limits     
                                when financial institutions may disclose the  
                                information to nonaffiliated third parties.   
Health Insurance Portability Protects the privacy of health information    
and                          that identifies an individual and restricts   
                                health care organizations from disclosing     
Accountability Act           such information to others without the        
                                patient's consent.                            

Source: GAO analysis

Congress has also introduced a federal statute that criminalizes fraud in
connection with the unlawful theft and misuse of personal identifiable
information. In 1998, Congress enacted the Identity Theft and Assumption
Deterrence Act (Identity Theft Act). The act made it a criminal offense
for a person to "knowingly transfer, possess, or use without lawful
authority," another person's means of identification "with the intent to
commit, or to aid or abet, or in connection with, any unlawful activity
that constitutes a violation of Federal law, or that constitutes a felony
under any applicable state or local law." Under the act, a name or Social
Security number is considered a "means of identification" and a number of
cases have been prosecuted under this law.

Many states have begun to enact laws to restrict the use and display of
SSNs. (See appendix 1 for a listing of state laws previously reported by
GAO.) After one state took action, other states followed in enacting
similar laws. For example, in 2001, California enacted a law restricting
the use and display of SSNs, which generally prohibited companies and
persons from engaging in certain activities, such as posting or publicly
displaying SSNs, or requiring people to transmit an SSN over the Internet
unless the connection is secure or the number is encrypted. In addition,
California enacted a law containing notification requirements in the event
of a security breach where a business or a California state agency is
required to notify any California resident whose unencrypted personal
information was, or is reasonably believed to have been, acquired by an
unauthorized person.

Subsequently, other states have enacted laws restricting the use and
display of SSNs. Specifically, in our prior work, we identified 13 others
states-Arizona, Arkansas, Connecticut, Georgia, Illinois, Maryland,
Michigan, Minnesota, Missouri, Oklahoma, Texas, Utah, and Virginia-that
have each passed laws similar to California's. 11 While some states, such
as Arizona, have enacted virtually identical SSN use and display
restrictions, other states have modified the restrictions in various ways.
For example, unlike the California law, which prohibits the use of the
full SSN, the Michigan statute prohibits the use of more than four
sequential digits of the SSN. The Michigan law also contains a prohibition
against the use of SSNs on identification and membership cards, permits,
and licenses. Missouri's law includes a prohibition against requiring an
individual to use his or her SSN as an employee number. Oklahoma's law is
unique in that it only limits the ways in which employers may use their
employees' SSNs, and does not apply more generally to other types of
transactions and activities.

Some states have recently enacted other types of restrictions on the uses
of SSNs as well. Arkansas, Colorado, and Wisconsin limit the use of a
student's SSN as a student identification number. 12 New Mexico requires
businesses that have acquired consumer SSNs to adopt internal policies to
limit access to authorized employees.13 Texas recently enacted a law
requiring businesses to properly dispose of business records that contain
a customer's personal identifying information, which is defined to include
SSNs.14

Other recent state legislation includes new restrictions on state and
local government agencies. For example, South Dakota law prohibits the
display of SSNs on all driver's licenses and nondriver's identification
cards,15 while Indiana law generally prohibits a state agency from
releasing a SSN unless otherwise required by law. 16 In addition, as of
January 1, 2007, a Nevada law will require governmental agencies, except
in certain circumstances, to ensure that the SSNs recorded in their books
and on their records are maintained in a confidential manner.17

11 See Arkansas (Ark. Code Ann. S: 4-86-107 (2005)); Arizona (Ariz. Rev.
Stat. S: 44-1373 (2004)); Connecticut (Conn. Gen. Stat. S: 42-470 (2003));
Georgia (Ga. Code Ann. S: 33-24-57.1 (2003)); Illinois (815 Ill. Comp.
Stat. 505/2QQ (2004)); Maryland (Md. Code Ann., Com. Law S: 14-3301 et
seq. (2005)); Michigan (Mich. Comp. Laws S: 445.81 et seq. (2004));
Minnesota (Minn. Stat. S: 325E.59 (2005)); Missouri (Mo. Rev. Stat. S:
407.1355 (2003)); Oklahoma (Okla. Stat. tit. 40, S: 173.1 (2004)); Texas
(Tex. Bus. & Com. Code Ann. 35.58 (2003)); Utah (Utah Code Ann. S:
31A-21-110 (2004)); and Virginia (Va. Code Ann. S: 59.1-443.2 (2005)).

12Ark. Code Ann. S: 6-18-208 (2005); Colo. Rev. Stat. S: 23-5-127 (2003);
and Wis. Stat. S: 36.32 (2001).

13N.M. Stat. Ann. S: 57-12B-1 et seq. (2003).

14Tex. Bus. & Com. Code Ann. S: 35.48 (2005).

We also identified four states that have passed legislation containing
notification requirements in the event of a security breach. For example,
New York recently enacted a law requiring such notifications.18 California
requires a business or a California state agency to notify any California
resident whose unencrypted personal information was, or is reasonably
believed to have been, acquired by an unauthorized person.19 In the last
year, this law forced several large companies to notify individuals that
their information was compromised because of certain circumstances. Under
a Nevada law, government agencies and certain persons who do business in
the state must notify individuals if their personal information is
reasonably believed to have been compromised.20 Similarly, Georgia
requires certain private sector entities to notify their customers if a
security breach occurred that compromised their customers' personal
information, such as their SSNs.21

In addition, we found that some state offices were beginning to take
measures to change the way in which they displayed or shared SSNs in
public records. For example, we found that many state agencies had
restricted access to or redacted-covered or otherwise hidden from
view-SSNs from public versions of records. Specific restrictions and other
actions state agencies reported taking included blocking or removing SSNs
from electronic versions of records, allowing individuals identified in
the record to request removing their SSN from the publicly available
version, replacing SSNs with alternative identifiers, and restricting
access only to individuals identified in the records.

15S.D. Codified Laws S: 32-12-17.13 (2005).

16Ind. Code S: 4-1-10-1 et seq. (2005).

17Nev. Rev. Stat.S: 239.030 (2005).

18N.Y. State Tech. Law S:208 (2005).

19Cal. Civ. Code S: 1798.29 (2002); 1798.82 (2002).

20Nev. Rev. Stat. S:603A.220 (2005).

21Ga. Code Ann. S: 10-1-910 et seq. (2005).

Finally, Congress is currently considering consumer privacy legislation,
which in some cases includes SSN restrictions. In 2005, there were more
than 20 proposed bills pending before the U.S. House and Senate.22 In some
cases, the provisions being considered mirrored provisions in enacted
state laws. For example, some proposed legislation included prohibitions
on the display of SSNs, similar to a Colorado law, while other proposed
legislation address the solicitation of SSNs by public and private sector
entities. In addition, some federal privacy legislation also proposed
consumer safeguards, such as security freezes and prohibitions on the sale
and purchase of SSNs.

                       More Could Be Done To Protect SSNs

Although laws at both state and federal levels have helped to restrict SSN
display and protect individual's personal information, clearly gaps
remain. We have issued a number of reports for this Subcommittee that have
looked at the collection, use, and protections of SSNs by federal agencies
and private sector entities. In some cases where federal action could be
taken, we have proposed matters for congressional consideration to explore
legislative actions or recommendations to a federal agency to address
problems we found. In other cases, mainly those that relate to private
sector entities, we have proposed a matter for Congressional
consideration. OMB has implemented two of our recommendations and Congress
is still considering what actions need to be taken.

Prior Work Found Gaps in the Protections of SSNs

In our review of government uses of SSNs, we reported that certain
measures that could provide more assurances that SSNs obtained by
government entities are secure are not universally in place at any level
of government.23 Agencies that deliver services and benefits use SSNs to
administer programs and took some steps to safeguard SSNs. However, when
federal, state, and county agencies request SSNs, they did not
consistently inform the SSN holders of whether they must provide the SSN
to receive benefits or services and how the SSN will be used. In addition,
although some agencies took action to limit the display of SSNs on
documents that were not intended to be public but may be viewed by others,
these actions sometimes took place in a piecemeal manner rather than as a
result of a systematic effort.

22GAO, Social Security Numbers: Federal and State Laws Restrict Use of
SSNs, yet Gaps Remain, GAO-05-1016T (Washington, D.C.: September15, 2005)

23 GAO-02-352

In our reviews of private sector entities' collection and use of SSNs, we
found gaps in how different industries are covered by federal laws
protecting individual's personal information. In our third party
contractors' review, we reported that federal regulation and oversight of
SSN sharing varies across four industries we reviewed, revealing gaps in
federal law and agency oversight for different industries that share SSNs
with their contractors.24 For example, federal law and oversight of the
sharing of personal information in the financial services industry is very
extensive: financial services companies must comply with GLBA requirements
for safeguarding customer's personal information, and regulators have an
examination process in place that includes determining whether banks and
securities firms are safeguarding this information. IRS has regulations
and guidance in place to restrict the disclosure of SSNs by tax preparers
and their contractors, but does not perform periodic reviews of tax
preparers' compliance. FCC does not have regulations covering SSNs and
also does not periodically review telecommunications companies to
determine whether they are safeguarding such information. Companies in the
industries we reviewed relied on accepted industry practices and primarily
used the terms of their contracts to safeguard personal information,
including SSNs they shared with outside contractors.

We also found that there are few restrictions placed on certain entities'
abilities such as information resellers to resell SSNs in the course of
their business. Although certain federal laws have some restrictions on
reselling nonpublic personal information, these laws only apply to certain
types of private sector entities, such as financial institutions.

In our review of SSNs in public records, we found that SSNs are widely
exposed to view in a variety of public records and are still subject to
exposure on identity cards issued under federal auspices.25 The number and
type of records in which SSNs are displayed varies greatly for both states
and counties, and SSNs are available in some federal court records. A
number of government agencies and oversight bodies are taking steps to
eliminate the open display of SSNs. For example, some actions state
agencies reported taking included blocking or removing SSNs from
electronic versions of records, and replacing SSNs with alternative
identifiers. However, such initiatives to protect the SSN may slow its
misuse, but the absence of uniform and comprehensive policy is likely to
leave many individuals vulnerable.

24 GAO-06-238 .

25 GAO-05-59 .

Finally, although they are not displayed in public records en masse, we
found that millions of SSNs are still subject to exposure on individual
identity cards issued under federal auspices. We found that in 2004 an
estimated 42 million Medicare cards displayed entire 9-digit SSNs, as did
approximately 8 million Department of Defense (DOD) insurance cards and 7
million Department of Veterans Affairs (VA) beneficiary cards. Some of
these agencies have begun taking action to remove SSNs from identification
cards. For example, VA is eliminating SSNs from 7 million VA
identification cards and is replacing cards with SSNs or issuing new cards
without SSNs from 2004 through 2009, until all such cards have been
replaced. DOD has begun replacing approximately 6 million health insurance
cards that display SSNs with cards that do not display the bearer's SSN,
but continues to include SSNs on approximately 8 million military
identification cards. The Centers for Medicare and Medicaid Services, with
the largest number of cards displaying the entire 9-digit SSN, does not
plan to remove the SSN from Medicare identification cards.

GAO Has Proposed Matters for Congressional Consideration and Recommendations

In order to address the issues we found, GAO has proposed matters for
congressional consideration and recommended that a federal agency take
action. To date, OMB has implemented two of our three recommendations, but
Congress is still considering what other actions to take.

           o  In order to address the problems we found with how government
           entities assure the security of SSNs, we proposed that Congress
           consider convening a representative group of federal, state, and
           local officials to develop a unified approach to safeguarding SSNs
           used in all levels of government. The Privacy Act and other
           federal laws prescribe actions federal departments and agencies
           must take to assure the security of SSNs and other personal
           information. However, these requirements may not be uniformly
           observed. We presented a matter for congressional consideration to
           facilitate intergovernmental collaboration in strengthening
           safeguards at the state and local levels. We also made two
           recommendations to the Office of Management and Budget that it
           direct federal agencies to review their practices for securing
           SSNs and providing required information, and advise all federal,
           state, and local governments of the applicability of the Privacy
           Act to their uses of SSNs. OMB has implemented both our
           recommendations.

           o  In our report on third party contactors' uses of SSNs, we
           recommended that Congress consider possible options for addressing
           the gaps in existing federal requirements for safeguarding SSNs
           shared with contractors. The current gaps do not provide
           incentives for companies to commit to protecting personal
           information. Each industry is subject to different federal
           oversight and is often left to decide what established practices
           for safeguarding SSNs and other consumer information it wishes to
           follow. We suggested that one approach Congress could take would
           be to require industry-specific protections for the sharing of
           SSNs with contractors where such measures are not already in
           place. For example, Congress could consider whether the
           Telecommunications Act of 1996 should be amended to address how
           that industry shares SSNs with contractors. Alternatively, we
           suggested that Congress could take a broader approach. For
           example, in considering proposed legislation that would generally
           restrict the use and display of SSNs, Congress could also include
           a provision that would explicitly apply this restriction to third
           party contractors. We stated that with either approach, Congress
           would want to establish a mechanism overseeing compliance by
           contractors and enforcement.

           o  In our report on the display of SSNs on identification cards
           and in public records, we recommended that OMB identify all those
           federal activities that require or engage in the display of
           9-digit SSNs on health insurance, identification, or any other
           cards issued to federal government personnel or program
           beneficiaries, and devise a governmentwide policy to ensure a
           consistent approach to this type of display. Although SSA has
           authority to issue policies and procedures over the Social
           Security cards that it issues, it does not have authority over how
           other federal agencies use and display SSNs. Rather, it is up to
           individual government agencies to have their own policies for the
           cards issued under their authority. The lack of a broad, uniform
           policy allows for inconsistent, but persistent exposure of the
           SSN. OMB has not yet taken action on our recommendation but said
           at the time we issued our report they would consider it. With
           regard to SSN exposure in public records, we again noted that it
           would be constructive for a representative group of federal,
           state, and local officials to develop a unified approach to
           safeguarding SSNs used in all levels of government, particularly
           those displayed in public records.

           o  Finally, with regard to private sector entities, such as
           information resellers reselling personal information, including
           SSNs, we noted that there are few restrictions placed on these
           entities ability to obtain, use, and resell SSNs for their
           businesses. The federal laws that have some restrictions can be
           interpreted broadly. The broad interpretation combined with the
           uncertainty about the application of the exceptions suggest that
           reselling personal information-including SSNs-is likely to
           continue.

                                  Conclusions

The use of SSNs by both public and private sector entities is likely to
continue given that it is used as the key identifier by most of these
entities and there is currently no other widely accepted alternative.
Given the significance of the SSN in committing fraud or stealing a
person's identity, it is imperative that steps be taken to protect it.
Without proper safeguards in place, SSNs will remain vulnerable to misuse,
thus adding to the growing number of identity theft victims.

SSNs are still widely used and publicly available, although becoming less
so. State legislatures have begun to place restrictions on SSNs by
enacting laws that restrict the use and display of SSNs and prohibit the
theft of individuals' personal information. Yet, more could be done to
protect SSNs. As Congress continues to propose and consider legislation to
protect individuals' personal information, gaps in protections that have
already been identified could help focus the debate on the areas that
could be addressed immediately based on our work in order to prevent SSNs
and other personal information from being misused.

At this Subcommittee's request, we are continuing work on SSNs and the
ease with which they can be purchased from Internet information resellers.
We look forward to supporting continued congressional consideration of
these important policy issues. That concludes my testimony, and I would be
pleased to respond to any questions the subcommittee has.

                     GAO Contacts and Staff Acknowledgments

For further information regarding this testimony, please contact Cindy M.
Fagnoni, Managing Director; or Barbara D. Bovbjerg, Director of Education,
Workforce, and Income Security Issues at (202) 512-7215. Contact points
for our Offices of Congressional Relations and Public Affairs may be found
on the last page of this statement. Individuals making key contributions
to this testimony, include Tamara Cross, Joel Marus and Sheila McCoy.

Appendix I: Selected State SSN Laws Previously Reported by GAO

Type of Law                                                Enacting States 
Imposes Limits on State and Local Governments, including   Connecticut     
Restrictions on Public Disclosure                                          
                                                              Delaware        
                                                                              
                                                              Florida         
                                                                              
                                                              Georgia         
                                                                              
                                                              Hawaii          
                                                                              
                                                              Indiana         
                                                                              
                                                              Minnesota       
                                                                              
                                                              Nebraska        
                                                                              
                                                              Nevada          
                                                                              
                                                              New Jersey      
                                                                              
                                                              North Dakota    
                                                                              
                                                              Oregon          
                                                                              
                                                              South Carolina  
                                                                              
                                                              Tennessee       
                                                                              
                                                              Texas           
                                                                              
                                                              Virginia        
                                                                              
                                                              West Virginia   
Limits Use and Display of SSNs                             Arizona         
                                                                              
                                                              Arkansas        
                                                                              
                                                              California      
                                                                              
                                                              Connecticut     
                                                                              
                                                              Georgia         
                                                                              
                                                              Illinois        
                                                                              
                                                              Maryland        
                                                                              
                                                              Michigan        
                                                                              
                                                              Minnesota       
                                                                              
                                                              Missouri        
                                                                              
                                                              Oklahoma        
                                                                              
                                                              Texas           
                                                                              
                                                              Utah            
                                                                              
                                                              Virginia        
Limits Use of SSNs on Drivers' Licenses                    Indiana         
                                                                              
                                                              North Dakota    
                                                                              
                                                              South Dakota    
                                                                              
                                                              West Virginia   
Requires Notification of Security Breaches                 California      
                                                                              
                                                              Georgia         
                                                                              
                                                              Nevada          
                                                                              
                                                              New York        
Prohibits Certain Activities Related to Identity Theft     Arizona         
                                                                              
                                                              Idaho           
                                                                              
                                                              New York        
Limits or Prohibits Use of SSN as Student ID Number        Arkansas        
                                                                              
                                                              Colorado        
                                                                              
                                                              Wisconsin       
Authorizes Redaction of SSNs in Certain Public Records     California      
                                                                              
                                                              New Jersey      
Limits Certain Activities of Financial Institutions        North Dakota    
                                                                              
                                                              Vermont         
Prohibits Businesses From Requiring SSNs as a Condition of New Mexico      
Doing Business                                                             
                                                              Rhode Island    
Requires Development of Employee Access Policies           New Mexico      
Requires Business to Properly Dispose of Business Records  Texas           
Containing Customers' Personal Information                 
Provides Identity Theft Victim Assistance                  Washington      
Requires that SSNs be Truncated for Certain Public Records Louisiana       
Requires Third Party Contracting Protections               California      

Source: GAO Analysis

Related GAO Products

Social Security Numbers: Stronger Protections Needed When Contractors Have
Access to SSNs. GAO-06-238. Washington, D.C.: January 23, 2006.

Social Security Numbers: Federal and State Laws Restrict Use of SSNs, yet
Gaps Remain. GAO-05-1016T. Washington, D.C.: September 15, 2005.

Social Security Numbers: Governments Could Do More to Reduce Display in
Public Records and on Identity Cards. GAO-05-59. Washington, D.C.:
November 9, 2004.

Social Security Numbers: Use Is Widespread and Protections Vary in Private
and Public Sectors. GAO-04-1099T. Washington, D.C.: September 28, 2004.

Social Security Numbers: Use Is Widespread and Protections Vary.
GAO-04-768T. Washington, D.C.: June 15, 2004.

Social Security Numbers: Private Sector Entities Routinely Obtain and Use
SSNs, and Laws Limit the Disclosure of This Information. GAO-04-11.
Washington, D.C.: January 22, 2004.

Social Security Numbers: Ensuring the Integrity of the SSN. GAO-03-941T.
Washington, D.C.: July 10, 2003.

Social Security Numbers: Government Benefits from SSN Use but Could
Provide Better Safeguards. GAO-02-352. Washington, D.C.:May 31, 2002.

Social Security: Government and Commercial Use of the Social Security
Number is Widespread. GAO/HEHS-99-28. Washington, D.C.: February 16, 1999.

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www.gao.gov/cgi-bin/getrpt? GAO-06-586T .

To view the full product, including the scope

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Highlights of GAO-06-586T , a testimony to the Subcommittee on Social
Security, Committee on Ways and Means, House of Representatives

March 30, 2006

SOCIAL SECURITY NUMBERS

More Can Be Done to Protect SSNs

In 1936, the Social Security Administration established the Social
Security number (SSN) to track worker's earnings for Social Security
benefit purposes. Since its creation, the SSN has evolved beyond its
original purpose and has become the identifier of choice for public and
private sector entities. Today, the SSN is a key piece of information
often sought by identity thieves. Once the SSN is obtained fraudulently,
it can then be used to create false identities for financial misuse or
assuming another individual's identity.

Congress and some states have recognized the importance of restricting the
use and display of SSNs. GAO has issued a number of reports and
testimonies about the various aspects of SSN use in both public and
private sectors and what could be done to further protect individual's
SSNs. Accordingly, this testimony focuses on describing (1) the use of
SSNs by government agencies and certain private sector entities, (2) the
federal laws that regulate the use and disclosure of SSNs, and (3) the
gaps that remain in protecting the SSN and what more could be done.

SSN use is widespread by both the public and private sectors. Agencies at
all levels of government frequently collect and use SSNs to administer
their programs, verify applicants' eligibility for services and benefits,
and perform research and evaluations of their programs. In addition, SSNs
are available in a variety of public records. Certain private sector
entities routinely obtain SSNs from various public and private sources,
and use SSNs for various purposes, such as to build tools that verify an
individual's identity or match existing records. In addition, private
sector entities that engage in third party contracting sometimes share
SSNs with their contractors for limited purposes.

There is no one law that comprehensively regulates SSN use and
protections. However, certain federal laws have been enacted to restrict
the use and disclosure of consumers' personal information, including SSNs.
In addition, certain states have begun to enact their own legislation
restricting the use and display of SSNs by public and private sector
entities, which has subsequently led other states to start enacting
similar legislation. Finally, Congress is currently considering several
proposals to restrict SSN use and display, similar to state legislation.

Although some action has been taken at the federal and state level to
protect SSNs, more could be done. In the course of this work, GAO found
that there were gaps in the practices for protecting SSNs within
government agencies and across industry sectors, such as a lack of
uniformity at all levels of government to assure the security of the SSN;
gaps in the federal law and oversight in different industries that share
SSNs with their contractors; exposure of SSNs in public records and
identification cards under the auspices of the government; and few
restrictions on certain entities' abilities to obtain and use SSNs in the
course of their business. To address some of these issues, GAO has made
recommendations and proposed matters for congressional consideration. To
date, OMB has implemented two of these recommendations and some agencies
have begun to take steps to eliminate SSNs from their identification
cards. Congress is still considering actions to take to address the issues
that remain.
*** End of document. ***