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Guest Commentary: June 1, 2001
Protecting Social Security Numbers from Identity Theft
The Honorable E. Clay Shaw, Jr.
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Beginning last year, the House Ways and Means Subcommittee on Social Security has heard about the truly devastating effects of identity theft.
Colonel and Mrs. Stevens of Maryland saw their Social Security numbers used on 33 fraudulent accounts accumulating $113,000 of bad debt. Mr. Bob Horowitz, a single father and small business owner from my district, saw his number used to open five fraudulent credit accounts. Months and years later these victims were still spending time, money, and energy to clear their names.
This week we heard from two more of the countless number of victims who have had their identity stolen and their credit ruined. Nicole Robinson of Maryland had her personal information stolen by a worker for a business that maintained HMO data bases. Her identity thief charged $36,000 worth of goods in three months using Nicole's hard-earned good credit. These crimes have impacted Nicole's ability to refinance her home, obtain credit, and purchase cellular phone service.
Emeka Moneme of the District of Columbia had his personal property stolen at a gym in Ohio last year. He believes the crucial piece of personal identification his thief obtained was his Social Security number. This theft resulted in 13 fraudulent accounts with a total of $30,000 in stolen credit.
It's no wonder why, in a Wall Street Journal poll last year, respondents ranked privacy as their number one concern in the 21st century, ahead of wars, terrorism, and environmental disasters.
When Social Security numbers were created 65 years ago, their only purpose was to track a worker's earnings so that Social Security benefits could be calculated. But today, use of the Social Security number is pervasive.
We have literally developed a culture of dependence on the Social Security number. ...
Although Social Security numbers are used for many legitimate purposes, the wide availability and easy access to this very personal information has greatly facilitated Social Security number -- related crimes and generated a growing concern for privacy. According to the Federal Trade Commission, Social Security numbers are a crucial piece of information used to commit identity theft.
The occurrence of identity fraud against U.S. consumers has increased dramatically in recent years. Identity theft is considered the fastest growing financial crime in the country, affecting an estimated 500,000-700,000 people annually. Allegations received by the Social Security Administration's Hotline involving potential fraudulent use of Social Security numbers for identity theft increased from 62,000 cases in fiscal year 1999 to over 90,000 in fiscal year 2000 -- almost a 50 percent increase in just one year. In fact, the Sheriff's office of Broward County, Florida, my home county, recently said that the number of reported cases of identity fraud is up 3,000 percent in the past year.
What's worse, the nightmare of identity theft continues for the victims years after their identity has been stolen. Studies show identity theft victims spend 2 years trying to remove an average $18,000 in fraudulent charges from their credit reports. Also, victims spent an average of 175 hours and $808 in out-of-pocket costs (not including legal fees) trying to fix their problem.
Identity theft is such a concern for consumers that two of our nation's leading insurance companies now offer policies insuring their customers from financial losses associated with identity and credit card theft. Customer surveys found that internet-related liabilities were high on the list of losses most insurance companies have yet to address. One insurer's web site included statistics from the credit reporting agency, Trans Union, who reports receiving a 15-fold increase in calls with questions or complaints about identity theft from 1992 (35,000 calls) to 1998 (554,450 -- over 1,500 calls per day).
Clearly, there is a need for a comprehensive law that will better protect the privacy of Social Security numbers and protect the American public from being victimized. That is why last year, I, along with Mr. Matsui, Mr. Foley, Mr. Kleczka, and other Subcommittee members introduced H.R. 4857 -- the "Social Security Number Privacy and Identity Theft Prevention Act of 2000." This legislation took a comprehensive approach to achieve this goal by addressing the treatment of Social Security numbers in both the public and private sectors.
While H.R. 4857 was approved by the Committee on Ways and Means at the end of last year, it was not considered by the full House of Representatives before the end of the session, due to its referral to other Committees of jurisdiction who did not take action on the bill.
I [have] re-introduce[d] the "Social Security Number Privacy and Identity Theft Prevention Act of 2001." This bipartisan, comprehensive legislation is very similar to last year's bill. In the public sector, the bill would restrict the sale and public display of Social Security numbers, provide for enforcement of the provisions, and establish civil and criminal penalties for violations.
In the private sector, the bill would restrict the sale, purchase, and display of Social Security numbers, limit dissemination of Social Security numbers by credit reporting agencies, and make it more difficult for businesses to deny services if a customer refuses to provide his or her Social Security number.
Based on the thoughtful comments we have received, this new legislation reflects a small number of fair and appropriate modifications, including the following:
Since the Federal Trade Commission does not have jurisdiction over financial institutions, our bill would now authorize the U.S. Attorney General to issue regulations restricting the sale and purchase of Social Security numbers in the private sector.
Similar to our provisions affecting the public sector, we make explicit our intent that the prohibition of sale, purchase, or display of Social Security numbers in the private sector would not apply if Social Security numbers are needed to enforce child support obligations.
To help prevent other individuals from suffering the same tragic fate as Amy Boyer, we include a new provision that prohibits a person from obtaining or using another person's Social Security number in order to locate that individual with the intent to physically injure or harm the individual or use their identity for an illegal purpose.
We have clarified the provision that would prohibit businesses from denying services to individuals who refuse to provide their Social Security number, including an exception for those businesses that are required by Federal law to submit the individual's Social Security number to the Federal Government. ...
We must act now to protect the privacy of Americans' Social Security numbers and to stop identity thieves from preying on those who have spent a lifetime achieving their good credit rating.
Note: This column has been adapted from a speech Rep. Shaw delivered on the floor of the House, May 25, 2001.
 How to contact Rep. E. Clay Shaw (R-Florida)
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