Protect yourself from identity theft by keeping a tight rein on your Social Security number. Only a few organizations have the right to demand it. Here's how to fend off the rest.
"Put it in a computer and poof -- here's your bank account, your phone number, where you work."
The key to all that private information? Your Social Security number.
Today, schools, phone companies, utilities, health clubs, insurance companies, video stores -- just about everybody wants your Social Security number. Some of the more prevalent uses are to get your credit rating and determine whether you pay your bills, and to keep track of you through name and address changes.
But companies also use your Social Security number to develop marketing lists, which they can sell to other companies. A list with the numbers is more valuable than one without.
Why should you care who sees your Social Security number? The more people who see it, the more susceptible you are to identity theft, where you are victimized by someone fraudulently using your name and credit report to steal money.
Identity theft costs American businesses billions each year, costs that are eventually passed on to all consumers. The toll on victims is heavy, too. The California Public Interest Research Group estimates that, on average, an identity theft victim will spend 175 hours and $800 trying to clear their record of fraudulent charges. Find a loan that's right for you at the Loan Center
Who has the right to ask for your digits?
While any business can ask for your Social Security number, there are very few entities that can actually demand it -- motor vehicle departments, tax departments and welfare departments, for example. Also, SSNs are required for transactions involving taxes, so that means banks, brokerages, employers, and the like also have a legitimate need for your SSN.
Most other businesses have no legal right to demand your number.
"There is no law prohibiting a business from asking for your Social Security number,
"We recommend that you ask if they'll accept an alternative piece of identification. If they don't, flat-out refuse to do business with them. Bear in mind that there's a possibility they'll refuse to provide whatever product or service you're seeking."
"When you go to the doctor's office and fill out the medical information, they ask for the SSN. I leave it blank. Nothing happens. I'm not reporting income from them."
In fact, chances are good that many companies that routinely ask for Social Security numbers will do business with you even if they can't have your number.
The Social Security number is just part of the customer's record. A common problem with utility accounts is people open an account, default and reopen another account using the same Social. We can use that to discover the problem. We ask them to fill out a questionnaire to determine their payment history. We don't do a credit check; we depend on them being honest. The questionnaire determines the Bell South rating for them, and then that determines whether they'll have to pay a deposit to establish service."
Social Security numbers and identity theft
.Although President Franklin Roosevelt signed an order requiring federal agencies to use SSNs for record-keeping systems, they were never meant to be used by businesses as an identifier, but have taken on that role because everyone has one.
But the snowballing problem of identity theft is spurring some governments to limit the use of SSNs.
California is leading the way with its law barring businesses, health care providers and schools from:
Publicly posting Social Security numbers or requiring them for access to products or services.
Printing of Social Security numbers on cards required for accessing products or services.
Requiring an individual to use his or her Social Security number to access a Web site unless a password is also required to access the site.
Printing an individual's SSN on any materials that are mailed to the individual.
The state of New York limits the use of Social Security numbers in schools and colleges. New York public and private schools cannot publicly display Social Security numbers. Many are opting to assign students identification numbers. Arizona has passed similar legislation.
"Are they verifying that the person applying for credit is the true consumer? Are they looking carefully for red flags that might alert them to possible fraudulent use? If a credit application has a last name spelled incorrectly or an address different from the credit record, that should provoke someone into calling the consumer."
Some privacy rights proponents say Social Security numbers shouldn't be used for obtaining credit. Does that mean a second number would have to be issued for people seeking credit? Would that be any better than the current system?
More protections in California
Perhaps California's newly enacted privacy law offers a better option.
In addition to limiting the use of Social Security numbers, the law allows a consumer to place a "security freeze" on his credit report. The freeze prohibits consumer-credit-reporting agencies from releasing the consumer's credit report or any information from it without express authorization from the consumer.
Time will tell if that provision works better than the more common "alerts" that many people put on their credit reports. With an "alert" a consumer is supposed to be notified that someone is attempting to obtain credit in his or her name. But stories abound of breakdowns in the system.
If someone uses your Social Security number to obtain credit and doesn't pay the bills, you'll discover the fraud as soon as the bill collectors come calling. But sometimes an identity thief actually pays the bills and, in those instances, it could be a long time before you discover the fraud.
The best way to find out if someone is fraudulently using your Social Security number is to request copies of your credit reports at least once a year. There are three main credit-reporting agencies. It's a good idea to get a copy of your report from each agency so you can check for discrepancies. You can order your credit report from: TransUnion, Equifax and Experian.
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