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Imagine giving a stranger all the particulars of your life: your bank account numbers, medical records, work history and credit information. Not happening, right?
But odds are, you regularly give out the one key that allows strangers complete access to all the information above.
That is your Social Security number. It's what identifies you as being you. No other series of numbers can do what a Social Security number can, and in the case of identity theft or fraud, that's not good.
The history of Social Security numbers
Social Security numbers were first issued in 1936 by the Social Service Board as part of the new Social Security laws. The nine-digit number was supposed to be used exclusively by the federal government to track working individuals for taxation purposes and to track Social Security benefits.
However, the Social Security number has become the most frequently used record-keeping number in the United States. Now, Social Security numbers are used as student IDs, patient identifiers and authenticators to set up bank accounts and obtain loans.
Ironically, during the first few decades that Social Security cards were issued, they contained the phrase, "Not to be used for identification." However, since no law was passed to prohibit the use of Social Security numbers as identification, institutions, including hospitals and banks, began using the nine-digit number to identify their customers.
The Social Security Administration estimates that approximately 227 million individuals have Social Security numbers. According to the Government Accountability Office, or GAO, Social Security numbers have become the de facto national identifier.
Back in the mid-1970s, amid concerns over the growing amount of personal information that was being traded electronically, Congress passed the Privacy Act of 1974. This law states, "Any Federal, State or Local government agency which requests an individual to disclose his Social Security account number shall inform that individual whether that disclosure is mandatory or voluntary, by what statutory or other authority such number is solicited, and what uses will be made of it."
Gail Hillebrand, senior attorney for Consumers Union, publisher of Consumer Reports, says that over the years the Social Security number has become popular because "it's convenient and it's the same number of digits everywhere for everyone and it stays the same, so it has become everyone's form of identification."
It allows financial institutions to distinguish one John Smith from another.
"Social Security numbers are used way too much for unnecessary reasons like identification on Medicare cards, student ID cards or driver licenses," says Hillebrand.
She says that unless you are applying for a loan where they need to check your credit history or a potential employer needs your Social Security number for tax purposes, there is no reason that businesses could not use a different identifier.
"Both government and businesses need to distinguish between convenience and importance. There needs to be a standard of disconnecting ID function from credit function," says Hillebrand.
If businesses are asking their customers to guard their personal identification to help reduce ID theft and fraud, but the businesses continue to use the Social Security numbers as their main source of identification, the businesses are doing exactly what they preach against by allowing access to these special numbers.
"It's a bomb in the town square; it needs to be defused," says Mark Durham of Identity Theft 911.
Durham says the Social Security number is much too powerful. "Why make one piece of information so powerful that it can ruin your life if a thief decides to open credit cards, take out loans or assume your identity?"
Giving out numbers
According to the Electronic Privacy Information Center, identity theft is facilitated when a thief gets ahold of consumers' Social Security numbers, dates of birth and mothers' maiden names. That's easy to do, given how extensively the information is used by businesses, financial institutions, schools and government agencies.
"In a consumer environment driven by credit scores, most businesses consider your Social Security number -- not your name -- to be the ultimate validation of your identity. Your SSN is the key that opens every door, and it never changes. For an identity thief, that's a dream come true. Other information matters, but your SSN is the golden ticket," says Judd Rousseau, COO and director of fraud operations for Identity Theft 911.
The widespread use of the SSN as an identifier and authenticator has led to an increase in identity theft. Once a Social Security number is obtained fraudulently, it can be used as "breeder" information to obtain a loan, access bank accounts or create false identification documents, such as a driver's license.
With an estimated 10 million individuals being victimized by identity theft each year, preventing identity thieves from obtaining Social Security numbers is increasingly essential.
So, when must you give out your Social Security number?
Hillebrand says, "Unless it's related to checking your credit record or used for tax purposes, there is no need to collect your Social Security number as an ID number."
The USA Patriot Act has a customer identification program, which means you have to give your Social Security number in order to open a bank account or get a credit card.
"But once your credit line has been established, there is no reason for that business to keep using your Social Security number as an identifier," says Hillebrand.
That means cell-phone firms, utilities and credit card companies, and basically any other business or government institution that does not deal directly with personal tax records or credit history can use other means to recognize customers.
However, that means more work and less convenience for both the organization and the customer. According to Durham, that convenience might be why both business and government institutions are unwilling to discontinue using your Social Security number as a skeleton key.
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