TRUTH AND FICTION
SOCIAL SECURITY NUMBERS
PROVIDED COURTESY OF CDIA
All companies that use consumer data rely on the social security number. It is one of the most important factors used for matching applicants with information in databases that can help determine whether the applicant is who he or she claims to be, or is a good risk for credit, employment, a lease or other benefits.
Yet, despite its critical role in our economy, legislation has been introduced at the State and National level that would significantly restrict the use of the SSN. The misunderstanding about the use of the number and its importance to commerce is breathtaking. Only companies in the information business or that rely on information to evaluate risk can help educate legislators and the public.
All companies that rely on consumer information to make risk decisions have a stake in the debate and need to take steps to educate their legislators—call and write when you learn of misguided legislation. Write your local newspaper to correct misunderstandings. Help explain the benefits, the lower prices that benefit everyone when risk decisions are made in a rational manner based on a careful evaluation of information.
In 1935, Congress created the social security system. For many years, the Social Security cards issued to citizen stated that the Social Security Account Number was "For Social Security Purposes – Not for Identification;" the concern being the preservation of individual liberty and limitation of government power.
So it is not surprising that few people anticipated role the SSN would play in the incredible information based economic expansion of the United States over the next several decades. Even today, few consumers connect the dots between the incredible value consumer data plays in their individual lives or our nation's economy.
The FTC recently stated: "SSNs play a vital role in our economy, enabling businesses, government, and others to match information to the proper individual. … consumer reporting agencies use SSNs to ensure that the data furnished to them is placed in the correct file, and that they are providing the right credit report for the right consumer. SSNs also are used in locator databases to find lost beneficiaries, witnesses, and law violators and to collect child support and other judgments. Employers must collect SSNs for tax reporting purposes, and health care providers may need them to facilitate Medicare reimbursement."
The consumer value of the SNN is often missed in the debate, but the truth is that the SSN is a unique number and we live in an economy where information is critical to millions of consumer transactions. Consider the following:
- 40 million addresses change every year according to both the U.S. Census and the U.S. Postal System.
- At least 3 million last names change due to marriage and divorce every year.
- At least 6 million vacation homes mean millions of consumers have second addresses.
The SSN is a key data matching element in tracking these changes. The SSN is vital in the protection against identity theft and fraud. For example:
- The SSN can help answer the question "does this combination of identifying data (e.g., name, address, DOB, etc.) occur and thus is likely valid?"
- The SSN can also "connect" an application with databases of known fraudulent applications, thus helping a lender measure the risk of fraud.
It is this very point, however, that leads to the greatest confusion about the SSN - many consumers assume the SSN is the sole means of validating identity. Few consumers consider the relevance of the questions asked by their bank or credit card company, such as:
- What was the color of your first car?
- What is the name the first school you attended?
- What is the name of the hospital you were born in?
What they don't realize is that this "Out of Wallet" information is available to a database compiler but not readily available to criminals who may be attempting identity theft.
In other words, the SSN information is insufficient to steal an identity. It is the SSN information, together with the “Out of Wallet” information that is essential to validate an identity, or in the alternative to steal an identity.
In this dual role of validation of identify and management of fraud risk, the use of a SNN in a consumer business transactions protects consumer. However, the SSN is NOT the sole identifier in either case. In fact, the red flags raised through the use of an SSN can often lead to the direct prevention of fraud. SNN plays are critical role in our economy and the proper and protected use of the SSN does and will continue to benefit consumers.
View Our Other Articles From This Issue of {see} Magazine