Guard your Social Security number
By Laura Bruce • Bankrate.com

"I think it's spooky. Everybody has that one number, and everything about you is tied to it. Put it in a computer and poof -- here's your bank account, your phone number, where you work ... "

-- Jim Edwards

Veteran radio newsman Jim Edwards was way ahead of most people. Back in the early '80s he refused to give his Social Security number when he enrolled at Miami Dade Community College. The school wanted to use it as a student identification number, but Edwards held his ground and the school gave him a different number -- all zeros, as he recalls.

Schools, phone companies, utilities, health clubs, insurance companies, video stores -- just about everybody wants your SSN. 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 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, identity theft victims each spend 175 hours and $800 trying to clear their records of fraudulent charges.

"I've seen accounts opened with wrong names and different addresses. As long as there's an SSN, that's all some of them care about," says Linda Foley of the San Diego-based Identity Theft Research Center.

Who has the right to ask for your digits?
While any business or agency can ask for your number, few 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, but people don't know they can say no," says Carolyn Cheezum of the Social Security Administration.

"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."

Edwards, for example, won't give his SSN to his doctor's office.

"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 SSNs will do business with you even if they can't have your number.

"We ask for a Social Security number to open an account, but it's not required," according to Michael Lowndes of the Long Island Power Authority.

"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."

Kimberly Brown at BellSouth headquarters in Atlanta says there's a procedure the company follows if someone doesn't want to give their number.

"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 BellSouth rating for them, and then that determines whether they'll have to pay a deposit to establish service."

Linda Foley of the Identity Theft Research Center says she brought her critically ill cat to a vet's office and balked when she was asked for her SSN.

"I said why? Will it be my cat's ID number? They said no, but if you give us a check we want a driver's license and a SSN in case the check bounces. I said I'd pay by credit card. They said it's our policy to get the number.

"I said if I give you a credit card and refuse to give you my Social Security number you'd let my cat die right now? They looked at me and the cat and said, 'Give us the card; we'll take care of it.' I was upset about the cat, but I was frustrated by the way I was being treated. It was unnecessary."

SSNs and identity theft
Social Security numbers exist for the purpose of tracking earnings and paying benefits, according to Cheezum. 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 recently enacted law barring businesses, health care providers and schools from:

• Publicly posting SSNs or requiring them for access to products or services
• Printing of SSNs on cards required for accessing products or services
• Requiring an individual to use his or her SSN 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 SSNs in schools and colleges. New York public and private schools cannot publicly display SSNs. Many are opting to assign students identification numbers. Arizona has passed similar legislation.

Foley says she hopes other states will follow suit and be even more restrictive so that SSNs will eventually be used only for a few selective purposes.

But, Foley says, until that happens, the first defense against the fraudulent use of SSNs are the companies that issue credit.

"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 SSNs 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?

Perhaps California's newly enacted privacy law offers a better option.

In addition to limiting the use of SSNs, the law allows a consumer to place a "security freeze" on their 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 SSN to obtain credit and doesn't pay their bills, you'll discover the fraud as soon as the bill collectors come calling. But sometimes an identity thief actually pays their 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 SSN 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.

If you suspect someone is fraudulently using your Social Security number, contact call the Federal Trade Commission's Identity Theft Hotline toll-free at 1-877-IDTHEFT (438-4338)or go online to the FTC Web site and fill out an Identity theft affadavit.

-- Updated: Dec. 8, 2004