Dangerous Information

by Gary Foreman

Dear Dollar Stretcher,
Someone told me you weren't supposed to put your Social Security number on your checks. Also you shouldn't have your number on your driver's license because that number is used for a lot of private things. Can you give me some input on this subject?

Marsha has asked a question that we should all be considering. How free should I be in releasing my Social Security number? And, frankly, what you're about to read isn't going to make you comfortable.

Originally, Social Security numbers were not to be used for identification. It even said so on your Social Security card. But no law was ever passed to support that. As our society has grown more complex, the trend has been to use your Social Security number in many more places. They've cropped up on driver's licenses, mailing labels, student ID's.

Surprisingly, the Social Security Administration has no legal authority to keep anyone from asking for your number. Nor can they control what someone does with it once they get it.

To further complicate matters, some people want to use Social Security numbers to catch bad guys. The 1996 Immigration Reform Act required states to get a valid Social Security number before issuing a driver's license. The goal was to catch illegal immigrants. Some states used that change to move toward using Social Security numbers as license numbers. Others have proposed requiring the use of your Social Security number for other government services. The goal was to catch "deadbeat dads" and other criminals. An admirable goal, but questionable from a privacy point of view.

Currently, there are two problems with the way Social Security numbers are being used. The first is that many organizations use your social security number as a password. Knowing the number gets you access to the account. Clearly that makes it easy for anyone who knows your number to pretend to be you.

The second problem is that many places use your number as an ID number. Banks, hospitals, brokers and others all find it convenient. Names and addresses can change, but your Social Security number remains the same. So that number makes it easy to identify you. But it also means that your number isn't nearly as private as it once was.

And that's created an entirely new crime called "identity theft." According to the U.S. Secret Service identity, theft crimes cost about $1 billion last year. It's estimated that there are 500,000 new victims yearly.

Identity thieves will open a new credit account using your name. All they need is your Social Security number and date of birth. To keep you unaware of the crime they'll have the bills sent to their address. You'll never know about the account. Naturally they won't pay the bills and you'll be left with the bad credit entries.

Thieves can also use your Social Security number to change the address on an existing account. They'll request an additional card and begin to make charges but you won't see any statements. It's not just credit cards. Many savings institutions will allow a caller to transact business in an account if they have the name and Social Security number. They can transfer money out of your bank account without ever setting foot in the bank.

Pretty scary, huh? And it's not hard to steal your Social Security number. It's often listed on billing and investment statements. All it takes is the theft of one statement from your mailbox. Would you even notice that it was missing?

What's interesting is that in most identity theft cases the police don't consider you to be the victim of a crime. That's because the card issuer is liable for the fraudulent bills. Unfortunately your reputation doesn't have a dollar value.

So how can you protect yourself? The AARP suggests that you do not print your Social Security number on your checks, and do not carry your Social Security card with you. But that's only the beginning. The real question is, what happens when you want to do business with someone and they ask for your number. Private organizations can demand your number for almost anything. You can refuse to give it to them, but they can choose not do business with you.

For instance, when you move, the utility company may ask for your number before they initiate service to your home. They can do a credit check without your number, and they will if you request it. But that will take longer, and you might not be willing to wait to get your electricity turned on.

When someone asks for your Social Security number, find out why they need it. Expect to provide it when you apply for credit. For anything else, you might want to consider refusing the request.

You'll also want to know how they'll use your number once they have it. Will they access your credit file once and that's it? Remember, the information that you provide may not remain private. Even "reputable" businesses have been known to sell blocks of social security numbers.

There's no one right answer for all situations, just a lot of gray areas. But by considering the request you should have a reasonable chance to come to a good decision.

Finally, check your credit report often. Anyone misusing your social security number will leave evidence in your credit file. They're just counting on you not to notice.

Check your credit rating at least once a year. There are three main credit reporting agencies. By law they may charge you up to $8 for your report unless you have been denied credit due to their report within the last 60 days.

  • Equifax: 800-685-1111
  • Experian (formerly TRW): 800-682-7654
  • Trans Union: 800-888-4213

Naturally you don't want to have to pay for the report. Consider it low-cost insurance against the hassle of an identity theft.

So, should Marsha provide her Social Security number? Only when she feels that it's really necessary. And she, like all of us, need to be alert for unusual activity.

Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.

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