The possibility that U.S. lawmakers might restrict the
widespread use of Social Security numbers in commerce because of
consumer privacy issues is prompting concern in the financial
services industry.
Such a move would rob businesses of a reliable and widely used
identity-verification method while doing little to bolster consumer
privacy, said Randy Lively Jr., CEO of the American Financial
Services Association in Washington.
Lively was one of several industry representatives who testified at
a hearing last week on the use of Social Security numbers in
commerce. Lively spoke before a subcommittee of the House Committee
on Energy and Commerce.
"The Social Security number is the only unique identifier in our
country that enables a credit grantor, or a credit bureau, or a
bank, or an insurance company, or an investment firm to be sure
that the consumer they are doing business with" is legitimate, he
said. Any attempt to change that use could disrupt the nation's
economy, Lively argued.
While concerns about the misuse of Social Security numbers and
their link to identity theft are valid, Lively said lawmakers need
to understand of the consequences of barring their use for
commercial purposes. "What would be put in place if that number
were to go away and a new identifier was put in place? And wouldn't
that identifier be susceptible to the same kind of fraud?" Lively
asked.
The hearing comes at a time of heightened consumer and
congressional attention to what has been a stream of high-profile
data breaches that have exposed the confidential information of
millions of Americans and raised fears of widespread identity
theft.
"The concern is that use of [Social Security numbers in commerce]
is contributing to the problem of ID theft," said Marc Rotenberg,
executive director of the Electronic Privacy Information Center
(EPIC), a privacy advocacy group in Washington. Although a Social
Security number is not the only source of identity information, "we
see it associated with a growing privacy risk," he said.
Rotenberg, who testified at the hearing, said that EPIC supports
current efforts by federal lawmakers to restrict the use of the
numbers in commerce. One such effort is being led by Rep. Edward
Markey (D-Mass.), who is sponsoring a bill to require the Federal
Trade Commission to put rules in place limiting the purchase and
sale of Social Security numbers except in certain situations.
Another bill, sponsored by Rep. Clay Shaw (R.-Fla.), seeks to
prohibit most government and private-sector sale and public display
of the numbers.
A statement submitted on behalf of the Financial Services
Coordinating Council (FSCC) of the Securities Industry Association
warned of "potentially negative effects" if such measures are
adopted. Overly broad legislation will raise credit costs, increase
fraud and identity theft rates and result in "fundamental and
costly changes to internal business operating systems," the FSCC
said.
"While the FSCC recognizes that there have been misuses of [Social
Security numbers], we strongly urge that any legislation intended
to address this problem be carefully targeted to specifically
identified abuses, such as measures to stop identity theft," the
group said.
It noted that laws such as the Gramm-Leach-Bliley Act and other
proposed bills already require companies to take adequate measures
to protect sensitive information.
In testimony from the FTC, Commissioner Jon Leibowitz said there
are other things that the government and industry can do to reduce
identity theft, such as implementing better processes for
protecting data and developing better fraud-detection
technologies.
The FTC itself will continue to move against companies that fail to
demonstrate due diligence in protecting sensitive data, he said in
a written statement. "Since 2001, the Commission has brought 13
cases challenging businesses that have failed to take reasonable
steps to protect sensitive consumer information in their files," he
said. Those cases include a US$10 million civil penalty and $5
million in consumer redress that data broker ChoicePoint Inc. had
to pay for allowing identity thieves to gain access to consumer
records, he said.
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