Best Way To Stop ID Theft

Identity theft cases doubled from 2001 to 2002. A report from the Federal Trade Commission revealed that ID theft complaints to the government rose from 86,000 to 162,000, and for the third year ID theft was the most reported type of fraud. The government believes most thefts go unreported and that about 700,000 ID thefts occur each year. The Justice Department believes that the average victim spends about $1,000 coping with the damage to financial accounts and reputation. Some victims spend much more.

The key way to prevent ID theft is to safeguard your Social Security number.

Because of the importance of your Social Security number and confusion regarding its confidentiality, the Social Security Administration recently provided a summary of key issues regarding SSNs.

Your Social Security number is your personal property, and giving your number to anyone is voluntary. Even government agencies cannot deny you any right, benefit, or privilege for refusing to give your SSN unless disclosure of the number is required by federal law or by a law or regulation that was in effect before September 1, 1976. For example, the SSN is required for dealings regarding Social Security, tax returns, Medicaid, and some other federal programs.

Any government agency requesting your SSN is required to tell you whether disclosure is mandatory or voluntary; what law or other authority requires disclosure; and how the number will be used. Even when the number is “required” you can refuse to give the number, but the agency can refuse to provide the benefit you are seeking.

Many businesses request the number as a matter of course. Some do so because the SSN is unique and makes recordkeeping easy. Some request the number because that makes it easy to run credit checks, conduct background investigations, or enforce the terms of a transaction if there are problems.

No law prevents a business or other organization from requesting an SSN, and there are few if any limits on how the number can be used. There also is no law that requires you to give the number to any non-governmental person or entity. Remember, the number is your property to keep or give out as you wish. A business can refuse to do business with you without receiving the number, but there is no law that requires a business to collect your number or you to give it. The exception is that employers and anyone who pays you more than $600 for personal services during the year is required to get the number for annual Forms W-2 or 1099 reports to the IRS.

The SSA recommends that before giving the number you should ask:

• why the number is needed;

• if giving the number is mandatory or voluntary;

• what law requires the number,

• how the number will be used; and

• what happens if the number is not provided.

You might also ask what safeguards are in place to protect the number. Of course, you cannot count on the safeguards at any organization being completely safe. Any employee in an organization easily can sell Social Security numbers. You might recall that a few months ago several employees at a major credit card processing firm were arrested for selling thousands of names and SSNs. The main safeguard is being judicious about who gets access to your SSN.

The article from Social Security is in the Winter 2002 edition of the SSA/IRS Reporter, sent to all employers. It is available on both the IRS and Social Security web sites by doing a search for SSA/IRS Reporter. The sites are www.ssa.gov and www.irs.gov.

Here are some other steps you can take to prevent ID theft:

• Use a shredder before disposing of documents. Any document that might have your SSN or other important information on it should be run through a shredder on the way to the trash. Key documents include credit card statements, bank statements, paycheck stubs, brokerage or mutual fund statements, and insurance company information. Shredders now cost less than $100. If in doubt, shred before disposing.

• Use a post office box for important mail. ID thieves like to drive through neighborhoods and loot mailboxes. Sometimes they go through after the mail is delivered and look for pre-approved credit card applications, bank statements, and credit card bills. Other times they drive through early, looking for the raised flags that indicate outgoing mail. They are hoping the outgoing mail includes checks to pay bills. A copy of one of your checks is a bonanza for an ID thief.

• Be careful when giving credit card or Social Security numbers. Don’t read them aloud in a store or over the phone unless you are comfortable with everyone who might be within hearing range.

• Don’t carry your Social Security card or anything with the SSN. If your state uses the SSN as a driver’s license number, ask for a replacement number.