Congress Moves Belatedly Against Identity Thieves

After six years of trying, lawmakers are finally about to ban a common cause of identity theft.

By Matthew Mogul, Associate Editor, The Kiplinger Letter

August 7, 2007

Congress will soon restrict the sale of Social Security numbers, a legal practice that many believe is a major source of fraud. Lawmakers have increasingly blamed the rising number of identity theft cases on the largely unregulated sales of SSNs. And many agree with a recently released Government Accountability Office report stating that "vulnerabilities persist in federal laws addressing SSN collection and use by private sector entities."

Still, in order to move against the practice, which will likely be part of a broader ID theft bill, the new Democratic majority will make concessions to Republican leaders who have blocked such efforts in the past by arguing that federal interference would end up crimping legitimate businesses, such as those in the financial service sector.

So, expect the law that gets passed to make exceptions. The legislation will likely allow Social Security numbers to be used by law enforcement, public health officials and businesspeople running credit checks.

The law will also bar the display of SSNs on ID tags and membership cards. Groups that still want to use Social Security numbers in their database will be forced to truncate the numbers on cards and documents to five or fewer digits. Violators will face stiff fines and could be criminally charged. Federal funds may also be set aside and allocated to local governments around the country to help them remove online records publicly displaying SSNs.

The law will hit data brokers the hardest. Even though heightened scrutiny in recent years has forced many data brokers to tighten their guidelines on whom they'll sell to and whom they won't, the self-imposed restrictions haven't gone far enough to satisfy lawmakers.

Firms in the crosshairs range from giants such as Acxiom Corp., ChoicePoint and LexisNexis to smaller online Web sites, such as www.secret-info.com and www.Iinfosearch.com. No matter its size, each does business selling people's personal information, such as birth dates, maiden names, real estate records, civil judgments and criminal records to everyone from prospective employers to collection agencies to private detectives.

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