February 18, 2004
By Mike Krause
The Colorado legislature is on track to pass some kind identity theft bill this session. And while giving the government better tools to prosecute ID thieves and empowering victims to restore their good names is all well and good, what ID theft and fraud laws, at both the state and federal level, have failed to do is actually prevent the crime itself.
In 2002, the Federal Trade Commission’s Identity Theft Data Clearinghouse ranked Colorado as the eleventh worst state for identity theft with 2660 instances (61.8 victims per 100,000 people). But interestingly enough, nine states, ranked worse than Colorado, have some type of criminal identity theft laws in place, while Vermont, ranked 49th, has none. (http://www.consumer.gov/idtheft/idt_statemap/Colorado%20CY2002.pdf)
In other words, there is a disconnect between ID theft laws and instances of the crime, and it should be little wonder.
The key ingredient to stealing someone’s identity is the social security number (SSN). The Federal Trade Commission’s “Protecting against Identity Theft” web page even advises, “Give your SSN only when absolutely necessary”. (http://www.consumer.gov/idtheft/protect_againstidt.html#5)
That’s good advice from the government. Problem is that the same government has mandated the widespread and growing use of SSN’s for purposes never intended, which at the same time ensures the number is widely available, both on paper and electronically, to would-be ID thieves.
Social security numbers were introduced as part of the Social Security Act of 1935. At the time, President Roosevelt assured the nation that the numbers would only be used by the Social Security Program. In 1943, the same President Roosevelt signed executive order 9397, which required federal agencies to use the number when creating new record-keeping systems. By 1961, the IRS began using it as a taxpayer identification number, which in turn required employers and financial institutions to require the number for tax reporting purposes.
Today, your SSN is required to get a job, open a bank or brokerage account, or get a bank loan, credit card or passport. It is required for any and all federal government services from veteran’s benefits to food stamps. As the government grows, so grows the scope of demand for the SSN as a national identifier.
In 1998, the U.S. Congress made identity theft a federal felony and threw the reach and resources of the FBI, Postal Service and Secret Service behind its enforcement. (http://www4.law.cornell.edu/uscode/18/1028.html)
And the result? According to a 2002 Government Accounting Office (GAO) report, “Identity Theft, Prevalence and Cost Appear to be Growing”, complaints to the Social Security Administration about SSN misuse increased five-fold from 1998 to 2001, with 81% of the allegations relating directly to identity theft.
Further, in 2001, the Identity Theft Resource Center (www.idtheftcenter.org) reported between 700,000 and 1.1 million cases nationwide, a record number at the time. For 2002, they report an 80% increase, claiming an estimated 7 million victims (this number may be exaggerated, as how they arrived at it is uncertain, but it is undisputed that ID theft is continuing to trend rapidly upwards).
It’s little wonder. Another GAO report on use of SSN’s found that, “Although agencies that use SSN’s to provide benefits and services are taking steps to safeguard the numbers from improper disclosure, our survey identified potential weaknesses in the security of information at all levels of government.” While “taking steps” has a reassuring ring to it, government has been misusing the SSN for some 70 year now. You would think they’d have the hang of it by now.
The spread of the SSN as an identifier is not limited to the national government. After my car was stolen, the Denver police officer taking the report requested my SSN. A friend who was pulled over and didn’t have his license reported that the Officer demanded his SSN. In recent years, Colorado and the rest of the states have genuflected before federal demands to collect the number for driver’s license issuance and such off- the- wall reasons as obtaining a simple hunting permit.
Dumpster diving and mail intercepts are rich fodder for ID thieves because government demands put the number on a wide variety of documents. The same goes for public records, increasingly available online.
Back in December of 2002, thieves simply stole computer equipment from a government health care contractor containing a host of personal information, including of course, the social security numbers (SSN’s) of about half a million active duty and retired military personnel and their dependents, putting them all at risk of identity theft. That those SSN’s were in any government database other than the Social Security Administration’s, is solely because the government itself deemed it so.
Today, the SSN as a national ID number is used to track, collect and store vast amounts of personal information about the private lives of Americans. This in turn has created a one stop shopping point for identity thieves.
Legislators, at all levels, can pass laws till they are blue in the face. But if they really want to honestly address the issue of identity theft, they will first have to deal with government’s culpability in helping to create the problem in the first place.
The Independence Institute
14142 Denver West Parkway, Suite 185
Golden, CO 80401
INDEPENDENCE INSTITUTE is a non-profit, non-partisan Colorado think tank. It is governed by a statewide board of trustees and holds a 501(c)(3) tax exemption from the IRS. Its public policy research focuses on economic growth, education reform, local government effectiveness, and Constitutional rights.
JON CALDARA is the President of the Independence Institute.
MIKE KRAUSE is a Senior Fellow at the Independence Institute.
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