A Social Security number is a unique 9-digit number issued to U.S. citizens, permanent residents, and temporary residents under section 205(c)(2) of the Social Security Act. The Social Security number was created in 1936 for the sole purpose of tracking worker’s earnings and eligibility for Social Security benefits. However, over time the use of the Social Security number has expanded significantly beyond its original intended purpose. Today, the Social Security number is commonly used as a unique identifier for taxation, employment, banking, credit checks, and other purposes. While the expanded use of the Social Security number provides conveniences, it also raises privacy and security concerns due to the sensitive nature of the information associated with the number.
What is a Social Security Number?
A Social Security number is composed of 9 digits separated by hyphens in the form “AAA-GG-SSSS”. The first three digits are the area number associated with the state where the application for the Social Security card was made. The next two digits are the group number which represent when the application was made. The last four digits are serial numbers assigned sequentially by the Social Security Administration.
Obtaining a Social Security Number
Social Security numbers are issued by the Social Security Administration to U.S. citizens, permanent residents, and temporary working residents. Newborns can be issued Social Security numbers at birth in the hospital. For children and adults, Social Security numbers can be obtained by submitting an application to the Social Security Administration and providing certain documents to prove age, identity, and U.S. citizenship or lawful immigration status. Replacement Social Security cards can also be obtained if a card is lost or name is changed.
Uses of a Social Security Number
While created solely for tracking earnings, a Social Security number today is required and used for many essential functions beyond its original intent. Some of the common uses of a Social Security number include:
Tax Identification
One of the primary uses of a Social Security number today is as a tax identification number for individuals. The Internal Revenue Service (IRS) uses the Social Security number to identify taxpayers and process tax returns. The Social Security number is also used to track wages and income to calculate Social Security benefits eligibility and amounts.
Employment Eligibility
During the hiring process, employers are required to verify the identity and employment eligibility of employees. An employee’s Social Security number is commonly used to run background checks and verify employment eligibility through E-Verify. The employer must report wages earned by an employee to the Social Security Administration and IRS using their Social Security number.
Banking and Financial Services
Banks, lenders, and other financial institutions use Social Security numbers to open accounts, process applications, run credit checks, and for tax reporting purposes. Many financial accounts like bank accounts, investment accounts, and loans may require providing your Social Security number even if it is not used as the main account number.
School Registration
Social Security numbers are commonly collected by schools during enrollment to identify students. The numbers may be used to register for exams, access records, or apply for financial aid. However, providing a Social Security number for school enrollment is often optional.
Health Insurance
For health insurance provided by employers, Social Security numbers are needed for the insurer to report coverage for tax purposes. Social Security numbers are also used by Medicaid and Medicare to coordinate benefits. Healthcare providers may also collect Social Security numbers for billing and coordination of benefits.
Driver’s License Registration
State motor vehicle agencies typically use Social Security numbers as an identifying number for driver’s licenses and ID cards. However, some states have moved to alternative state ID numbers to reduce reliance on the Social Security number. The Social Security number may still be needed to take driver’s license exams or collect driving records from other states.
Credit Checks and Lending
Credit reporting agencies use Social Security numbers to match consumers to their credit files. Lenders and financial institutions may require a Social Security number on applications for loans, credit cards, and other financial products to look up and evaluate creditworthiness. While lenders are required to protect the confidentiality of Social Security numbers, the extensive use increases the risk of fraud and identity theft.
Court Fines, Tickets, and Child Support
Government agencies like courts and family services may collect Social Security numbers to track fines, tickets, DUI charges, and child support payments. The Social Security number provides a unique identifier to properly credit payments. Child support enforcement agencies can also locate individuals through their Social Security number for enforcement actions.
Background Checks
Many employers and volunteer organizations run background checks on applicants and existing personnel using their Social Security number. This allows databases to be searched for criminal history, sex offender status, and other records tied to the Social Security number. Background checks help assess suitability for employment, volunteering, adoption, and other purposes.
Rental Housing
Landlords and property managers frequently require Social Security numbers on rental applications to run credit and background checks on applicants. Some states now prohibit requiring a Social Security number for rental housing. However, landlords may still ask for a Social Security number voluntarily for screening purposes while making it clear it is not required.
Limitations on Social Security Number Use
While Social Security numbers are very commonly used and required, there are some limitations imposed:
Privacy Act of 1974
The Privacy Act of 1974 established standards for collection, maintenance, use, and dissemination of personal information by federal agencies. Under the Privacy Act, government agencies may not deny any right, benefit, or privilege provided by law based on refusing to disclose a Social Security number unless the disclosure is required by federal statute or statute adopted prior to 1975.
Family Educational Rights and Privacy Act
The Family Educational Rights and Privacy Act (FERPA) protects the privacy of student education records. Educational institutions may not require students to disclose a Social Security number to receive educational services and must get written consent before disclosing a Social Security number from education records.
Driver’s Privacy Protection Act
The Driver’s Privacy Protection Act restricts states from displaying an individual’s Social Security number on driver’s licenses and prohibits the sale and disclosure of personal information from motor vehicle records. Social Security numbers can still be collected but states must take steps to prevent public disclosure.
State Laws
Many states have enacted laws further restricting the collection and use of Social Security numbers by government agencies, schools, hospitals, insurers, employers and other organizations to improve privacy. For example, some states prohibit requiring Social Security numbers for college admissions.
Risks of Social Security Number Use
Despite the protections in place, the extensive collection and use of Social Security numbers beyond their original intended purpose poses significant risks:
Identity Theft
Identity theft is one of the major risks associated with the reliance on Social Security numbers as an identifier. If a criminal gains access to someone’s Social Security number and other personal information, they can open fraudulent accounts and incur debts in the victim’s name. Stolen Social Security numbers also enable employment and tax fraud.
Privacy Violations
The widespread use of Social Security numbers increases the risk of accidental disclosure and privacy violations. When Social Security numbers are collected and shared with many organizations, there are more opportunities for human error, security breaches, and records exposure that compromise privacy.
Weak Security Protocols
Private companies and organizations may not have adequate data security safeguards in place compared to government agencies. However, government agencies have also had security failures. Weak security protocols increase vulnerability to hacking, data breaches, and unauthorized access to Social Security numbers.
Unnecessary Collection
Collection of Social Security numbers is sometimes excessive beyond what is needed for a stated purpose. Organizations may reflexively ask for Social Security numbers even when alternative forms of identification could suffice because the collection is habitual. Unnecessary collection amplifies privacy risks.
Data Aggregation
When Social Security numbers are provided to multiple organizations, it enables data aggregators to combine data and build extensive consumer profiles. While data aggregation can have benefits for marketing, it raises privacy concerns when profiles contain sensitive data like Social Security numbers, information individuals may not want shared widely or used for business purposes.
Best Practices for Social Security Number Use
To minimize the risks of Social Security number overuse, the following best practices are recommended:
Limit Collection
Only collect Social Security numbers when truly necessary and avoid routinely collecting “just in case”. Identify alternatives to Social Security numbers such as account numbers or other identifiers.
Limit Internal Usage
Restrict access to Social Security numbers to personnel who need them for job duties. Avoid using Social Security numbers as an internal identifier. Have procedures to securely dispose of documents containing Social Security numbers.
Increase Security
Use encryption when storing Social Security numbers in databases. Transmit Social Security numbers securely over email, websites and other channels. Conduct regular security audits.
Isolate Paper and Electronic Records
Store paper records containing Social Security numbers securely, ideally behind locked doors with limited access. Electronically, it is best to separate Social Security numbers from other personal information where possible when storing in databases.
Provide Limited Disclosure
Do not display entire Social Security numbers on documents mailed to individuals. Only reveal the last four digits if needed. Before sharing with third parties, ensure it is contractually allowed and necessary.
Support Privacy Legislation
Encourage legislators to enact strong data privacy laws that give individuals more control over their personal data including Social Security numbers. Strict legal protections are needed to reduce security risks.
Increase Public Awareness
Initiatives to educate the public on Social Security number risks and best practices are also beneficial. Individuals can then make more informed decisions before providing Social Security numbers.
Conclusion
In summary, while Social Security numbers were originally created solely for tracking Social Security earnings, the use has expanded over decades to become a quasi-national identifier used for taxation, employment, banking, credit checks, and many other non-Social Security purposes. This expanded use provides conveniences but also significant risks to privacy and security. Organizations should follow best practices to limit collection, restrict internal use, isolate records, improve security protocols and support protective legislation. Additionally, individuals should be judicious in providing their Social Security number when requested and follow recommendations to prevent identity theft. With prudent actions taken by both organizations and individuals, it is possible to reduce the privacy and fraud risks associated with the relies on Social Security numbers as unique identifiers while retaining needed functionality.
| Use | Required by Law? | Alternatives |
|---|---|---|
| Tax identification | Yes | ITIN |
| Employment eligibility | Yes | I-9 documents |
| Banking/Financial accounts | Sometimes | State ID |
| School registration | No | Student ID |
| Health insurance | Sometimes | Member ID |
| Driver’s license | Yes | State ID number |
| Credit checks | No | Alternative ID |
| Court fines/tickets | Yes | Case number |
| Background checks | No | Authorization |
| Rental housing | No | State ID |