[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
PRESERVING THE INTEGRITY OF SOCIAL SECURITY
NUMBERS AND PREVENTING THEIR MISUSE BY TERRORISTS AND IDENTITY THIEVES
=======================================================================
JOINT HEARING
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
and the
SUBCOMMITTEE ON IMMIGRATION,
BORDER SECURITY, AND CLAIMS
of the
COMMITTEE ON THE JUDICIARY
of the
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 19, 2002
__________
Serial No. 107-81
(Committee on Ways and Means)
Serial No. 102
(Committee on the Judiciary)
__________
Printed for the use of the Committee on Ways and Means and the
Committee on the Judiciary
U.S. GOVERNMENT PRINTING OFFICE
84-170 WASHINGTON : 2003
___________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa JOHN LEWIS, Georgia
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania XAVIER BECERRA, California
WES WATKINS, Oklahoma KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
Allison Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Social Security
E. CLAY SHAW, Jr., Florida, Chairman
SAM JOHNSON, Texas ROBERT T. MATSUI, California
MAC COLLINS, Georgia LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona BENJAMIN L. CARDIN, Maryland
KENNY C. HULSHOF, Missouri EARL POMEROY, North Dakota
RON LEWIS, Kentucky XAVIER BECERRA, California
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois JOHN CONYERS, Jr., Michigan
GEORGE W. GEKAS, Pennsylvania BARNEY FRANK, Massachusetts
HOWARD COBLE, North Carolina HOWARD L. BERMAN, California
LAMAR SMITH, Texas RICK BOUCHER, Virginia
ELTON GALLEGLY, California JERROLD NADLER, New York
BOB GOODLATTE, Virginia ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina
BOB BARR, Georgia ZOE LOFGREN, California
WILLIAM L. JENKINS, Tennessee SHEILA JACKSON LEE, Texas
CHRIS CANNON, Utah MAXINE WATERS, California
LINDSEY O. GRAHAM, South Carolina MARTIN T. MEEHAN, Massachusetts
SPENCER BACHUS, Alabama WILLIAM D. DELAHUNT, Massachusetts
JOHN N. HOSTETTLER, Indiana ROBERT WEXLER, Florida
MARK GREEN, Wisconsin TAMMY BALDWIN, Wisconsin
RIC KELLER, Florida ANTHONY D. WEINER, New York
DARRELL E. ISSA, California ADAM B. SCHIFF, California
MELISSA A. HART, Pennsylvania
JEFF FLAKE, Arizona
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia
Philip G. Kiko, Chief of Staff-General Counsel
Perry H. Apelbaum, Minority Chief Counsel
______
Subcommittee on Immigration, Border Security, and Claims
GEORGE W. GEKAS, Pennsylvania, Chairman
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
MELISSA A. HART, Pennsylvania BARNEY FRANK, Massachusetts
LAMAR SMITH, Texas HOWARD L. BERMAN, California
ELTON GALLEGLY, California ZOE LOFGREN, California
CHRIS CANNON, Utah, Vice Chair MARTIN T. MEEHAN, Massachusetts
JEFF FLAKE, Arizona
J. RANDY FORBES, Virginia
George Fishman, Chief Counsel
Lora Ries, Counsel
Art Arthur, Full Committee Counsel
Cindy Blackston, Professional Staff
Leon Buck, Minority Counsel
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisory of September 12, 2002, announcing the hearing........... 2
WITNESSES
Social Security Administration, Hon. James B. Lockhart III,
Deputy Commissioner............................................ 11
U.S. Department of State, Charisse M. Phillips, Director, Office
of Fraud Prevention Programs, Bureau of Consular Affairs....... 48
U.S. Secret Service, Robert Bond, Deputy Special Agent in Charge,
Financial Crimes Division...................................... 54
Federal Bureau of Investigation, Grant D. Ashley, Assistant
Director, Criminal Investigative Division...................... 62
Social Security Administration, Hon. James G. Huse, Jr.,
Inspector General.............................................. 66
______
Stylecraft Interiors Inc., Matthew James Reindl.................. 73
Electronic Privacy Information Center, Chris Jay Hoofnagle....... 78
SUBMISSIONS FOR THE RECORD
Social Security Advisory Board, Hon. Hal Daub, statement......... 104
______
American Federation of Government Employees, National Council of
SSA Field Operations Locals, Baltimore, MD, Witold
Skwierczynski, statement....................................... 108
American Immigration Lawyers Association, letter................. 111
ERISA Industry Committee, National Association of State
Retirement Administrators, National Council on Teacher
Retirement, National Rural Electric Cooperative Association,
and Profit Sharing/401(k) Council of America, joint statement.. 112
Federation for American Immigration Reform, Dan Stein, letter.... 114
National Council of La Raza, and National Immigration Law Center,
joint letter................................................... 115
PRESERVING THE INTEGRITY
OF SOCIAL SECURITY NUMBERS
AND PREVENTING THEIR MISUSE BY
TERRORISTS AND IDENTITY THIEVES
----------
THURSDAY, SEPTEMBER 19, 2002
House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
and
Committee on the Judiciary,
Subcommittee on Immigration,
Border Security, and Claims,
Washington, DC.
The Subcommittees met, pursuant to notice, at 1:05 p.m., in
room 1100 Longworth House Office Building, Hon. E. Clay Shaw,
Jr., and Hon. George W. Gekas (Chairmen of the Subcommittees)
presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
September 12, 2002
No. SS-16
Shaw Announces Joint Hearing on
Preserving the Integrity of Social Security
Numbers and Preventing Their Misuse by
Terrorists and Identity Thieves
Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on
Social Security of the Committee on Ways and Means, today announced
that the Subcommittee will hold a joint hearing with the Subcommittee
on Immigration, Border Security, and Claims of the Committee on
Judiciary, chaired by Congressman George W. Gekas (R-PA), on preserving
the integrity of Social Security numbers and preventing their misuse by
terrorists and identity thieves. The hearing will take place on
Thursday, September 19, 2002, in 1100 Longworth House Office Building,
beginning at 1:00 p.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only. However,
any individual or organization not scheduled for an oral appearance may
submit a written statement for consideration by the Subcommittee and
for inclusion in the printed record of the hearing.
BACKGROUND:
Although Social Security numbers (SSNs) are used for many
legitimate purposes, wide availability, and easy access to this very
personal information has greatly facilitated Social Security number-
related crimes and fueled growing concern for safeguarding individuals'
privacy.
Identity theft is considered the fastest growing financial crime in
the country, affecting an estimated 500,000 to 700,000 people annually,
regardless of age, gender, or race. Older Americans will become an
increasingly attractive target by criminal elements, since they hold
substantial wealth and because seniors are often dependent on
caregivers. In addition, the rising cost of this crime increases the
cost of banking, insurance, and credit cards for all Americans.
Worse yet, according to the Federal Bureau of Investigation,
terrorists have utilized Social Security number fraud and identity
theft to obtain employment, access secure locations, and finance their
operations, thereby posing a significant threat to our national
security. Forged documents, whether bogus birth certificates, fake SSN
cards, or false immigration documents, are increasingly available from
those who make their living selling false identities. There are now
illegal markets throughout the cities of the United States where anyone
can acquire a false or stolen identity.
The Social Security Administration (SSA) serves as the front line
of defense in ensuring SSN integrity, because it is responsible for
accurately assigning SSNs and ensuring the wages earned and Social
Security benefits claimed on that number are only those of the number
holder. Last year, SSA issued 18.1 million SSN cards, of which 5.8
million were new and 12.3 million were replacement SSN cards. The SSA's
Inspector General (IG) has long criticized the agency's failure to
verify the authenticity of identification documents, and in a recent
report estimated that of the 1.2 million SSNs issued to non-citizens in
2000, nearly 100,000 were based on invalid or inappropriate immigration
documents. This year, the SSA began verifying supporting immigration
records before issuing SSN cards. The agency is also working with the
Immigration and Naturalization Service (INS) and the U.S. Department of
State (DoS) to implement new data sharing initiatives and an
Enumeration at Entry initiative.
Each year the SSA receives about 250 million wage reports from
employers covering approximately 150 million workers. For tax year
2000, employers reported almost 9.6 million wage items, equaling almost
$50 billion in wages, that could not be credited to individuals due to
lack of key information or submission of erroneous information,
although further efforts to reduce these discrepancies is ongoing.
According to the SSA, after all processing is complete, 2 to 3 percent
of wage items will remain unmatched. Earnings that cannot be matched to
a particular worker are recorded in separate file known as the Earnings
Suspense File (ESF).
According to the SSA IG, the ESF contains over 237 million wage
items and $375 billion in wages accrued between tax years 1937 and
2000. However, approximately two-thirds of growth in the file occurred
between 1990 and 2000. The IG has referred to the ESF as a ``major
management challenge'' for the agency because of its potential impact
on benefit amounts and administrative costs, and because it represents
a significant portion of SSN misuse. This year, the SSA extended its
outreach to employers by sending letters to all employers who submitted
earnings records that did not match SSA's records and asking them to
provide corrected information. In addition, the SSA began piloting an
on-line system to supplement existing verification procedures and more
quickly enable employers to verify the names and SSNs of newly hired
employees.
Although SSA issues SSNs in order to track individual's wages and
right to Social Security benefits, the agency assigns SSNs for limited
non-work purposes to certain individuals who are not U.S. citizens and
are not authorized to work by the INS. Today, SSA only issues non-work
SSNs to these individuals if Federal statute requires one to access a
particular benefit or service, or State or local law requires one to
get general assistance benefits. However, despite their ``non-work''
designation, in tax year 2000 approximately 600,000 individuals with
non-work SSNs earned over $21 billion, though in some cases individuals
may have become authorized to work without notifying the SSA.
In announcing the hearing, Chairman Shaw stated: ``This
Subcommittee has extensively examined identity theft by criminals and
heard first-hand testimony of the personal devastation caused by this
type of robbery. In the year since the September 11 attacks, we have
also learned how SSN fraud can enable terrorism. That is why my
legislation to improve the privacy of SSNs has generated bipartisan
support. The SSN protection must be an integral part of a comprehensive
effort to strengthen homeland security. It is one very tangible way we
can help prevent the American public from being further victimized by
terrorists.''
Chairman Gekas added: ``The privacy of the Social Security numbers
of every American is under attack by terrorists, international
criminals, and an increasing number of identity thieves. I believe the
Social Security Administration can do more to tighten up its procedures
for issuing Social Security Cards to prevent fraud.''
FOCUS OF THE HEARING:
The Subcommittees will examine: the role SSN fraud plays in crime
and terrorist activities and methods by which criminal fraud is
accomplished utilizing stolen SSNs; the integrity of the SSA's
enumeration and wage crediting process; Federal agency coordination and
cooperation, including data sharing, to verify identification
documents, and to detect and prevent fraud; and recommended legislative
proposals aimed at combating SSN misuse and protecting privacy.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Due to the change in House mail policy, any person or
organization wishing to submit a written statement for the printed
record of the hearing should send it electronically to
[email protected], along with a fax copy to
(202) 225-2610, by the close of business, Thursday, October 3, 2002.
Those filing written statements who wish to have their statements
distributed to the press and interested public at the hearing should
deliver their 200 copies to the Subcommittee on Social Security in room
B-316 Rayburn House Office Building, in an open and searchable package
48 hours before the hearing. The U.S. Capitol Police will refuse
sealed-packaged deliveries to all House Office Buildings.
FORMATTING REQUIREMENTS:
Each statement presented for printing to the Committee by a
witness, any written statement or exhibit submitted for the printed
record or any written comments in response to a request for written
comments must conform to the guidelines listed below. Any statement or
exhibit not in compliance with these guidelines will not be printed,
but will be maintained in the Committee files for review and use by the
Committee.
1. Due to the change in House mail policy, all statements and any
accompanying exhibits for printing must be submitted electronically to
[email protected], along with a fax copy to
(202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a
total of 10 pages including attachments. Witnesses are advised that the
Committee will rely on electronic submissions for printing the official
hearing record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. Any statements must include a list of all clients, persons, or
organizations on whose behalf the witness appears. A supplemental sheet
must accompany each statement listing the name, company, address,
telephone and fax numbers of each witness.
Note: All Committee advisories and news releases are available on
the World Wide Web at http://waysandmeans.house.gov.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call (202) 225-1721 or (202) 226-3411 TTD/TTY in advance of the event
(four business days notice is requested). Questions with regard to
special accommodation needs in general (including availability of
Committee materials in alternative formats) may be directed to the
Committee as noted above.
Chairman SHAW. Thank you for being here. Mr. Gekas and I
have sat in these chairs before at a joint meeting, and he just
reminded me how well he did the last time we were here in
cross-examining a certain witness and sort of nailed his hide
to the barn door. When the newspaper----
Chairman GEKAS. The New York Times.
Chairman SHAW. When the New York Times wrote about it, they
said how Clay Shaw tore this witness apart.
[Laughter.]
Chairman GEKAS. This time I sat in front of the right
nameplate.
Chairman SHAW. Okay, today our Subcommittees will join
together to examine efforts to preserve the integrity of Social
Security numbers and how we can better prevent terrorists and
identity thieves from using these numbers to abet their heinous
activities.
I welcome my friend, Chairman Gekas. We were partners
against crime on Judiciary a number of years ago, before I came
to this Subcommittee.
I welcome Ms. Jackson Lee and all of the Members of the
Judiciary Committee on the Immigration, Border Security, and
Claims Subcommittee to the Committee on Ways and Means.
I appreciate the opportunity to work with you as we look
for ways to ensure the security of individuals and the security
of our Nation.
Although created solely for the purpose of tracking
workers' Social Security earnings, our culture is hooked on
Social Security numbers. Business and governments use the
numbers as primary identifiers of individuals. Even the most
trivial transactions, such as renting a video, require us to
hand over our nine-digit ID before services can be rendered.
The Social Security number has become so woven into the
fabric of American society that it has become the key that
unlocks the door to an individual's identity for any
unscrupulous individual who gains access to it. If someone such
as a criminal or a terrorist unlocks the door, at their
fingertips are all of the essential elements needed to carry
out whatever dastardly act they can conceive.
Worse, as each day passes, we learn more about the degree
to which terrorists use stolen identities and false Social
Security numbers to establish cover employment, drivers'
licenses, and credit cards, all enabling them to live within
our borders and plan their crime against Americans.
No longer is Social Security number fraud simply a tool of
common criminals. Sadly, it is now a tool of terrorists.
As we will hear today from our witnesses from the U.S.
Department of State, the Federal Bureau of Investigation (FBI),
U.S. Secret Service, and the Social Security Administration's
Inspector General (IG), there is no limit to the creativity of
the reprehensible acts perpetrated by criminals and terrorists.
Our Nation and this Congress has forced our attention on
America's first line of defense since the attacks of September
11; the war on terrorism and protecting our borders. Next, we
must enact increased privacy protections for Social Security
numbers and more powerful tools for law enforcement.
To that end, I along with several of my Committee on Ways
and Means colleagues introduced H.R. 2036, the Social Security
Number Privacy and Identity Theft Prevention Act of 2001. It is
a vital component of our country's response to terrorism.
The Social Security Administration serves as the frontline
of defense in ensuring the integrity of Social Security
numbers, a responsibility it takes very seriously. It is
responsible for accurately assigning Social Security numbers as
well as ensuring the wages earned and the Social Security
benefits claimed on that number are only those of the holder.
As we will soon hear, since September 11, the agency has
implemented a number of initiatives to help prevent identity
theft. Yet, we will also hear there is more to do, particularly
with regard to interagency cooperation. A solo approach by
Federal agencies is not acceptable, as President Bush
recognizes through his proposal to create a U.S. Department of
Homeland Security.
Our Nation has been forever changed by the horrible attacks
on our country. No longer can we sit idly by and not protect
ourselves from domestic and foreign terrorists. Also, long
before these attacks, individuals were fighting more personal
battles with identity thefts.
We must implement changes that will prevent and deter
future attacks on our national security and our personal
financial security.
I look forward to hearing from each of our witnesses and
thank them in advance for sharing with us their experience and
their recommendation.
I now yield to my Co-Chair at this hearing, Mr. Gekas of
Pennsylvania.
[The opening statement of Chairman Shaw follows:]
Opening Statement of the Hon. E. Clay Shaw, Jr., a Representative in
Congress from the State of Florida, and Chairman, Subcommittee on
Social Security
Today, our Subcommittees join together to examine efforts to
preserve the integrity of Social Security numbers and how we can better
prevent terrorists and identity thieves from using these numbers to
abet their heinous activities. I welcome Chairman Gekas, Ms. Jackson-
Lee, and all of the Members of the Judiciary Subcommittee on
Immigration, Border Security, and Claims to the Committee on Ways and
Means and appreciate the opportunity to work with you as we look for
ways to ensure the security of individuals and our Nation.
Although created solely for the purpose of tracking workers' Social
Security earnings, our culture is hooked on Social Security numbers.
Businesses and governments use the number as the primary identifier of
individuals. Even the most trivial transactions, such as renting a
video, require us to hand over our 9-digit ID before services can be
rendered.
The Social Security number has become so woven into the fabric of
American society, it has become the key that unlocks the door to an
individual's identity for any unscrupulous individual who gains access
to it. If someone, such as a criminal or terrorist, unlocks the door,
at their fingertips is all the essential elements needed to carry out
whatever dastardly act they can conceive.
Worse, as each day passes we learn more about the degree to which
terrorists use stolen identities and false Social Security numbers to
establish cover employment, drivers' licenses, and credit cards--all
enabling them to live within our borders and plan their crimes against
Americans. No longer is Social Security number fraud simply a tool of
common criminals; sadly, it's now a tool of terrorists.
As we will hear today from our witnesses from the Department of
State, FBI, Secret Service, and the Social Security Administration's
Inspector General, there is no limit to the creativity of the
reprehensible acts perpetrated by criminals and terrorists.
Our Nation, and this Congress, has focused our attention on
America's first line of defense since the attacks of September 11th--
the war on terrorism and protecting our borders. Next, we must enact
increased privacy protections for Social Security numbers and more
powerful tools for law enforcement. To that end I, along with several
of my Ways and Means colleagues, introduced H.R. 2036, the ``Social
Security Number Privacy and Identity Theft Prevention Act of 2001.'' It
is a vital component of our country's response to terrorism.
The Social Security Administration serves as the front line of
defense in ensuring the integrity of Social Security numbers--a
responsibility it takes very seriously. It is responsible for
accurately assigning Social Security numbers, as well as ensuring the
wages earned and Social Security benefits claimed on that number are
only those of the number holder. As we will soon hear, since 9/11 the
agency has implemented a number of initiatives to help prevent identity
theft. Yet we will also hear there is more to do, particularly with
regard to inter-agency cooperation. A silo approach by Federal agencies
is not acceptable, as President Bush recognized through his proposal to
create a Department of Homeland Security.
Our Nation has been forever changed by the horrible attacks on our
country. No longer can we sit idlely by and not protect ourselves from
domestic and foreign terrorists. Also, long before these attacks,
individuals were fighting more personal battles with identity thieves.
We must implement changes that will prevent and deter future attacks on
our national security and our personal financial security.
I look forward to hearing from each of our witnesses, and thank
them in advance for sharing with us their experiences and their
recommendations.
Chairman GEKAS. I thank the Chairman. I begin by asking
unanimous consent that the written statement that I have
prepared to be my opening statement be received in the record.
Chairman SHAW. Without objection.
[The opening statement of Chairman Gekas follows:]
Opening Statement of the Hon. George W. Gekas, a Representative in
Congress from the State of Pennsylvania, and Chairman, Subcommittee on
Immigration, Border Security, and Claims
Chairman Shaw, it's a pleasure to join with you and your colleagues
on the Committee on Ways and Means. Thanks for your kind words of
welcome.
I agree with your concerns about the overuse of the Social Security
Number and its lack of privacy.
Times have changed since the Social Security Administration began
producing the little green cards in 1937. We in the Congress need to
determine what remedies can be applied to the use of the card and to
the practices of the Social Security Administration.
I am very supportive of the efforts of Chairman Shaw to bolster
protection of the Social Security Number. At the same time, we need to
look at what else is needed to address the problem comprehensively.
In some cases, old laws need to be updated.
There's no question in my mind that the criminal penalties for
identity theft and for Social Security Number fraud, in particular,
need to be strengthened.
We also need to look at whether tougher legal rules are needed so
that the Social Security Administration will move faster to work with
federal law enforcement agencies to stop the growth of identity fraud.
All Americans, especially Seniors and those approaching retirement,
need to hear that the Social Security Administration is aggressive in
preventing ineligible people from obtaining Social Security Numbers. It
is only a short step from fraudulently obtaining Social Security
Numbers to fraudulently obtaining benefits.
The structural problems of the Social Security program are well
known and publicly debated. The problems with Social Security number
fraud are much less well known, but equally important to protect
benefits and the financial well being of the fund. I believe we can do
much more to make it very difficult for terrorists, crooks and illegal
workers to obtain Social Security Numbers.
Terrorists and crooks and the purveyors of illegal documents are
getting smarter and many are experts in use of the Internet. We have to
compel our government agencies and especially the Social Security
Administration to get smarter too. We have to look at changing the
business practices of the Social Security Administration to raise the
bar against fraudulent and counterfeit source documents. We have to
make it much more difficult for people to obtain two and three valid
Social Security Numbers from this government agency.
The Social Security Number is the most common form of
identification confirmation by Americans. It is absolutely vital that
we make it extremely difficult for terrorists to abuse this fundamental
key to the American identity.
I look forward to the testimony from the Deputy Commissioner of the
Social Security Administration, and from our other excellent witnesses.
I want to particularly recognize Mr. Matthew Reindl. He has come here
today from Great Neck, New York, to tell us about the difficulty of
operating a small family business with strict adherence to federal
laws, when his competition freely employs illegal workers because of
the lack of enforcement by federal agencies, including especially, the
INS.
Chairman GEKAS. Hearing no objection from my colleagues, I
will proceed to underline and endorse the concepts enunciated
by the gentleman from Florida, Mr. Shaw, the Chairman, on the
importance of the hearing and on the subject matter itself.
Perhaps the most ironic outcome of Social Security fraud
and identity theft is that this great social program, one of
the greatest ever attempted by any society in the history of
the world, is also a potential and actual vehicle for
terrorists who threaten our Nation and actually attack our
Nation.
That is reason enough to convene such a meeting and to
determine, once and for all, what we as legislators can do to
prevent this kind of result that threatens the very lives of
the people who are Social Security recipients and Social
Security contributors across the land.
If that weren't enough to put us on guard on what has been
happening to our Social Security number system, then we have to
consider as well the attack on the system that identity fraud
perpetrates with respect to diminution of the funding and the
assets of the Social Security program. For everyone who falsely
secures a Social Security number and starts to receive
benefits, the pot of available funding is diminished by that
much, to the detriment of the current recipients and future
recipients, not to mention the budgetary problems facing the
Nation every single year, vis-a-vis the health of the Social
Security fund and all that it touches in our society.
So, when we begin to listen to the witnesses here, we will
have an eye and ear pinned to what it means in the day of the
terrorist and what it means in the day of watchfulness on the
health of the Social Security fund, what it means to try to
prevent identity fraud and Social Security fraud in all its
aspects.
I thank the Chair, and I yield back the balance of my time.
Chairman SHAW. Mr. Becerra, do you have an opening
statement?
Mr. BECERRA. Thank you, Mr. Chairman.
First, let me say to the Chairman of the Subcommittee on
Social Security of the Committee on Ways and Means, thank you
very much for the several hearings that you have held on this
issue of the Social Security number identity fraud and the
importance to not just the people who will be recipients of
Social Security but to all Americans who depend on such an
important program, and, of course, to our government, which
must dispense and implement this valuable program that has
existed for over 75 years.
To our Co-Chair who is here today, Mr. Gekas, it is a
pleasure to again have an opportunity to sit with him on a
panel, as I did before when I served on the Committee on the
Judiciary. I am pleased to join with my colleague, the Ranking
Member of the Subcommittee on Immigration and Claims, Ms.
Sheila Jackson Lee as well.
With all our colleagues that are here, I am looking forward
to a hearing that will help us gain better insight on how we
protect not just the Social Security number but Americans from
identity fraud, how we protect them against invasions of that
security that they had grown accustomed to. Now that we have
seen what happened after September 11 and the fact that the 19
terrorists used Social Security numbers to help them obtain
that fraudulent identity, it is important for us to try to move
forward to see how we can secure not just our freedom and our
privacy, but also the security of this country.
So, I am very much looking forward to the hearing, building
upon what has been done through the Chairman's and the Members'
good work on the Subcommittee on Social Security, and hoping
that the testimony enlightens us on how to move forward and
move forward quickly.
So, I thank you, Mr. Chairman. I yield back the balance of
my time.
Chairman SHAW. Thank you, Mr. Becerra. Ms. Jackson Lee?
Ms. JACKSON LEE. Thank you very much, Mr. Chairman, and
might I add my appreciation to Chairman Shaw and as well
Chairman Gekas for having a hearing that gives example to
government working at its best, Committees with their
respective jurisdictions coming together. I'm pleased, of
course, to join with the fellow Ranking Member of the Committee
on Ways and Means and a former colleague on the Committee on
the Judiciary, Xavier Becerra, and I think this very important
issue.
It is good to see the Inspector General will be here. You
testified earlier on some matters that we have before the
Committee on the Judiciary, and I believe you gave great
insight.
It is, of course, natural and important that we take
leadership on the issues of Social Security fraud, theft, and
issues that would impact negatively on the identity and the
security of this Nation. Serving on the Subcommittee on
Immigration and Claims, of course, I have to add my additional
concern in words that I reflect most often; as we look to
secure the Nation, we must also realize that we are a nation of
immigrants, a nation of laws, even after September 11 and the
unfortunate and tragic and horrific event that occurred, where
so many of the terrorists and the perpetrators came in on legal
visas that we still do not equate terrorism to immigration.
So I would hope, as look to this question, you will also
have as a backdrop the fact that the recently passed
immigration reform bill did not include a national identity
card. We thought that that was not the direction to go, but it
certainly is a direction to go with Mr. Shaw's concern about
Social Security card fraud and identity fraud.
I hope that we will be cognizant of the technology that may
put together a national Social Security card and the abuses
that could occur. I also hope that we will avoid steps in this
hearing and any legislation that would increase rather than
diminish immigration-related discrimination that has already
become a problem with the use of Social Security numbers by
some employers.
So, we have our job cut out for us. I believe the American
people will challenge us to do the right thing together, to
provide enhanced security, but at the same time balance and
respect the laws of this land, and certainly the civil rights
and civil liberties of the people of this land.
With that, Mr. Chairman, I would ask that my entire
statement be put into the record.
Chairman SHAW. Without objection, and without objection,
any statement that any of the Members of this joint Committee
hearing would like to put into the record will be made part of
the record.
[The opening statement of Ms. Jackson Lee follows:]
Opening Statement of the Hon. Sheila Jackson Lee, a Representative in
Congress from the State of Texas
Good Afternoon Mr. Chairman. I would like to thank the Chairman and
the Ranking Member of the Subcommittee on Social Security for inviting
me and other member of the Subcommittee on Immigration, Border Security
and Claims to participate in this important hearing on the importance
of ensuring the integrity of Social Security Numbers (SSN) and
preventing their misuse by terrorist and identity thieves. As many will
note, the SSN is probably the most important number as it is the first
step in access to so many things in our culture. If you need a drivers
license you need a social security number. If you need credit you need
a social security. It is central to American life.
On September 11, the United States experienced the worst attack on
its soil since World War II. In the weeks following the attack, the
U.S. government initiated a nationwide investigation into the reasons
behind the failure of U.S. police and intelligence agencies to uncover
the plot to destroy the Trade Center. In Washington Post stories
earlier this year it was revealed that some of the September 11, 2001,
hijackers had used identity theft and fraud to obtain false SSNs and
other identification documents to facilitate training and preparation
for the September 11, attacks.
First, let me emphasize that I, like you, condemn SSN fraud and its
negative impact. None of us would approve of the fraudulent use of
identification cards or any other documentation. People who
fraudulently use SSNs can and should be punished.
Our subcommittee held another Joint Hearing in Identity Theft and
Fraud in June of this year with the Judiciary Subcommittee on Crime.
Mr. Huse testified there, and I would like to let him know that it is
good to hear from him again. I will say now as I said then, that
efforts at stopping terrorism beg the question at which point is it
best to stop the terrorist. Clearly, the best point to stop terrorists
is prior to their entry into the country, before they have access to
our social security administration, departments of motor vehicles and
other infrastructure critical to secure identification documents. It
should be pointed out that ``18 of the 19 hijackers entered the United
States on visitors visas.'' They made ``concerted efforts to do so, so
it is logical to assume that they believed that this type of entry, as
visitors, made them less likely to come to the attention of federal
authorities.'' This glaring fact underscores the difficulties faced by
agencies in preventing terrorists from obtaining fraudulent SSNs and
other identification. Again, it is better to get to terrorists prior to
their entry into our country.
Effective measures will be difficult to achieve. The integrity of
any SSN verification system hinges on the security of the documents
which underlie it, and such ``breeder'' documents must also be secure.
The birth certificate is a ``breeder'' document in that it can be used
to obtain an identity document such as a U.S. passport, driver's
license, military I.D. and a SSN.
However, if we are going to examine these issues, let us do so in
in a balanced fashion. We need to decide just how far we are willing to
go in dealing with this problem. For instance, birth and death records
are certain to be used, and we need to examine just what resources we
need to dedicated to revamping these record-keeping systems. We must
deal with issues of efficiency and resources in a complimentary fashion
as opposed to pitting these issues against one another. The same is
true of revising SSA and INS databases. Are we willing to bear the
costs of developing and maintaining such gigantic data bases? Again,
examination of these issues must be done in a fair and equitable way.
The fight against SSN fraud and counterfeit documents should not
become a fight against personal privacy that leads to a national ID
card. I do not want a national ID card to be demanded of Americans
every time they engage in what should be routine activity that can be
conducted anonymously and without government intervention.
Technology has played a vital role in advancing freedom around the
world, but it also has laid new temptations at the doorstep of
business, government and criminals. Once the technology and a database
are in place for a system such as a national ID, alternative uses for
the system will arise. This potential abuse of such a system by
unscrupulous businesses and governments and plain criminals could be
devastating to our nation's average citizen.
Congress must also take care to avoid steps that would increase
rather than diminish immigration-related discrimination that has
already become a problem with the use of SSNs by some employers. In
response to employer sanctions, some--but not all employers have
screened out all ``foreign-looking'' or ``accented'' job applicants; or
conversely have adopted the practice of looking only for illegal
immigrants to hire in order to hold their status over these employees
heads. They have selectively applied verification procedures only to
``suspect'' employees and demanded documents when hiring foreign-
sounding employees when compared to other employees.
We also have to be mindful of states' rights. We should not become
so aggressive in this area that states are turned into mere tools of
the Federal Government in connection with the identity documents they
issue.
Finally, Mr. Chairman, I hope that we can work cooperatively, and
in the true spirit of bipartisanship to eliminate SSN fraud and make
the necessary changes in the law that must be made. However, I would
like to say for the record that although there is ample and substantial
SSN fraud and theft, this hearing should in no way be used as a vehicle
to discourage talented men and women from different countries from
coming to the United States to study, to exchange creative thought and
ideas, or to discourage businesses from temporarily moving their
employees to contribute to our economy and our way of life. We should
discourage SSN fraud, but not discourage fair and equal opportunity.
Thank-you Mr. Chairman.
Chairman SHAW. Now it is my pleasure to recognize the
Honorable James B. Lockhart III, who is the Deputy Commissioner
of Social Security. I believe this may be the first time you
have appeared before the Social Security Subcommittee.
Mr. LOCKHART. Yes, Mr. Chairman.
Chairman SHAW. It is my privilege to welcome you.
Please proceed as you see fit. We have your full statement
which, without objection, will be made a part of the record, as
will the full statements of all the witnesses this afternoon.
So, you may summarize or proceed as you see fit, Mr. Lockhart.
STATEMENT OF THE HON. JAMES B. LOCKHART III, DEPUTY
COMMISSIONER, SOCIAL SECURITY ADMINISTRATION
Mr. LOCKHART. Chairman Shaw, Chairman Gekas, and Members of
the Subcommittees, thank you for asking me here today to
discuss our work to preserve the integrity of the Social
Security number and to prevent its misuse.
Commissioner Barnhart and I have made protecting the Social
Security number a major stewardship priority. We have made many
important enhancements and are reviewing other improvements.
We all know that Social Security number misuse can lead
directly to identity theft with serious personal and economic
consequences. On September 11, we also learned that it can have
more far-reaching consequences, as the terrorists used made-up
Social Security numbers.
As you know, the original purpose of the Social Security
number was solely for tracking the earnings of people who
worked in jobs covered by Social Security. Ever since, the use
of the Social Security number has mushroomed as a way to
identify people in records systems. It has become the
identifying number for Federal and many other employee systems,
taxpayers, noncitizens authorized to work in this country,
beneficiaries of Federal- and State-funded programs, and some
drivers' licenses.
By 1974, Congress became concerned about the widespread use
of the Social Security number and passed the Privacy Act. It
provides that except when required by Federal law, no
government agency could withhold benefits from a person simply
because of a refusal to give his or her Social Security number.
Federal law does not restrict Social Security number use by
private businesses or organizations.
As you can see, the Social Security number has become the
personal identifier through a buildup over time. Unfortunately,
it also has become the identifier of choice for criminals,
including terrorists.
After September 11, the Social Security Administration
formed a high-level response team to better prevent those with
criminal intent from using Social Security numbers. We have put
a new training emphasis on what we call enumeration for the 1.5
million noncitizens that we give numbers to every year.
On March 1, we stopped assigning Social Security numbers to
noncitizens for the purpose of applying for a drivers' license.
Noncitizens can now only get a Social Security number if they
are authorized to work or if they need it for public
assistance.
On June 1, we began verifying birth records of U.S.-born
citizens older than age 1 who apply for a Social Security
number, and we are piloting an online system that lets
employers verify the names and Social Security numbers of newly
hired employees. That should help to strengthen our present
verification systems.
We are also leading the government-wide e-VITAL project to
improve the death master file and electronic birth records
verification systems.
We are implementing a range of new initiatives with the
Immigration and Naturalization Service (INS) and the State
Department, which will be consistent with the requirements of
the Privacy Act. We now verify all INS documents with that
agency.
By the end of the year, under the Enumeration at Entry
Project, we will assign directly Social Security numbers to
newly arrived immigrants based on the information the State
Department and INS collect as they authorize noncitizen entry
into the country.
We are also taking major steps to improve the accuracy of
the 250 million annual wage reports that we receive, as they
are critical for correctly calculating benefits. Despite
improving our matching routines, almost 10 million of those 250
million wage reports a year are placed in the suspense file
because the name and the Social Security number do not match.
We have been writing letters to employees, asking them to
correct the information. Over the last several years, we have
greatly increased the no-match letters to employers.
Let me say that we appreciate the Subcommittee's effort to
strengthen Social Security number privacy and prevent identity
theft. The provisions in H.R. 2036 which strengthen the
penalties and enforcement for Social Security number misuse
would help in our efforts to locate and eliminate abuses.
Adding civil monetary penalties as proposed to existing
criminal penalties for Social Security number misuse would
provide another level of deterrence. We believe it would
strengthen our ability to deal with cases of misuse that are
not criminally prosecuted by the U.S. Department of Justice.
In closing, I would like to emphasize that the Social
Security Administration is committed to doing all that it can
to protect the integrity of the Social Security number by
strengthening our enumeration and misuse detection
capabilities. Commissioner Barnhart and I look forward to
continuing to work with you on this vital national issue. I
would be happy to answer any questions.
[The prepared statement of Mr. Lockhart follows:]
Statement of the Hon. James B. Lockhart III, Deputy Commissioner
Social Security Administration
Mr. Chairmen and Members of the Subcommittees:
Thank you for asking me to be here today to discuss the process of
assigning and issuing Social Security Numbers (SSN), and the role that
the SSN has in our society today. As the number of legitimate uses for
SSNs increases, especially in the private sector so does the potential
for misuse--and the resulting consequences of misuse.
Social Security Number misuse can lead directly to identity theft
and the resulting personal and economic consequences to the individual
whose identity is stolen. But SSN misuse also can create far-reaching
consequences to our economy and our society as a whole.
The tragic events of September 11, and reports that some of the
terrorists fraudulently used SSNs, have brought home the need to
strengthen the safeguards to protect against the misuse of the SSN.
Since Commissioner Barnhart and I have been at Social Security we have
made protecting the SSN a major stewardship priority. We have made many
important enhancements this year and are reviewing other improvements.
Original Purpose of the Social Security Number and Card
To begin, I would like to discuss the original purpose of the SSN
and the Social Security card. Following the passage of the Social
Security Act in 1935, the SSN was devised administratively as a way to
keep track of the earnings of people who worked in jobs covered under
the new program. The requirement that workers covered by Social
Security apply for an SSN was published in Treasury regulations in
1936.
The SSN card is the document SSA provides to show what SSN is
assigned to a particular individual. The SSN card, when shown to an
employer, assists the employer in properly reporting earnings. Early
public education materials counseled workers to share their SSNs only
with their employers. Initially, the only purpose of the SSN was to
keep an accurate record of earnings covered under Social Security so
that we could pay benefits based on those earnings.
Growth of SSN as an Identifier for Other Federal Purposes
In spite of the narrowly drawn purpose of the SSN, use of the SSN
as a convenient means of identifying people in records systems has
grown over the years. In 1943, Executive Order 9397 required Federal
agencies to use the SSN in any new system for identifying individuals.
This use proved to be a precursor to a continuing explosion in SSN
usage which came about during the computer revolution of the 1960's and
70's and which continues today. The simplicity of using a unique number
that most people already possessed encouraged widespread use of the SSN
by Government agencies and private organizations as they adapted their
record-keeping and business applications to automated data processing.
In 1961, the Federal Civil Service Commission established a
numerical identification system for all Federal employees using the SSN
as the identifying number. The next year, the Internal Revenue Service
(IRS) decided to use the SSN as its taxpayer identification number
(TIN) for individuals. And, in 1967, the Defense Department adopted the
SSN as its identification number for military personnel. Use of the SSN
for computer and other record-keeping systems spread throughout State
and local governments, and to banks, credit bureaus, hospitals,
educational institutions and other areas of the private sector. At the
time, there were no legislative authorizations for, or prohibitions
against, such uses.
Statutory Expansion of SSN Use in the Public Sector
The first explicit statutory authority to issue SSNs did not occur
until 1972, when Congress required that SSA assign SSNs to all
noncitizens authorized to work in this country and take affirmative
steps to assign SSNs to children and anyone receiving or applying for a
benefit paid for by Federal funds. This change was prompted by
Congressional concerns about welfare fraud and about noncitizens
working in the U.S. illegally. Subsequent Congresses have enacted
legislation which requires an SSN as a condition of eligibility for
applicants for SSI, Aid to Families with Dependent Children (now called
Temporary Assistance to Needy Families), Medicaid, and food stamps.
Additional legislation authorized States to use the SSN in the
administration of any tax, general public assistance, drivers license,
or motor vehicle registration law within its jurisdiction.
The Privacy Act was enacted in 1974 when Congress became concerned
about the widespread use of the SSN. It provides that, except when
required by Federal statute or regulation adopted prior to January
1975, no Federal, State or local government agency could withhold
benefits from a person simply because the person refused to furnish his
or her SSN.
In the 1980's, separate legislation provided for additional uses of
the SSN including employment eligibility verification, military draft
registration, driver's licenses, and for operators of stores that
redeem food stamps. Legislation was also enacted that required
taxpayers to provide a taxpayer identification number (SSN) for each
dependent age 5 or older. The age requirement was lowered subsequently,
and an SSN is now required for dependents, regardless of age.
In the 1990's, SSN use continued to expand with legislation that
authorized its use for jury selection and for administration of Federal
workers' compensation laws. A major expansion of SSN use was provided
in 1996 under welfare reform. Under welfare reform, to enhance child
support enforcement, the SSN is to be recorded in the applications for
professional licenses, driver's licenses, and marriage licenses; it
must be placed in the records relating to a divorce decree, support
order, or paternity determination or acknowledgment; and it must be
recorded in the records relating to death and on the death certificate.
When an individual is hired, an employer is required to report this
event to the State's New Hire Registry. This ``New Hire Registry'' is
part of the expanded Federal Parent Locator Service which enables
States to find non-custodial parents by using the SSN.
Private Sector Use of the SSN
Currently, Federal law places no restrictions on the use of the SSN
by the private sector. People may be asked for an SSN for such things
as renting a video, getting medical services, and applying for public
utilities. They may refuse to give it. However, the provider may, in
turn, decline to furnish the product or service.
There are two basic ways the providers use the SSN. Within an
organization, the SSN is typically used to identify specific persons
and to maintain or retrieve data files. The second use is for external
exchange of information, typically to transfer or to match data. For
example, individual companies can track buying habits and customer
preferences through the use of such data.
Continuing advances in computer technology and the ready
availability of computerized data have spurred the growth of
information brokers who amass and sell vast amount of personal
information including SSNs. When possible, information brokers retrieve
data by SSN because it is more likely than any other identifier to
produce records for a specific individual.
The SSN as an Identifier
As you can see, Mr. Chairman, the current use of the SSN as a
personal identifier in both the public and private sectors is not the
result of any single step; but rather, from the gradual accretion over
time of extending the SSN to a variety of purposes. The implications
for personal privacy of the widespread use of a single identifier have
generated concern both within the government and in society in general.
The advent of broader access to electronic data through the
Internet and the World Wide Web has generated a growing concern about
increased opportunities for access to personal information. Some people
fear that the competition among information service providers for
customers will result in broader data linkages with questionable
integrity and potential for harm, and make it easier for identity
thieves to ply their trade.
On the other hand, there are some who believe that the public
interests and economic benefits are well served by these uses of the
SSN. They argue that use of the SSN would enhance the ability to more
easily recognize, control and protect against fraud and abuses in both
public and private activities. All Federal benefit-paying agencies rely
on data matches to verify not only that the applicant is eligible for
benefits, but also to ensure that the benefit paid is correct. Other
federal agencies may be able to provide information about other
socially beneficial uses of the SSN, including its use in research and
statistical activities. The SSN often is the key that facilitates the
ability to perform the matches.
e-VITAL
I also want to mention that SSA is actively involved in an
interagency initiative (e-VITAL) which is pursuing electronic data
exchanges between other federal agencies and the States. This ``e-
VITAL'' program consists of 2 projects that are being undertaken to
maximize efficiency and improve customer service to citizens and
businesses. One project is working with State agencies and funeral
homes to expand and improve electronic notification of deaths. The
second project is an electronic query system that allows State and
Federal agencies to access birth and death information. This
information would be used to improve the accuracy of our records and
ensure that proper benefits are paid to individuals.
Identity Theft
When most people think of identity theft they are referring to the
use of the personal identifying information of another person to
``become'' that person. Identity theft and fraud also include
enumeration fraud, which uses fraudulent documents to obtain an
original SSN for establishing identity. Finally, identity theft and
fraud also includes identity creation, which uses false identity, false
documents and a false SSN.
Skilled identity thieves may use a variety of low and hi-tech
methods to gain access to personal data. We at the Social Security
Administration want to do what we can to help prevent identity theft,
to assist those who become victims of identity theft, and to assist in
the apprehension and conviction of those who perpetrate the crime.
Preventing identity theft can play a role in the prevention of any
future terrorism. Identification documents are critically important to
terrorists, and a key to such documents is the SSN. The integrity of
the SSN must be ensured to the maximum extent possible because of the
fundamental role it can play in helping unscrupulous individuals steal
identities and obtain false identification documents.
Identity thieves may get personal information by stealing wallets
and purses, mail, personal information on an unsecured Internet site,
from business or personnel records at work, buying personal information
from ``inside'' sources, or posing as someone who legitimately needs
the information such as an employer or landlord. We ask that people be
careful with their SSN and card to prevent identity theft. The card
should be shown to an employer when an individual starts working, so
that the employment records are correct and then it should be put in a
safe place.
SSA Response to SSN Misuse
In response to the events of September 11, SSA formed a high-level
response team which has met regularly ever since to recommend and track
progress towards policy and procedural enhancements to help ensure that
we are strengthening our capability to prevent those with criminal
intent from using SSNs and cards to advance their operations. Just as
there have been delays at airports as a result of heightened security,
we recognize that some of these initiatives may result in a delay in
the receipt of SSNs for some citizens and non-citizens. However, these
measures are necessary to ensure the integrity of the SSN and to ensure
that only those who should receive an SSN do so.
Soon after September 11th, we began a new training emphasis on the
rules for enumeration, and especially for enumerating non-citizens. We
started with refresher training for all involved staff, but are
following this up with periodic special training and additional
management oversight. On March 1 we stopped assigning SSNs to non-
citizens for the sole purpose of applying for a driver's license, so
that non-citizens can now only get an SSN if they are authorized to
work or where needed for a Federal funded or state public assistance
benefit to which the person has established entitlement. On June 1, we
began verifying with the custodians of the records, any birth records
submitted by U.S. born citizens over the age of one applying for an
SSN. Further, we are currently piloting an online system for employers
to verify the names and SSNs of newly hired employees. I must note that
SSA has had systems for employers to verify employees SSNs for wage
reporting purposes for more than twenty years.
Throughout this year we are also implementing a range of new
initiatives with the Immigration and Naturalization Service (INS) and
the Department of State (DoS) that will improve integrity goals with
respect to enumeration of non-citizens. We expect to have in place by
the end of the year the first phase of what we are calling Enumeration
at Entry (EAE). EAE is an integrity measure we have been working on
collaboratively with the INS and DoS for some time. EAE will work
similarly to our highly successful Enumeration at Birth program under
which most U.S.-born infants are assigned SSNs based on requests by
their parents in the hospital right at birth, eliminating the potential
for the use of fraudulent documents. EAE will also eliminate the use of
fraudulent immigration documents from the process. Under EAE, SSA will
assign SSNs to newly arrived immigrants based on data collected by the
DoS, as it approves the immigrant visa in the foreign service post, and
by the INS, as entry into the country is authorized. SSA would receive
electronically the information needed to enumerate the individual from
the INS with no need for further document review and verification.
In July, we began verifying any documents issued by the INS with
them before assigning an SSN. We are verifying many of these
electronically. But if the immigration document is not recorded in the
INS system within ten days, we request written confirmation from INS
that the documents submitted are bona fide and that the individual is
authorized to work. This new verification process was fully implemented
earlier this month.
We are also planning to pilot a Social Security Card Center that
would be an interagency specialist group designed to provided quick and
efficient service while ensuring the integrity of the enumeration
process.
We have developed this multi-pronged approach to make SSNs less
accessible to those with criminal intent as well as prevent individuals
from using false or stolen birth records or immigration documents to
obtain an SSN.
We also implemented changes to speed up the distribution of our
Death Master File. SSA receives reports of deaths from a number of
sources, and from computer matches with death data from Federal and
State agencies. This information is critical to the administration of
our program and is made available to facilitate the prevention of
identify theft of the SSN's of deceased persons. Many of the private
sector companies purchasing this information are credit card companies
and financial institutions.
Furthermore, we are also limiting the display of SSNs on our
correspondence. As of October 1, 2001 we no longer include the first
five digits of the SSN on Social Security Statements and as of December
2001 on Social Security Cost-of-Living Notices. We do use the full SSN
on other correspondence because there may be legal requirements for
display of the SSN on the notice especially on termination and award
notices. However, to ensure the confidentiality of the SSN on mail we
do not show the addressee's SSN on the envelope, if mailing an envelope
to an individual. If requesting information from third parties, we do
not show the SSN for the purpose of associating the reply with the file
when it is returned.
The good news is that over 80% of our beneficiaries receive their
payments by direct deposit, which means for this large group there are
no SSNs to be stolen or paper checks that can be lost or stolen. For
those that do not use direct deposit, the Department of the Treasury
prepares and mails all government checks including those for Social
Security and Supplemental Security Income recipients. Effective with
the September 1, 2000 benefit payments, the SSN printed on Social
Security and Supplemental Security Income checks is no longer visible
through the envelope window. Additionally, to protect the privacy of
recipients who are paid by check and help prevent identity theft,
Treasury is taking steps to remove all personal identification numbers,
including the SSN, on all check payments. The goal for completing the
project is early 2004.
Detecting SSN Misuse
One way that a person can find out whether someone is misusing
their number to work is to check their earning records. About three
months before their birthday, anyone 25 or older and not already
receiving Social Security benefits, automatically receives a Social
Security statement each year. The statement lists earnings posted, to
their Social Security record as well as providing an estimate of
benefits and other Social Security facts about the program. If there is
a mistake in the earnings posted they are asked to contact us right
away, so their record can be corrected. We investigate, correct the
earnings record and if appropriate, we refer any suspected misuse of an
SSN to the appropriate authorities.
SSA may learn about misused SSNs in a variety of other ways
including alerts from our computer systems while matching Federal and
State data, processing wages, claims or post entitlement actions,
reports from individuals contacting our field offices or teleservice
centers and inquiries from the IRS concerning two or more individuals
with the same SSN on their income tax returns.
We have another tool that has been used successfully to detect
instances of fraud and abuse. This tool, called the Comprehensive
Integrity Review Process (CIRP), is a review and anomaly detection
system. This system first identifies known fraudulent patterns and then
transactions that fit these fraudulent patterns are provided to SSA
managers for their review. If upon investigation, the SSA manager
believes that fraud or misuse has occurred, they prepare a referral to
the Office of the Inspector General (OIG).
Of course SSA's OIG has played an ongoing role in the investigation
of fraud and misuse of the SSN, as shown in the following examples. As
you know, SSA OIG agents have participated along with the US Department
of Justice in ``Operation Tarmac''. In this joint effort, individuals
have been identified who misused SSN's to fraudulently obtain security
badges, and to date, a significant number have been sentenced. Further,
SSA's OIG, INS, and local law enforcement authorities investigated an
organization in Utah that manufactured and sold counterfeit documents.
To date, nine individuals have been sentenced to jail time and/or
deportation, and the investigation continues. In another combined
effort, OIG, Postal Service, Federal Bureau of Investigations and the
Secret Service investigated and arrested individuals in Seattle who
established more than 50 false identities to open bank accounts.
Another important pillar in the effort to safeguard program
integrity is the joint SSA-OIG General Cooperative Disability
Investigations Program (CDI). Its mission is to detect fraud in the
early stages-at the time of application for Social Security benefits or
during the appeals process. The results of CDI investigations were used
to support over 2,700 denials or terminations, allowing SSA to avoid
improper payments to individuals.
Assisting Victims
To help victims, SSA provides hotline numbers to SSA's Fraud
Hotline and the Federal Trade Commission ID Theft Hotline. We provide
up-to-date information about steps that the person can take to work
with credit bureaus and law enforcement agencies to reclaim their
identity. We issue a replacement card if their Social Security Card is
stolen. We help to correct their earnings record and issue a new SSN in
certain circumstances. If the victim alleges that a specific individual
is using the SSN, SSA develops the case as a possible fraud violation.
If appropriate, we refer the case to the OIG for an investigation and
work closely with the OIG to facilitate their investigation.
Suspense File
As I mentioned earlier, the primary purpose of the SSN has always
been to allow us to accurately record and keep track of a worker's
earnings. This is SSA's core business process, and it ensures that a
worker and his family receive benefits that reflect his work history.
The earnings suspense file is an electronic holding file for reported
earnings items that cannot be recorded to the earnings records of
individual workers because the name and SSN on the items do not match
SSA's records.
Currently, we receive and process about 250 million annual wage
reports (Forms W-2) for employees from about 6.5 million employers. In
recent years, after electronic and manual processing, about 97 percent
of these items are ultimately posted to the Master Earnings File (MEF),
which contains a record of the lifetime earnings of each individual
worker. The remaining items, about 3 percent, are ultimately placed in
the earnings suspense file. For 2000, after electronic processing, 10
million reports of wages were sent to the suspense file representing
over $54 billion in wages. The suspense file contains all mismatches
since 1937 about 237 million reports of wages representing $376 billion
in earnings.
So, why is this issue significant? As I stated earlier, the wages
reported to SSA on the Forms W-2 are used to maintain a record of every
working individual's earnings. This earnings record is the basis for
computing retirement, survivors, and disability benefits. If a worker's
earnings are not recorded, he or she may not qualify for benefits or
the benefit amount may be lower. When a person files for benefits, the
earnings record is reviewed and an effort is made to establish any
earnings that are not shown. However, it may be difficult to accurately
recall past earnings and to obtain evidence of them. Thus, it is better
to establish and maintain accurate records at the time the wages are
paid.
We have a number of initiatives to assure that wage items are
credited to the correct individual's earnings record and do not go into
suspense. These include:
LEncouraging the filing of wage reports electronically
or on magnetic media which has increased to 78.0% percent in
2001.
LUsing over 23 software routines to match names to
SSNs which initially do not match SSA records--for TY1999,
software matched 16 million (about 60 percent) of the initial
mismatches.
LNotifying employees of name/SSN errors and requesting
corrections. In the last five years we have sent an average of
8 million letters a year to individuals or to their employers
if we do not have a record of the employee's address.
LNotifying employers of name/SSN errors. In 2002, we
increased these ``no match'' letters from about 110,000 to
870,000. This is because we sent these letters to all employers
who submitted W-2 forms with information that did not match our
records instead of only to employers with relatively large
number of mismatches. We will be reviewing the effectiveness of
this change.
LProviding outreach to the employer community to
reinforce the need for accurate name/SSN reporting.
We are building a new Earnings Suspense File process that looks
promising. It would electronically find millions of additional matches
and post them to the correct earnings record.
Under this new process, we are estimating that at least 30 million
items will be removed from the suspense file and credited to the
records of individual workers. If so, benefits for several hundred
thousand beneficiaries would be increased. If the test we have planned
for the fall of this year is successful, we expect to begin the new
process early in 2003 and have it completed by the end of 2004.
Improving Enforcement
Mr. Shaw's bill (H.R. 2036) is aimed at the need to limit private
and public sector use, display and sale of the SSN and to increase
penalties for misuse of the number. We appreciate Mr. Shaw's commitment
to these objectives.
We support efforts to strengthen the penalties and enforcement for
SSN misuse, which would be of great help to the agency in our
consistent efforts to locate and eliminate abuses to the program. While
current law provides criminal penalties for SSN misuse, the addition of
civil monetary penalties for SSN misuse would provide another level of
deterrence for those who would misuse the SSN. Such measures would help
to strengthen our ability to deal with instances of misuse that are not
criminally prosecuted by the Department of Justice.
Closing
I would like to conclude by emphasizing that we at the Social
Security Administration are committed to protecting the integrity of
the SSN. We want to do what we can to help prevent identity theft, to
assist those who become victims and to assist in the apprehension and
conviction of those who perpetrate the crime. We are committed to
improving the accuracy of the records of workers earnings and thereby
helping to ensure accurate retiree, disability, survivors and SSI
payments.
In a larger view, the Social Security Administration is on guard
for identity theft. This is a challenging task. In our experience, most
instances of identity theft have resulted not from any action or
failure to act by SSA, but from the proliferation of personal
information in our society. The disclosure of SSNs by private citizens
and organizations are prime among them. While SSA cannot control the
disclosure of SSNs, we can and are doing a better job in areas that we
can control, such as enumeration and misuse detection.
Thank you for asking us to testify on this issue.
Chairman SHAW. Mr. Lockhart, if someone comes into this
country, perhaps on a student visa or whatever, opens a bank
account, the bank will require that person to supply their
Social Security number. This is needed for the reporting of
interest and things of that nature that account might be
subject to.
Is there any indicator on the Social Security number as to
the status of that particular person? Is there any indication
on the Social Security card as to the status of that particular
person? Now, this is not on a work visa.
Mr. LOCKHART. Yes. First of all, if a student comes into
the country with a J-1 or F-1 visa, and is not authorized to
work, we will not give him a Social Security card. So, that's
the first step. They have to be authorized to work to get a
Social Security number.
Let's assume that the university tells us that they are
authorized to work, and we get a letter from the university to
that effect, and we do the verification with the INS about the
visa, we would then give them a Social Security number. The
Social Security number itself has nothing special on it, but
the card would say that the employer should check the INS
documents in that case.
Chairman SHAW. If the person who the card is issued to then
decides to go to work and supplies that identification number
to the employer without showing him that card, what happens at
that particular time, assuming then that the person takes the
job and the Federal Insurance Contributions Act (FICA) wages
are paid into the Social Security Administration?
Mr. LOCKHART. Again, assuming that he or she got the card
legitimately, there is no problem. That is what is supposed to
happen, that they will pay the FICA taxes in, and assuming we
have verified the documents with the INS, the card was given
legitimately. The employer still is supposed to look at the
documents to make sure that they are legitimate.
Chairman SHAW. I understand the employer would be liable
for other penalties for not properly checking the resident
status or exactly why that person happens to be in the country,
whether they be a citizen or a noncitizen.
Mr. LOCKHART. Now, in the circumstances that you posed at
the beginning, if they were not authorized to work, if we did
not give them a Social Security number, in theory, they can go
to the U.S. Department of the Treasury and get a taxpayer
number. That is a 900 series. It looks like a Social Security
number, but that is a separate series and is not part of the
Social Security system.
Mr. JOHNSON. Would the gentleman yield?
Chairman SHAW. I am a little confused here. I will be glad
to yield in just a moment, but I am a little confused here
because the person who you issued the Social Security number to
may not be authorized to work or may not be here on an actual
work visa. Is that not correct?
Mr. LOCKHART. Under our new procedure, that should not
happen. As of September 1, we are verifying all documents with
the INS, and they are telling us that the document is good
before we give the Social Security number out.
Unfortunately, I think in the past, before the new
procedure, there was a procedure at Social Security, where, if
someone had been in the country only 30 days, our field office
looked at the documents, put them under black lights and
checked them to see if they were real. If they were a really
good forgery, they might have been faked or something, and they
could have possibly gotten a Social Security number on
documents that were counterfeit.
Chairman SHAW. The gentleman from Texas?
Mr. JOHNSON. Thank you, Mr. Chairman.
I would like to follow up on that because just in Dallas,
Texas, this month, they caught a bunch of illegals in an 18-
wheeler, some of which died. You are aware of that case, I am
sure.
My question is, there were 26 of them that were released on
the spot in the United States and told they could get a Social
Security number from you and go to work. Now, how do you
account for that kind of thing?
Mr. LOCKHART. I am not actually aware of who made that
statement.
Mr. JOHNSON. The lady who runs the district office for the
Immigration and Naturalization Service there in Dallas. They
let them go for 2 months, and she told me that they would get
Social Security numbers and be given work permits. Three of
them were allowed to go, one to Chicago and two to New York
City, from Dallas.
Mr. LOCKHART. Well, under our present procedures, they
would have had to have a document from the INS saying that it
was valid for them to work. If the INS had given that document
to them, yes, if you bring in a valid document----
Mr. JOHNSON. You give them a Social Security number just on
the basis of the Immigration and Naturalization Service letting
an illegal have a work document temporarily? Do you put any
time limit on the Social Security number? How do you know they
are not all terrorists?
Mr. LOCKHART. Again, our job is to give a Social Security
number when we have valid documents from the Immigration and
Naturalization Service. We get the documents, we look at them,
we check them, we go into the INS system, we check it against
the INS system. If it is not in the INS system, then we send a
paper request to the INS to get them to verify that there is a
real document that authorizes them to work.
It is not the Social Security Administration's job to
decide whether they are authorized to work. It is our job to
give them a number once they are authorized to work, so that
they will pay taxes into the Social Security fund and to the
Internal Revenue Service (IRS).
Chairman SHAW. Reclaiming my time, there are situations
where someone can get a nonworking Social Security number. Now,
that Social Security number, can an employer or anybody look at
that number and say, ``Hey, that's a nonworking Social Security
number''? That is my question.
Mr. LOCKHART. Yes, there are circumstances. Historically,
there were more circumstances. As of March this year, we are
only giving them to people who are not working that are
required by some benefit system--I think we will give about
20,000 or 30,000 out a year from now on. Previously, we did it
for a driver's license, but those cards themselves say ``not
eligible for work.'' There is no special number, and we are
looking at a special number. It is one of the things we are
looking at.
Chairman SHAW. That is what I wanted to get at. I think
that when we do issue a nonwork Social Security number, it
ought to have something on it, a letter, a prefix, or
something, that would identify it as ``this is not for purposes
of work.''
Mr. LOCKHART. We are looking at a special series, just
like, as I mentioned, the Treasury Department has the 900
series. We are looking, potentially, at a special series for
anybody that doesn't have a permanent right to work in this
country.
Chairman SHAW. Do you know if you can do that without
legislation from us? I believe you can.
Mr. LOCKHART. I believe we can. Yes, sir.
Chairman SHAW. If you need legislation, come back, and we
will work on it. Mr. Gekas?
Chairman GEKAS. Yes, I thank the Chair.
Mr. Lockhart, pursuing some of the questions that emerged
from the statements and questions that were posed by the
gentleman from Texas, Mr. Johnson, you said that after
September 11, you undertook several initiatives to pin down the
ability to grant Social Security numbers to only those who
deserved them. The questions posed by Mr. Johnson implicate the
Immigration and Naturalization Service in the wholesale
admission of people first into the country and then to allow
them to seek and gain Social Security numbers. Were there any
recommendations made by the Social Security Inspector General
in his recent report with respect to this problem, the reliance
of Social Security on INS in its processing of prospective new
numbers?
Mr. LOCKHART. Well, the Inspector General has recommended,
I think for several years, to do what we just implemented. One
of the points I would like to make is that both Commissioner
Barnhart and I came in after September 11, and we looked at all
these things, and we saw that there were holes in our system,
and we want to correct them. We have corrected a lot, but we
have more room to go. We are very concerned about this issue,
and we will work on it.
The key recommendation that the Inspector General had made
is that we verify every document with the INS. Every document
that authorizes someone to work, we first go into the computer
system. If it is not in their computer system, then we actually
send a copy of the document to the INS and ask them to verify
it.
So, that is our procedure, and we are following it now. It
may, in some cases, slow up persons getting a Social Security
number, but we think it is well worth it.
Chairman GEKAS. Do you hold up issuance of the number until
submissions are made to you by the INS so that you are
perfectly----
Mr. LOCKHART. Under our new procedure that we began
implementing about 3 months ago and finished September 1, that
is correct. We do not issue a Social Security number if the
documents have not been verified by the INS.
Chairman GEKAS. Speaking of the recommendations of the
Inspector General, were they before September 11 or after, or
both?
Mr. LOCKHART. As I remember, they were both.
Chairman GEKAS. Do you have a scorecard on the
recommendations made and where you are in implementing or
attempting to implement those recommendations?
Mr. LOCKHART. Yes, Mr. Chairman, we do have a scorecard. We
have been working very diligently. This task force that I
mentioned in my testimony has a whole series of initiatives. We
have implemented a lot of the major ones, but we are looking at
other ones. For instance, the one that Chairman Shaw mentioned
about a special series of numbers for nonpermanent Social
Security cards.
So, we are working very diligently through this list. As I
said, both Commissioner Barnhart and myself are really
extremely serious about making sure that only people who are
authorized to work, only people who should get Social Security
numbers, are getting them in this country.
Chairman GEKAS. I would like, personally, and perhaps the
other Members would also benefit from it, if we could actually
produce such a scorecard, that is, to list the recommendations
on the left and then give us completed or implemented or about
to be implemented or on the way, some kind of indication as to
what the recommendations were and what progress has been made
in implementing those recommendations. I would be interested in
that kind of graph.
Mr. LOCKHART. We certainly will be happy to provide that
for the record, Mr. Chairman. I think as you talk to our
Inspector General when he comes up in the next panel, I think
he will tell you that we are making extremely good progress on
this issue.
Chairman GEKAS. Well, you will have time to do it right
before he takes the stand.
[Laughter.]
Mr. LOCKHART. Well, I have some versions of it here, but--
--
Chairman GEKAS. You can start the conversation now. I yield
back the balance of my time.
Chairman SHAW. Thank you, Mr. Gekas. Mr. Becerra?
Mr. BECERRA. Thank you, Mr. Chairman.
Thank you for you testimony, Mr. Lockhart. I appreciate it.
Let me make sure, before I ask the particular questions
that I have, I want to make sure that I understand something
correctly. There are some 600,000 Social Security numbers that
come to your attention that are based on nonwork-authorization
Social Security numbers, correct?
Mr. LOCKHART. Yes, let me explain it. We have, really,
three major categories of Social Security cards.
One is, you are authorized to work. You are either a
citizen and you got it at birth, you have been authorized to
work, or you have been permanently allowed in the country. The
second one is that you are authorized to work with INS
documentation, and the third one is that you are not authorized
to work. We used to give those out because many State driver's
license departments required them, and we have given out,
unfortunately, many millions of those.
Every year, as we get the wage earnings reports in, those
250 million that I mentioned in my testimony, we get about half
a million wages on nonwork Social Security numbers. Now, that
doesn't mean that they are not authorized to work because they
may not have come in to us again to get their Social Security
card updated.
Mr. BECERRA. That was going to be my point, because I am
familiar, being from California, that there are a lot of folks
who start with a nonwork Social Security number but then
ultimately obtain the authorization to work. Then, for whatever
reasons, either they or the employer, somehow the information
doesn't get to the Social Security Administration immediately.
So, until that information gets to you, they are categorized as
nonwork-authorized Social Security numbers.
Mr. LOCKHART. That is correct.
Mr. BECERRA. Okay. Let me get back to the whole issue,
because it is becoming clear, now that Social Security has been
able to give us more and more information, that you are trying
to clean up these files, which for years have been building up
and up in terms of the number of cases where we haven't been
able to identify all the pertinent information for an
individual.
My understanding is you obtain, on a yearly basis, claims
or numbers or information on cases for about 250 million Social
Security numbers.
Mr. LOCKHART. What we receive are wage reports from
employers. Oftentimes, people change jobs, so there are
actually less people working than the number of wage reports.
Mr. BECERRA. The information I have is that there are some
250 million wage reports on an annual basis, representing about
150 million workers. When you run those through your checks, at
the onset, there is about a 1 in 10 nonmatch for those wage
reports, incorrect name, some information doesn't correspond.
It doesn't mean that it is not a valid Social Security number.
It just means that, of those 250 million, 1 in every 10 or so
came up with some red flag.
Mr. LOCKHART. Right. It didn't match.
Mr. BECERRA. It didn't match. You are then able to reduce
that to about 2 or 3 percent, versus about 10 percent, correct?
Mr. LOCKHART. Well, 3 percent yes.
Mr. BECERRA. Three percent, and that is your suspense file?
Mr. LOCKHART. Exactly.
Mr. BECERRA. Within that suspense file, my understanding is
that you have a caseload of about--is it 250 million of these?
Mr. LOCKHART. Yes. We have, in the suspense file----
Mr. BECERRA. About 237 million.
Mr. LOCKHART. Yes, 237 million. Exactly.
Mr. BECERRA. So, 237 million. In tax year 2000, you
received some 9.6 million more of these wage reports that went
into the suspense file. Give me a sense of what it takes to
close a case on one of these files. What does it take to do the
final check, to determine if there was just an error or if we
have to do some further checks?
Mr. LOCKHART. We have computer teams that catch about two-
thirds, as you mentioned, of the mistakes. It can be typos.
Someone's maiden name hadn't been changed in our records. Some
Hispanic names get transposed. They are having that problem
right now at the California Department of Motor Vehicles. I was
out there a week or so ago, and there is a lot of activity
there.
So, our routines catch some of that. So, as we have done
for many years, we then send out to the employees whose wage
report we are getting, a letter telling him we are having a
problem with mismatching. We send close to 10 million of these
letters out a year, and we have been doing it for years, and
about 1 million-plus, we don't have a good address for the
employee, so we actually send it just to the employer. We ask
them to come to the Social Security office and straighten it
out, submit a form called a W-2C for correction.
Mr. BECERRA. What is the resource requirement for you to do
that along with administering all the retirement benefits,
dealing with survivors' benefits, disability claims? What is
the separate resource requirement to deal with the suspense
file?
Mr. LOCKHART. I don't really know the number, to tell you
the truth. The initial piece of it is pretty computerized, and
so, the cost is reasonable, but when they start coming in with
the information, then it takes up a lot of field office time.
It is an important thing to do because what we are trying
to do is correct the record so that when people are disabled,
when people are retiring, that we have the right amount of
money and we give them the proper benefits. We think it is an
important function of the agency.
Mr. BECERRA. My time has expired, so I will close and say
that perhaps, Mr. Chairman, we can try to follow up and try to
get a sense of what it takes for the Social Security
Administration to really do the job of getting through that
suspense file, because as Mr. Lockhart just mentioned, that is
important work.
Thank you, Mr. Lockhart. Thank you, Mr. Chairman.
Chairman SHAW. Ms. Jackson Lee?
Ms. JACKSON LEE. Thank you very much, Mr. Chairman.
Mr. Lockhart, thank you again. Would you restate for me the
categories of immigrants that you give a Social Security card
to?
Mr. LOCKHART. There are a whole series of different visas
that are created by the INS, and I am not an expert on all
this, but really, there are two main categories, if you look at
it that way. One is that they are permanently authorized to
work, and maybe about a half million of the cards we give each
year are that group. The other million or so that we give are
temporarily authorized to work under a whole series of things.
A lot of them are student-related. Then there are the whole
series of people coming in for software firms. The whole series
that are given by the INS, but those are temporary.
Ms. JACKSON LEE. Do you feel comfortable in the procedures
at the Administration, that you are accurately providing those
who have documentation to work, that you are fairly accurate,
or do you need additional resources or additional assistance in
making sure you are accurate on the issuance of those types of
cards?
Mr. LOCKHART. We feel, with the new procedures, we are
doing a lot better job. Now what we are doing is verifying
every document with the INS.
Now, new and better systems are needed because it is still
a pretty paper-intensive process. The INS is starting to get
more and more of the documents quickly into the system called
the Systematic Alien Verification for Entitlements (SAVE)
program. They have a student system coming up next year, which
will help a lot.
We also have some other important procedures that I think
will really help this and really put the workload where it
should be. One of these that we are looking at is called
Enumeration at Entry, which I mentioned, which would be that
the State Department and the INS, when they are giving these
work-authorizing documents, that they just send us an
electronic message that this person is authorized, so we can
issue them a Social Security number. Then we don't have to go
through this roundabout procedure.
So that is the long-term solution, I think, for a lot of
this.
Ms. JACKSON LEE. What kind of efforts are you making to get
to that point? Certainly, it makes a lot of sense to me. You
are talking about, by technology, send an e-mail, a note, a
notice, if you will, to the Social Security Administration.
Where are you on that?
Mr. LOCKHART. We have been working on that for several
years. Our systems are all ready for it, and it is supposed to
start next month, actually, with the State Department. Then, we
will roll it out over time throughout the State Department and
the INS.
Ms. JACKSON LEE. I think that is an important step to
announce or to at least make known that you are moving toward
that, because then that helps, if you will, keep the pathway of
legality even more on track, because you are getting
information as it comes. I think one of the difficulties is
trying to go back and restructure documents and to look at what
happened as opposed to getting that information as it is
happening.
Mr. LOCKHART. That is correct. I think that will be a very
important step forward. We are going to put a lot of resources
in it. As I said, our systems are already ready to do it, and
we hope to have it as a very high priority over the next year
or two.
Ms. JACKSON LEE. To capture of the essence of the problem,
you said millions of cards are issued for those with documents
and allowed to work. Then there are about a million, if I
understand, you left of an ``S.'' You said there are about a
million that may come in that don't have documentation or don't
have authorization to work but ultimately may secure that. What
kind of monitoring do you have to know the ones that are
securing it and ultimately may need the right kind of Social
Security card?
Mr. LOCKHART. Well, what I said, I think, is that there are
about a half a million who have permanent authorization to work
and about a million a year that we give cards have some sort of
temporary work permit.
Ms. JACKSON LEE. Then there is a group that----
Mr. LOCKHART. Then there is a whole group that is not
authorized to work, and we do not give them Social Security
cards. We do not give them Social Security numbers, except for
a very, very small group, about now 20,000 to 30,000 a year,
that get these nonwork cards because they are authorized for
some benefit program, but generally, they would not be a major
threat.
Ms. JACKSON LEE. So you feel fairly confident that you are
not giving now Social Security cards to those without the
documentation to work? Do you feel fairly confident of that, in
terms of immigrants?
Mr. LOCKHART. I visited our field offices in California a
couple of weeks ago and watched them work, and it seems to be
working, the new procedure. Again, we rolled it out over the
last 3 or 4 months. We have 1,300 field offices countrywide.
The last one just implemented it September 1.
We are very hopeful that this procedure will work and that
people will follow it, and they seem to be following it very
well.
Ms. JACKSON LEE. I thank you. My time is out. I will just
simply say the suggestion or maybe what we might have read or
heard of millions of individuals who may be immigrants who
don't have authorization to work, such as that figure you gave,
20,000 to 30,000, is not as accurate as we may have heard. The
number of cards that you are dealing with that are unauthorized
to work are about 20,000 to 30,000, and not millions.
Mr. LOCKHART. Those that are nonwork cards. Now, there is
obviously a whole series of people that are working in this
country that do not have legitimate Social Security numbers. As
we were talking earlier, some of those are showing up in our
suspense file. A lot of our suspense file just may be typos and
stuff like that, but there are people that are working, and it
is probably in the millions, without proper Social Security
cards and numbers in this country.
Ms. JACKSON LEE. We will work through that. Thank you very
much.
Mr. JOHNSON. [Presiding.] Thank you, Ms. Jackson Lee. The
Chair recognizes Mr. Hayworth.
Mr. HAYWORTH. I thank you, Mr. Chairman.
Mr. Lockhart, thank you for coming to testify today. I want
to make sure that I understand exactly the status of foreign
students who come to the United States to study at our colleges
and universities, vis-a-vis Social Security cards. Now, you
mentioned some distinctions here; those who come who are
authorized to work, those who are on public assistance.
Help me nail down the student status. Do we classify that
as an authorization to work? Authorized to study? What
classification are they given?
Mr. LOCKHART. The general student status at, say, a
university is, they are authorized to study. Then the INS, as I
understand it, has authorized the universities to authorize
them to work within the college, not somewhere else, just
within the university.
The way the statute works is, if they come in with a letter
from an authorized person from that university to say this
person is authorized to work at the university and is expected
to work at the university, then we will give them a Social
Security number.
Now, what has happened, frankly, is some universities,
because they may need Social Security numbers for these
individuals for their records or something, are not actually
putting these people to work, so that they are not actually
working. And yet, we are getting a letter that says----
Mr. HAYWORTH. So, what you have are universities engaged in
defrauding the Federal Government, saying they have people
working who are not working, to get Social Security numbers?
Mr. LOCKHART. We may have some universities sending
letters, and they may be interpreting differently than we are.
Mr. HAYWORTH. No, no. Let's get down to brass tacks here.
If people are attempting to defraud and deceive the Federal
Government in wartime for easy bucks, this is serious.
Mr. LOCKHART. Yes sir, and I know our Inspector General has
looked at some cases. I have heard of situations where a
university has actually advertised in foreign newspapers that
``come to our school and we'll get you a Social Security
number.'' You know, that is not right.
Mr. HAYWORTH. What is the name of the university that has
done that?
Mr. LOCKHART. I am not sure. I heard about it in our
Oklahoma City office, though.
Mr. HAYWORTH. Let me ask you a further question. This is
very disturbing, to say the least. Maybe this is a question
better suited for INS, but do we keep track of the
nationalities of those who come to study? Do we know, for
example, the number of Iraqi students who are in the United
States on study programs or work study programs? Do you have
any estimate today how many Iraqi students are here in the
United States on a work study program?
Mr. LOCKHART. You are right, it is an INS question. We
would not have that information in any of our databases.
Mr. HAYWORTH. Is there any particular reason not to keep
that information?
Mr. LOCKHART. Again, what we are looking at is to make sure
that people are paying their FICA taxes, and that is what the
Social Security number has been created for. It is the INS's
job to authorize people to work. That is what they are there
for. That is their law. It is not our law.
Mr. HAYWORTH. Let me ask you this question. You say things
have changed under the new programs, the combination of pre-
September 11 reforms and post-September 11 reforms, and we are
about 4 months into the situation now. How would you evaluate
the level of communication between Immigration and
Naturalization Service and the Social Security Administration?
Are your computers able to talk to each other?
Mr. LOCKHART. Well, first of all, I think we are doing a
lot better with communicating with the INS. In fact, I just
talked to the Deputy Commissioner there this morning, and we
are trying to work better than we have in the past. So, I think
on the human level, it is working better. We are having many
more meetings. I think they understand our issues now a lot
better, and we are beginning to understand theirs.
From the computer standpoint, they do have this SAVE
program that does tell us when someone is authorized to work.
We have access to it in our field office. A person right at the
service window who is reviewing a document will have access to
the system. I saw them bring one up when I was in California.
Momentarily it comes up, and it says whether this person is
authorized to work or not.
The problem is not all of the data is in there.
Mr. HAYWORTH. So, we have incomplete data. Again, as we
opened this questioning period, I am very concerned about the
status of some colleges and universities who seem to be playing
fast and loose with work study.
There is perhaps, Mr. Chairman, an appropriate role
legislatively to crack down on those who would deceive the
government for work study dollars.
I see my time has expired. I thank you, and thank you, Mr.
Chairman.
Mr. JOHNSON. The time of the gentleman has expired. The
Chair recognizes Mr. Collins.
Mr. COLLINS. Thank you, Chairman Johnson.
Mr. Lockhart, you know, we talk about these Social Security
numbers, and it seems as though we kind of hand them out in a
manner that has no system to it. Do we do benefits the same
way? They get these Social Security numbers and they are here
and they work temporarily----
Mr. LOCKHART. First of all, I would say that we do have a
system for handing out Social Security numbers. We do handout
approximately 18 million a year. A major portion of those are
actually replacement cards, but we handout about 5 million new
cards a year.
We do have systems in place. We have significantly
strengthened those systems, as I have already said, but there
were systems in place before September 11 as well. There were
procedures in place.
On the benefits side, we have a whole series of systems. I
think I can say, having come to Social Security only 7 or 8
months ago, that the systems at Social Security are some of the
best in government, and we are always well-rated that way.
For benefits, obviously we have some issues with the
suspense file, which we already talked about, but I think we do
a reasonable job of keeping track of people's benefits. We have
maybe that 3-percent error rate, but we have a 97-percent match
every year, which is significant. We are talking about $4
trillion in wages a year.
So, our systems are doing what I consider a good job. We
could do better, and I am not trying to say that we couldn't do
better. We could do significantly better, and we are continuing
to work on it. Commissioner Barnhart and I have made it very
clear since we arrived here that we are not going to accept the
status quo. We want to improve this agency dramatically.
Mr. COLLINS. Well, that is encouraging, and truthfully, I
think you have. I have talked with the Commissioner on several
occasions, and you too, and I think you have made some good
strides.
I have a situation that has occurred in my district, which
includes Fort Benning, Georgia. We have a local judge there who
has called on a number of occasions, but his first call was in
reference to several who had appeared in his court. They were
here illegally, didn't have any kind of identification.
This is really an INS problem, too, because when he called
INS to report them and ask them to pick them up, and this was
after September 11 of last year, they said they didn't have the
time, didn't have the money, couldn't do it. It was very
frustrating to this particular judge.
He did call 1 day and said that they had incarcerated a
person who was working at Fort Benning. He had a work pass, a
work permit, and on that work permit was a Social Security
number, and this person was here illegally also.
So, he sent a copy of the work permit over the office, and
we double-checked it with your office and found that the number
had not been issued.
How much of that exists? Do we have any idea? That is what
this judge said, how much? Fort Benning, too, says, you know,
this is not an isolated incident.
Mr. LOCKHART. It is a big issue. People make up Social
Security numbers. As far as we can tell, all 19 terrorists, or
however many that did have a Social Security number, they were
all made up, and that is a big, big issue. As I said earlier to
a question, there are probably millions in this country with
made up Social Security numbers.
What we are trying to do is develop--and we do already have
in place for employers, for State agencies, the ability to
check those numbers with us, either in person or by computers.
The idea is that, if they bring in a name, and they bring in a
Social Security number, we can tell them if it is real or not.
If there is a mismatch, then they should know that there is an
issue with the individual.
Mr. COLLINS. I am glad that you are communicating with the
people over at INS, because it seemed like there was a lot of
slack there. For an INS office to inform a judge we don't have
the time to pick up people who are here illegally, already
incarcerated, something is wrong with that type of system.
I think it is a real threat and a danger to us to have
people with work permits file Social Security numbers here
illegally, working on a military installation.
Mr. LOCKHART. Yes. As you may have read in the newspaper,
many of the agencies represented on the next panel, including
our Inspector General, have been very active at the airports in
this area, in verifying Social Security numbers. We are very
committed to helping out in those kinds of law enforcement
activities because we do believe it is extremely important for
this country.
Mr. COLLINS. Well, in closing, the Office of the Inspector
General for Social Security has been very helpful in this case,
too. They are investigating this and investigating the
employer.
Thank you.
Mr. LOCKHART. Thank you.
Mr. JOHNSON. Some of my colleagues and myself would like to
clarify the statement you made. Did you indicate that all the
terrorists had illegal Social Security numbers?
Mr. LOCKHART. Well, what I said is, I am not sure if all of
them had Social Security numbers, but as far as we can tell--
and the Inspector General has talked to the FBI, and the FBI I
guess will be up--as far as we know at this time, none of the
terrorists received a Social Security number at one of our
offices. That is why we need to use the kinds of systems that
we are building. We have had in place systems for 20 years for
employers and other people to verify Social Security numbers.
They just have not been used.
We now have a test, which, again, I mentioned in my
testimony, with about eight major employers of an online
system. I think over time, if we can do that, it will help
protect the Social Security number from people that just make
it up.
Ms. JACKSON LEE. Mr. Chairman, if you would just yield for
just a brief moment?
Mr. JOHNSON. I yield to the gentlelady.
Ms. JACKSON LEE. There is a question that I left on the
table, when you said millions of made-up numbers, you are not
saying that there are millions of immigrants with made-up
numbers? There are people all over the United States with made-
up numbers. Is that what you are saying?
Mr. LOCKHART. You have to go back to that suspense file we
were talking about. There are 10 million that we can't match
every year. A lot of it is typos, wrong names, but there are
certainly people in there that are working, whether they are
immigrants, illegal or not, I don't know. There are certainly--
I think most people would say many millions that are working
without a proper Social Security number.
Ms. JACKSON LEE. Not all of one label?
Mr. LOCKHART. What?
Ms. JACKSON LEE. Not all of one label, one type of people,
there are many----
Mr. LOCKHART. We just don't have the data. I mean, if we
could find them, we could match them.
Ms. JACKSON LEE. We would find out.
Mr. Chairman, thank you. I do want to say that the INS is
really trying to work on this issue, to the extent that I have
visited sites, airports around the country I spent my time
visiting. I will tell the Committee, if they have interest,
that I literally saw the INS recognize undocumented individuals
coming in from a country overseas, and was able to match the
fact that their documents were fraudulent and was there to
greet them. I saw the action when I was there. They were able
to greet them immediately as they deplaned.
This is happening across the Nation. I think that we can be
assured that they listen to Congress on the responsibilities
that they have.
I thank the Chairman for yielding.
Mr. JOHNSON. I thank the lady for her comments. The Chair
recognizes Mr. Hulshof.
Mr. HULSHOF. Thank you, Mr. Chairman. Welcome, Mr.
Lockhart. We certainly welcome our colleagues from the
Subcommittee on Immigration, Border Security, and Claims.
A lot of the questions to you, Mr. Lockhart, have been
referenced around the issue of illegal immigrants that are
here. What I would like to do is focus, as is also the subject
of our hearing, on identity theft. Our Subcommittee, the Social
Security Subcommittee, has heard some heart-wrenching stories
from citizens, sometimes elderly citizens, who have been bilked
of thousands of dollars in personal savings, with credit
histories being just turned upside down because of identity
theft. So, I would like to ask a couple of questions along that
line.
You mentioned about 18 million cards a year, some of those
are replacement cards. What percentage per year are replacement
cards?
Mr. LOCKHART. About 12.5 million of those, so two-thirds.
Mr. HULSHOF. A couple of hypotheticals. If I come in to get
a replacement card, I presume I could get one. What if I had
just been given a replacement card the week before?
Mr. LOCKHART. You can get one with the proper
documentation. You just can't ask for it. Yes, assuming you had
the proper documentation, you can come in.
At the moment, we don't have a limit. It is one of the
areas we are really looking at, because not only is there an
integrity issue here, there is also a tremendous workload
issue. Some of our offices are spending a third of their time
issuing replacement cards. So, we are looking at it to see if
we should limit the number, to see if we should charge, to see
if they even need a replacement card.
I mean, what is happening in many of these offices is we
have the Supplemental Security Income, SSI, population that we
serve, and many of them have mental impairments, are homeless,
and they are always losing the cards. We have people that have
had 30 or 40 cards, and they are being required by some State
agency to produce it. Now, if we can go to more of a
verification electronically, that might relieve some of that
workload as well.
Mr. HULSHOF. So, the Inspector General's recommendation to
put perhaps some limit on the number of replacement cards, with
some exception for extraordinary circumstances, that would be
something that you would support?
Mr. LOCKHART. I am about ready to get a white paper on the
topic. There is a series of issues. Some of the people I have
talked to in the field office say why not charge them something
for it. Maybe that will discourage them. A limit would be
another way. There is a whole series of ways.
I mean, what is important is actually the number, not the
card, when you really think about it.
Mr. HULSHOF. A couple of other quick areas, as my time is
dwindling. If the Social Security Administration receives a
report from an employer that indicates that somebody is working
in America, say in Phoenix, Arizona, using my Social Security
number, do you let me know that?
Mr. LOCKHART. What we do, if there is more than one wage
report on a Social Security number, we try to unscramble it,
and that unscrambling may mean that we call someone. By the
time we receive the information, we are receiving information
well over a year old on wage reports by the time it is entered
in the system. It is probably not very helpful, if your
identity has been stolen. You would probably know by then
anyway.
The other thing we do, though, is we also put out annually
the Social Security statement, as you know. In that, when you
see it, if there is an incorrect wage, you could call us, and
we would unscramble it that way.
Mr. HULSHOF. Okay, the final area of questioning regards
data sharing with law enforcement agencies. Of course, the
Privacy Act does say that agencies can share information with
another information for the purpose of civil or criminal law
enforcement purposes, if the head of that agency makes a
written request.
Yet, it is my understanding that regulations within your
agency limit disclosure to law enforcement activities relating
to serious crimes like murder and crimes of violence. What
about identity theft itself? I mean, for instance, if law
enforcement were to contact the Social Security Administration
and say, ``We are working on an identity theft case. We need
some data from your agency to be shared with us,'' would you
provide it to them?
Mr. LOCKHART. It is not only serious crimes but it also is
fraud against a Social Security number, and it is also if our
IG opens a case. So, if the law enforcement person comes to the
IG, which is where they would come, and the IG opens a case, we
would certainly provide the information. We are not protecting
identity thieves, in any sense of the word.
Mr. HULSHOF. Local law enforcement would then have to go
the Inspector General.
Mr. LOCKHART. Which is part of Social Security, yes.
Mr. HULSHOF. Okay. Thank you, Mr. Chairman. I yield back.
Mr. JOHNSON. Thank you. Mr. Brady, do you care to question?
The gentleman is recognized for 5 minutes.
Mr. BRADY. Thank you, Mr. Chairman.
I want to follow up on Congressman Hulshof's questions on
collaboration. First, I want to thank the Social Security
Administration for your collaboration with law enforcement on
Operation Tarmac, which was launched after September 11. It has
uncovered a large number of individuals with security
clearances working at our Nation's airports under false
pretenses, obviously a practice that cannot be allowed to
continue.
On the 9th of this month, in my community, just 2 days
before September 11's anniversary, Operation Tarmac indicted
143 individuals working at Houston's Bush International
Airport, the airport that I and many of my neighbors fly in and
out of on a weekly basis.
These people acquired airport security badges by using a
nonexistent Social Security number of someone else's Social
Security number.
From my viewpoint, the operation was a very solid
preventative measure because these individuals each had access
to airplanes, ramps, and tarmacs, regardless of their security
clearance.
You have really addressed the question of what we can do to
prevent this type of fraud in the future, but following on to
Congressman Hulshof's question, is there not a way to increase
cooperation with law enforcement, short of the IG opening up a
case? Obviously, what we are tying to do here, the 143 who were
indicted, perhaps and most likely there isn't a terrorist among
them. Just as you arrest speeders before they cause an
accident, someone who tries to buy a gun illegally, in hopes to
prevent harm from happening later, it is important that we have
these measures in place, even though they may seem to be small,
preventative measures.
What can we do to increase, short of having to open up a
case, to increase this type of cooperation with law
enforcement?
Mr. LOCKHART. Really, the best way is for the security
companies, everybody that is hiring at the airports or anywhere
else, to use our systems. We have the systems, and any employer
can come in and verify Social Security numbers when a hiring
decision is made. That is the best prevention by far, just not
to employ them to start with.
It is not being used as well as it should, and we are
trying to get the word out that we have those systems in place,
and they should be using them. So, that is the first thing that
should be done.
The second thing is, we are continuing to work with our IG
and our IG is continuing to work with all law enforcement to
see how we can better fit our constraints.
Our constraint really is that this is taxpayer information.
It is protected by the Internal Revenue Code, and it is a very
important issue with them, that taxpayer information is secure.
So, we are working with the IRS, and we are working through
our IG with the various law enforcement officials.
Mr. BRADY. That is a very good answer. My thought was, in
the case with Houston's airport, Federal agents went through,
under the leadership of our U.S. attorney, Mike Shelby, went
through some more than 21,000 individual files to make those
match. The good news is, there are only 143 who didn't, which
tells you there is a level of security there.
My thought was, can we not make it, with certain
restrictions, as easy for law enforcement, again, under certain
restrictions, to match those numbers as it would be for
employers to go online to do it?
Mr. LOCKHART. It is an issue we talked about in the agency,
and certainly we talked it over with the Inspector General, and
he is certainly recommending it. Again, it is an issue that is
partially out of our hands, from the standpoint that the
taxpayer information belongs to the IRS. So, it is one of the
issues that we have to continue to work with them on, as to
what are the procedures.
We have certainly, as you said, been able to do it for
Operation Tarmac, and we hope that we can do it whenever
necessary.
Mr. BRADY. I was just thinking, if there was some law
enforcement clearinghouse at some level that works directly
with the Social Security Administration and the appropriate
authorities to be able to access, so that you don't have 10,000
going on from different jurisdictions, but actually a good,
cooperative, laid-out, disciplined process that speeds up
having to run through 21,000 files, where we can do more
security because we save time.
Mr. LOCKHART. It is certainly something we should consider,
yes.
Mr. BRADY. Thank you, sir. Thank you, Mr. Chairman.
Mr. JOHNSON. Thank you. Let me follow up on that for just a
second. I am told, and I would like for you to verify it, that
if an employer called you with a number for you to check, you
say it is okay or not, but you don't tell them whether the guy
is dead or if he is on a nonwork Social Security number. Is
that true?
Mr. LOCKHART. Yes, sir. That is true. That is a flaw in our
system that we are in the process of correcting. I was not
aware of that until very recently myself, and I had the same
concern that you do, that it doesn't make any sense to verify
in that circumstance, if someone is dead or they have a nonwork
number. We are making the system changes so that our
verification systems will tell that.
Mr. JOHNSON. You will be in the near future, then?
Mr. LOCKHART. We are implementing those changes. Yes, sir.
Mr. JOHNSON. Okay. Let me ask you one other thing. I
believe the Social Security Administration Inspector General is
on record as supporting Social Security privacy legislation.
This bill would prevent numbers from being used as ID numbers
for many purposes, including military ID. At a time when
military personnel are deployed worldwide, and terrorists are
trying to exploit our weaknesses in everything from the
Internet to our own financial systems, I don't know if it is
wise for the military to be using their Social Security number
for everything from checking out equipment to cashing a check.
I would like to hear your comments on that.
Mr. LOCKHART. There is certainly an overuse of the Social
Security number in our society. It has become a de facto
identifier one way or another. The problem is that, in many
ways, something else will have to be substituted for it. In
some cases, it is useful for prevention of fraud and prevention
of terrorists. So, there are pluses and minuses to all this.
Certainly, in your legislation, there are a lot of
reasonable things that we can think about on how to limit the
use of the Social Security number, because it has really grown
dramatically more than it was ever supposed to do in this
country.
Mr. JOHNSON. You agree with the original concept, as far as
Social Security and tax purposes, period?
Mr. LOCKHART. That is the original concept. Unfortunately,
I think the cat's out of the bag.
[Laughter.]
Mr. JOHNSON. Okay. Let me ask you one other quick question.
In reference to the illegals that I spoke of earlier, I
recognize it is mostly an Immigration and Naturalization
Service problem, but if you issue a temporary work permit and
the Immigration and Naturalization Service then follows up 2
months later with a letter to these guys, saying, ``You are
going to be deported. Come on back home,'' maybe some of them
will, how do you get termination on that Social Security
number?
Mr. LOCKHART. The procedures of the agency have been that,
once a Social Security number is issued, it is issued. If we
think there has been some fraud, we do put in the record that
there has been some fraud, and we won't issue a replacement
card, but the numbers are not canceled.
Mr. JOHNSON. So, they are out there indefinitely? So, if
the guy is deported back to Mexico, let's say, and then comes
back across the border, he still has a good Social Security
number?
Mr. LOCKHART. He still has a Social Security number. If we
have entered into our records that we think fraud has been
involved, if they came into our office, we could find that out,
but it is something that we need to look at. It is an issue
that I think we need to look at, as to whether we should do
anything to cancel a number. Historically, we never have. We
have issued 415 million numbers.
Mr. JOHNSON. Thank you. I appreciate your honest testimony
and openness with us. We thank you for the job you all are
doing over there. Keep up the good work.
With that, we will close your testimony and ask the second
panel to step up. I am going to turn the meeting over the
Chairman Gekas.
Mr. LOCKHART. Thank you, Mr. Chairman.
[Questions submitted by Chairman Shaw to Mr. Lockhart, and
his responses follow:]
Social Security Administration
Baltimore, Maryland 21235
1. During the hearing, Mr. Lockhart stated that SSA has a scorecard on
the recommendations the Inspector General had made to tighten controls
related to issuing Social Security numbers (SSNs). As requested by
Chairman Gekas, we would appreciate your providing a copy of that
scorecard to both of our Subcommittees.
------------------------------------------------------------------------
Scorecard on Inspector General Recommendations to Tighten Controls on
Issuing Social Security Numbers
-------------------------------------------------------------------------
RECOMMENDATION STATUS
------------------------------------------------------------------------
Congressional Response Report--Terrorist Misuse of Social Security
Numbers
A-08-02-32041
October 3, 2001
------------------------------------------------------------------------
Expand the Agency's data matching
activities with other Federal, State and
local Government entities.
--------------------------------------------Ongoing. The Enumeration----
Response Team (ERT) is
considering this as part of
its long-term efforts.
------------------------------------------------------------------------
Explore the use of other innovative Ongoing. The ERT is
technologies, such as Biometrics, in the exploring the use of
enumeration process. biometrics in the
enumeration process.
------------------------------------------------------------------------
Increase the number of investigative and Ongoing. The FY 2003 IG
enforcement resources provided for SSN budget request includes an
misuse cases additional 29 FTEs, which
will be used for
investigative and audit and
the OIG technology plan.
------------------------------------------------------------------------
Authorize SSA and SSA's OIG to disclose Partially Completed. OIG
information from SSA files as requested will take the lead for
by the DoJ and FBI in times of national completing this initiative.
emergency and in connection with
terrorist investigations.
------------------------------------------------------------------------
Audit of enumeration at Birth Program A-08-00-10047
September 27, 2001
------------------------------------------------------------------------
Reinvest some of the savings realized by Ongoing. The current EAB
the Enumeration at Birth (EAB) program contracts expire on
and provide necessary funding, during December 31, 2002.
future contract modifications, for the Negotiations for the new
Bureaus of Vital Statistics (BVS) to contracts with the States
perform periodic independent began in March 2002. We
reconciliations of registered births with have proposed the
statistics obtained from hospital's labor recommended review to the
and delivery units and to periodically states in negotiations for
verify the legitimacy of sample birth the new contracts. We
records obtained from the hospitals. expect the negotiations to
be completed by December
2002, with the new
contracts effective from
January 1, 2003 through
December 31, 2007.
------------------------------------------------------------------------
Enhance its duplicate record detection and Ongoing. SSA plans to
prior Social Security number (SSN) enhance its system to
detection routines to provide greater prevent the assignment of
protection against the assignment of multiple SSNs for identical
multiple SSNs. cases with different birth
certificate numbers, but an
implementation date for
this enhancement has not
been determined.
------------------------------------------------------------------------
Instruct FO personnel to exercise greater Completed. Instruction
care when resolving enumeration feedback issued via Emergency
messages generated by the system. Message on December 27,
2001.
------------------------------------------------------------------------
Cross-reference multiple SSNs assigned to Completed. SSA has completed
the 178 children within the sample. the cross-referencing of
these SSNs.
------------------------------------------------------------------------
Continue to monitor the timeliness of BVS Completed. SSA has taken a
submissions and work with those BVSs that number of actions with the
are having difficulty complying with the States to assist them in
timeframes specified in the contracts. complying with current
contract timeframes. These
include attending a yearly
conference of all State
registrars, presenting EAB
findings to the
participants, and
establishing a ``Frequently
Asked Question'' or FAQ, on
SSA's Internet site.
------------------------------------------------------------------------
Obstacles to Reducing Social Security Number Misuse in the Agriculture
Industry.
A-08-09-41004
January 22, 2001
------------------------------------------------------------------------
Expedite implementation of the initiative Partially Completed. SSA
to improve communication of name/SSN began a pilot of its online
errors to employers and employees. Social Security Number
Verification System (SSNVS)
in April 2002, and expects
to expand the pilot in
early 2003.
------------------------------------------------------------------------
Introduce legislation that would provide Ongoing. Currently IRS has
SSA the authority to require chronic the authority to penalize
problem employers to use Enumeration employers who do not comply
Verification System (EVS). with wage reporting
requirements. IRS has
recently announced that
they will impose penalties.
SSA is working with IRS to
support them in this
effort.
------------------------------------------------------------------------
Collaborate with the INS to develop a Ongoing. IRS has implemented
better understanding of the extent that a task force to review
immigration issues contribute to SSN their policies and
misuse and growth of the Earnings procedures regarding
Suspense File (ESF). Additionally, penalizing employers who
reevaluate its application to existing send SSA bad names and
disclosure laws or seek legislative SSNs. We are reviewing our
authority to remove barriers that would regulations to determine if
allow the Agency to share information current SSA regulations
regarding chronic problem employers with provide sufficient
the INS. authority to share
information with other
agencies, including INS, in
situations that are
consistent with the purpose
of Social Security programs
and SSA's disclosure
policy.
------------------------------------------------------------------------
Procedures for Verifying Evidentiary Documents Submitted with Original
Social Security Number Applications A-08-98-41009
September 19, 2000
------------------------------------------------------------------------
Accelerate negotiations with United States Partially Completed. SSA
Immigration and Naturalization Service implemented the first phase
(INS) and Department of State (DOS) to of EaE in October 2002, and
implement the Enumeration at Entry (EaE) is working with INS on
program. Once implemented, all non- identification of the next
citizens should be required to obtain phases.
their SSNs applying at one of these
Agencies.
------------------------------------------------------------------------
Continue efforts and establish an Partially Completed. The
implementation date for planned systems Comprehensive Integrity
controls that will interrupt SSN Review Process (CIRP) was
assignment when multiple cards are mailed implemented in 1999. Based
to common addresses not previously on certain characteristics
determined to be legitimate recipients of the information input
(for example, charitable organizations) into Modernized Enumeration
and/or when parents claim to have had an System (MES), CIRP
improbably large number of children. identifies high-risk
transactions that are
subject to a monthly
management review (such as
too many cards being sent
to one address). SSA
continues its efforts to
implement enhancements to
the MES, however, the
timeline for these
enhancements has been
impacted by the
implementation of the near-
term changes recommended by
the Enumeration Response
Team.
------------------------------------------------------------------------
Obtain independent verification from the Completed. SSA now obtains
issuing agency for all alien evidentiary independent verification
documents before approving the respective for all alien evidentiary
Social Security number applications until documents.
the Enumeration at Entry program is
implemented.
------------------------------------------------------------------------
Propose legislation that disqualifies Unable to implement. We are
individuals who improperly obtain SSNs unable to implement this
from receiving work credits for periods recommendation because INS
that that they were not authorized to does not have historical
work or reside in the U.S. information on when an
individual was or was not
authorized to work.
------------------------------------------------------------------------
Effectiveness of Internal Controls in the Modernized Enumeration System.
A-08-97-41003
September 14, 2000
------------------------------------------------------------------------
Require field office (FO) management to Ongoing. Management is
perform periodic quality reviews of required to perform quality
processed exception messages (EMs) and reviews and as additional
provide appropriate feedback and related enumeration training needs
training to FO personnel. are identified refresher
training is provided to FO
personnel.
------------------------------------------------------------------------
Require FO personnel to document the basis Ongoing. Most EMs require
of all resolution actions taken on EMs only routine review and
for an appropriate period of time to decision; FO managers
facilitate management review. receive and review listing
of pending EMs that are
coded as suspect or
fraudulent.
------------------------------------------------------------------------
The Social Security Administration is Pursuing Matching Agreements with
New York and other States using Biometric Technologies A-08-98-41007
January 19, 2000
------------------------------------------------------------------------
Pursue a matching agreement with New York Ongoing. SSA will begin a
so that the Agency can use the results of pilot for verifying
the State's biometric technologies to claimant identity by
reduce and/or recover any improper picture ID in early 2003,
benefit payments. and is exploring the
possibility of using
matching agreements.
------------------------------------------------------------------------
Initiate pilot reviews to assess the cost- Ongoing. SSA continues to
efficiency of matching data with other discuss its privacy
States that have employed biometrics in concerns with such matches
their social service programs. with the OIG.
------------------------------------------------------------------------
Review of Controls over Nonwork SSNs A-08-97-41003
September, 1999
------------------------------------------------------------------------
Conduct periodic quality reviews of Completed. SSA's Office of
processed SSN applications and provide Quality Assurance (OQA)
timely feedback to field office (FO) conducts periodic reviews
personnel. of processed SSN
applications and timely
feedback is provided based
on their findings. SSA has
expanded our performance
indicators for enumeration
for Fiscal Year (FY) 2003
and beyond.
------------------------------------------------------------------------
Propose legislation to prohibit the Unable to implement. We are
crediting of nonwork earnings and related unable to implement this
quarters of coverage for purposes of recommendation because INS
benefit entitlement. does not have historical
information on when an
individual was or was not
authorized to work.
------------------------------------------------------------------------
SSA should perform its own actuarial Unable to implement. Because
calculations of the effects of nonwork it is not feasible to
quarters of coverage on benefit payments, accomplish this
if deemed necessary to support changes in recommendation, SSA has not
legislation. pursued this analysis.
------------------------------------------------------------------------
Review the 452 unrestricted SSN's Completed. It was
processed by the California FO's established that the
temporary SR to identify other coding employee misunderstood
errors that resulted in the incorrect operating instructions,
issuance of SSN cards containing work resulting in the employee
authorization. making the same error on
all of the incorrectly
processed applications. The
situation has been
corrected.
------------------------------------------------------------------------
Using Social Security Numbers to Commit Fraud A-08-99-42002
May 28, 1999
------------------------------------------------------------------------
Incorporate preventive controls in Ongoing. SSA continues its
Modernized Enumeration System (MES) that efforts to implement
address 1) multiple SSNs to a common enhancements to the
address, 2) parents claiming an Modernized Enumeration
improbably large number of children, 3) System (MES). 1) There is
known fraudulent documentation used as an end-of-line integrity
evidence in support of SSN applications. review for too many cards
to the same address, 2)
software changes in 2003
will interrupt the
assignment of the SSN to
parents claiming an
improbably large numbers of
children, and 3) currently
in place is software which
interrupts the issuance of
a card where there is a
fraud indicator on a prior
application.
------------------------------------------------------------------------
Continue efforts to have INS and the State Partially Completed. SSA
Department collect and certify implemented the first phase
enumeration information for aliens. of its Enumeration at Entry
(EaE) program with the
State Department in October
2002, and is working with
INS on identification of
the next phases.
------------------------------------------------------------------------
SSA should require verification from the Completed. Effective June
issuing state when an out-of-state birth 2002, we started collateral
certificate is presented as evidence for verification of birth
an SSN application. records for all U.S. born
SSN applicants age one and
older.
------------------------------------------------------------------------
SSA should require that the field offices Completed. SSA now obtains
obtain independent verification of the independent verification
alien's evidentiary documentation from for all alien evidentiary
the issuing agency (e.g., State documents.
Department, INS) before approving the SSN
application, if an alien chooses to visit
a SSA office to apply for his or her SSN.
------------------------------------------------------------------------
2. During the hearing, Mr. Johnson, who represents the Dallas area in
Texas, mentioned that illegal aliens in an 18-wheeler had been
apprehended. Approximately 26 of the individuals were released and told
by the local Immigration and Naturalization Service (INS) office that
they could get a Social Security number from SSA and go to work. Can
you provide more details on this situation?
Our understanding is that approximately two dozen Mexican
immigrants survived a harrowing journey that began in El Paso and ended
in North Texas aboard an unventilated tractor trailer rig. Two men died
of heat exhaustion and nearly a dozen others were hospitalized briefly
for heat stress. Because of the need for witnesses against the
smugglers when the cases come to trial, the INS granted the immigrants
permission to work.
The Attorney General pursuant to Sec. 212(d) [8 U.S.C.
Sec. 1182(d)] of the Immigration and Nationality Act has the authority
to parole individuals into the United States for reasons specified in
the Act and provide them with work authorization. Inquiries should be
directed to the Department of Justice because once the Attorney General
exercises his discretion and issues work authorization, SSA has no
discretion. Section 205 (c)(2)(B)(i) of the Social Security Act
requires that the Commissioner of Social Security issue a work Social
Security Number if an individual has a valid INS work authorization.
3. The Earnings Suspense File (ESF) has increased more than fourfold in
the last 10 years. The SSA's Office of Inspector General (OIG) found
there are patterns of reporting errors among certain employers,
including identical Social Security numbers (SSNs) used for more than
one employee, non-issued SSNs, and consecutively numbered SSNs--all of
which end up in the Earnings Suspense File. There are also many
instances of employers and industries that continually submit erroneous
wage reports--one study of 20 agriculture employers in which 60% of
their wage reports had inaccurate names or SSNs and who submitted
almost $250 million in mismatched wages between 1996 and 1998--and that
three industries (agriculture, food and beverage and services) account
for almost half of wage items in the suspense file. What is the agency
doing to address this growing file? Is SSA making any special endeavor
to refer these employers to the Immigration and Naturalization Service
(INS) or the Internal Revenue Service (IRS) or to otherwise target them
for corrective action in submitting erroneous wage reports? What else
can be done? Please also provide information requested by Mr. Becerra
regarding the administrative costs associated with the ESF (sending out
letters responding to workers/employers' questions, and so forth).
The ESF contains approximately 238.2 million items (name/SSN
mismatches). This covers items submitted for tax years (TY) 1937
through 2000. Approximately 25 percent or 61.6 million items were added
to the ESF for TYs 1991-2000, which is an increase of about one-third.
SSA developed a tactical plan to address the growth and management
of the ESF. As a result SSA:
LHas instituted multiple computer-matching routines to
increase SSA's ability to match a reported name/SSN that does
not match SSA's record with the correct record.
LIs building a new process that would electronically
find millions of additional matches and post them to the
correct earnings record. The new process would compare earnings
items to the Master Earnings File (which includes the Employer
Identification Number), the benefit record, and the Numident
(the record of SSNs assigned to individual names). (The current
matching process compares earnings items only to the Numident.)
The new process would also employ new techniques with earnings
record patterns to match the earnings to the correct
individual. It is estimated that at least 30 million items
would be removed from the suspense file and credited to the
records of individual workers. If so, benefits for several
hundred thousand beneficiaries would be increased.
LProvides regional office assistance to employers with
a high volume of mismatches to assist them in improving the
accuracy of their records.
LIs discussing with IRS its existing authorities to
penalize employers who contribute a large number of or a high
percentage of name/SSN mismatches to the ESF. (The penalties
for submitting erroneous records are in the Internal Revenue
Code.) We understand that the IRS has begun to pilot a process
to penalize these employers.
LCurrently piloting with a small group of employers
the Social Security Number Verification Service (SSNVS), an
Internet option to verify the accuracy of employees' names and
Social Security Numbers (SSN) by matching the employee-provided
information to SSA's records. SSA's current system provided to
the employer community through SSA's 800 number and through
electronic (magnetic tape, diskettes) and paper processing is
time consuming for employers. An Internet option will be more
efficient and encourage more employers to use SSA's name/SSN
verification program for new employees, thereby reducing items
posted to the suspense file.
LDeveloped and conducted outreach programs to the
employer and payroll communities to address the issue of
correctly matching names and SSNs. SSA staff have spoken to
numerous employers and payroll groups on this and related
issues. SSA has made changes to our publications to help
employers better understand the issues. In our quarterly
publication, the ``SSA/IRS Reporter,'' which is sent to over
6.5 million businesses, we have had numerous articles on the
importance of providing correct name/SSN information on the
Form W-2. SSA has built a website that is designed specifically
for employers to address their payroll reporting issues and
provide guidance.
LHas worked with both the INS and IRS on the mismatch
issue. Both agencies have incorporated training on the
importance of name/SSN information into their training programs
for businesses.
LHas revised the letters sent to the employer to
provide more detailed information about name/SSN mismatches.
SSA also provides detailed step-by-step instructions of what
the employer should do to resolve the discrepancy. The letters
highlight the responsibilities of employers and the rights of
employees when there are name/SSN mismatches.
LWorked with the IRS to revise the Form W-2 and its
magnetic and electronic formats to provide separate first and
last name fields to facilitate capturing the proper last name.
This separation of the last name better assures that the
information reported can be properly matched to SSA's records,
especially in cases where a person has a multiple or hyphenated
last name. Similar name presentation changes have also been
made to the Form W-4.
LModified the Spanish version of the Form SS-5
(Application for a Social Security Card) to separate the first
name from the last name. There are plans to make similar
changes to the English version of the Form SS-5.
LImproved the timeliness of the notices sent to every
employee whose name and SSN do not match requesting correction
information.
LHas engaged Price Waterhouse Coopers to review the
Agency's management practices of the ESF and make
recommendations as appropriate for improvement.
You asked if SSA is making any special endeavor to refer these
employers to the INS or the IRS or to otherwise target them for
corrective action in submitting erroneous wage reports. SSA shares name
and SSN mismatch data reported on the Form W-2 with the IRS since SSA
processes these forms on behalf of the IRS. SSA is working with IRS
cooperatively in the development of its penalty program.
SSA is precluded from making referrals of name/SSN mismatch
information to the INS due to section 6103 of the Internal Revenue
Code, which prevents SSA from sharing tax information with other
agencies.
In response to your question concerning what else can be done, SSA
is now piloting an Internet based SSNVS. This is a free service where
employers can verify that the name and SSN on their payroll records
matches SSA's records. Expanding this limited pilot to the entire
employer community will offer an inexpensive and easy way for all
employers to verify their employee's names and SSNs.
As far as the administrative costs associated with the earnings
suspense file, SSA sends a notice to every individual whose name and
SSN does not match SSA's records. For TY 2001 (calendar year 2002), it
costs SSA approximately $5.4 million to send these notices.
SSA also sends notices to employers. For TY 2001, SSA sent notices
to all employers that had an item go into the ESF at a cost of $600,000
for the 944,000 notices sent.
There are additional costs associated with both types of notices:
LOver $200,000 for system maintenance and cyclical
changes; and
LAn average of $9.00 for each call to our National 800
number generated by the notices. We estimate that we received
about 100,000 inquiries about the TY 2001 letters.
4. SSA shares information on work credited to non-work SSNs with INS
annually (worker name, address, employer, wages). What does INS tell
you they do with the information? In 2000, about 9.6 million wage items
representing $49 billion in wages did not match SSA's records. The SSA
IG recommended that SSA share information on wage records that do not
match SSA files. The IG also recommended that SSA match Office of Child
Support Enforcement files with non-work SSNs and share that data with
INS. What are your views and do you plan to take action on these
recommendations?
With regard to the INS' use of information on work credited to non-
work SSNs, we defer to the INS for an explanation of what they do with
the information and its usefulness.
Concerning IG's recommendation that SSA share information with INS
on wage records that do not match SSA files, SSA does not have the
legal authority to share such records with INS. Whether or not the wage
records submitted to SSA match SSA records, they constitute tax return
information subject to the disclosure restrictions in the Internal
Revenue Code (IRC) (26 U.S.C. 6103). section 6103 of the IRC prohibits
sharing of wage records when SSNs on those records do not match
information in SSA records.
With respect to the IG recommendation that SSA match Office of
Child Support Enforcement files with non-work SSNs and share that data
with INS, SSA cannot act on this recommendation for reasons similar to
those cited above regarding sharing wage data with INS. SSA's access to
and use of OCSE data is subject to limitations specified in section 453
of the Social Security Act (the Act) (42 U.S.C. 653). Section 453(l)(1)
of the Act prohibits SSA from sharing this information with INS.
5. Do you believe it would make it easier for employers to identify
illegal workers if the SSN number itself was changed to indicate
whether the person is not authorized to work? If so, are you planning
to implement this change and if yes, when?
It is not clear if the SSN itself were changed to indicate whether
the person is not authorized to work whether it would significantly
help employers identify ``illegal'' workers. Most illegal workers use
made up numbers. The best way for employers to identify them is to use
one of SSA's matching systems.
6. An article published by The Deseret News, of Phoenix, Arizona, on
Tuesday, October 01, 2002 entitled ``Thefts of Social Security ID
rising fast,'' by Pat Reavy, Deseret News staff writer, described the
substantial problems of a retired woman named Frances Stone, aged 70.
According to the article:
L``. . . in 1992, Stone noticed her Social Security checks were getting
smaller. After some investigating, Stone discovered that the woman who
allegedly took her wallet, an illegal immigrant, had gotten a job and
was earning wages using her Social Security number. The government
thought Stone was earning more money than she really was. Now, 10 years
later, the problem still hasn't been settled. Each year Stone's Social
Security checks are cut, and each year she has to go through a lot of
red tape to prove somebody else is using her Social Security number.
And each year it takes three to four months' worth of phone calls and
letter writing to get the matter cleared up.''
The SSA sent some eight million letters to people identified with
``mismatched SSNs.'' How many of these were to people who are using
someone else's SSN? Has the SSA compiled any reports as to how many
people receiving SSA benefits are experiencing the same kind of fraud
experienced by Frances Stone? How many citizens and lawful residents
are now subject to erroneous records of SSA benefits and don't
recognize the problem? If SSA receives a report from an employer that
indicates someone else is working using another's SSN, would SSA
contact the true owner to let him or her know? Doesn't the SSA have a
responsibility to the person to whom the SSN was lawfully issued? Why
not?
SSA is committed to achieving the results our citizens expect. We
regret the difficulties that Frances Stone experienced resulting from
the theft of her wallet. Her earnings record is now correct.
SSA/OIG does not have enough information to determine how many no-
match letters went to people who are using someone else's SSN. For Tax
Year 1999, SSA has over 8.3 million wage items in suspense because the
name/SSN on the employer wage reports failed to match SSA's records.
SSA produced no-match letters in an attempt to resolve these suspended
items. About 2.6 million wage reports could not be matched due to zero
SSNs, invalid SSNs, no names, and so forth. About 5.7 million wage
reports contained SSNs that matched SSA's records; however, the names
did not match. SSA/OIG does not know how many of the 5.7 million
letters were mailed to individuals who used someone else's valid SSN.
Without a valid name/SSN match, these earnings could not be posted to
an individual's master earnings record.
Although 5.7 million of the wage items could have led to letters
going to people who are using someone else's SSN, they could have also
gone to the owner of the SSN who used an incorrect name (i.e. married
name, improperly hyphenated name, and so forth.) Since these items are
still in need of resolution, SSA/OIG cannot determine the actual number
of people who are using someone else's SSN.
You asked, if SSA receives a report from an employer that indicates
someone is working using another's SSN, would SSA contact the true
owner to let him or her know? SSA does not notify the actual SSN holder
if someone is using his or her SSN. SSA has a number of ongoing
processes to obtain the correct name and SSN associated with the wages,
including manual and automated edits. Due to these internal efforts,
notifying the actual number holder of this situation may be premature
and create unnecessary alarm. In addition, the earnings history of the
SSN owner, as well as their status with SSA's programs, has not been
impacted since the wages earned by the other user (who may or may not
have fraudulently used the number) remain in suspense.
SSA does not have reports as to how many people receiving SS
benefits are experiencing the same kind of fraud experienced by Frances
Stone. SSA's IG is currently completing an audit of Internal Revenue
Service referrals to SSA where a taxpayer has claimed that someone else
is working under their name and SSN. IRS refers such cases to SSA so
that their earnings history within SSA's records can also be corrected.
SSA/OIG's audit work has found numerous instances of potential and
actual identity theft. While SSA/OIG does not know how many other
citizens and lawful residents do not recognize this problem, SSA does
send annual Social Security statements to the public which allow the
individuals to identify anomalies in their earnings records.
SSA has a responsibility to ensure that the earnings recorded on
all wage reports with names/SSNs that match SSA's records are properly
posted to employees' earnings records. In addition, should the SSN
owner request a correction to their earnings history, SSA has the
ability to do so.
SSA also has the ability to assign a new SSN if this is the only
means of resolving an identity theft situation. SSA allows a second SSN
to be issued when: (1) attempts to locate the individual using the
number holder's SSN have been unsuccessful; (2) the number holder has
earnings posted to his/her account in the last 2 years which belong to
someone else; (3) the number holder requests or agrees to accept a new
SSN; and (4) the number holder has cooperated with SSA.
7. What is the timeframe for merging your data systems so that
employers who verify SSNs will be notified that an SSN is a non-work
SSN or that the individual assigned the SSN is deceased?
Modifications to include additional verification information are
planned for the Internet based SSNVS (Social Security Number
Verification Service) now in an initial pilot phase. The next step in
that process is to expand the pilot to include additional employers.
8. The Privacy Act says an agency can share information with another
agency for purposes of civil or criminal law enforcement activity if
the head of that agency makes a written request. However, your
regulations limit disclosure to law enforcement activities related to
serious crimes (e.g., murder, kidnapping) where the person has been
indicted or convicted and to criminal activity involving the Social
Security program or similar programs, correct? Does this mean that
employers can request verification of basic information, but law
enforcement agencies cannot?
SSA's authority for verifying SSNs for employers and law
enforcement entities is separate and distinct. SSA verifies SSNs for
employers under the Privacy Act's routine use provision (5 U.S.C.
552a(b)(3)). For law enforcement, the disclosure authority is 5 U.S.C.
552a(b)(7).
SSA's verification of SSNs for employers is for a compatible
purpose, i.e., routine use, because employers' submittal of wage
reports to SSA is a part of SSA's business process. It is in SSA's
interest that employers submit wage reports with correct SSNs so that
the Agency can post wages to the correct individual's record. These
verifications enable the Agency to maintain correct wage records on
which to base individuals' future retirement, survivors or disability
benefits.
Unlike verifying SSNs for employers, the disclosures SSA makes for
law enforcement purposes generally are for non-program related
purposes; thus are more limited. These disclosures are based on a
balanced policy that provides service to the law enforcement community
while maintaining the confidentiality and integrity of personal
information in SSA's records. We provide information to law enforcement
organizations in connection with an individual who has been indicted or
convicted of a violent crime. We also provide information if an
individual is suspected of committing fraud against the Social Security
program or any other government health or income program.
SSA has ad hoc authority (under the ad hoc provision in Regulation
20 CFR 401.195) allowing the Commissioner to make one-time disclosures
to law enforcement authorities upon written requests from law
enforcement agencies in special situations of national emergency or
security.
On September 13, 2001 the Commissioner exercised this ad hoc
authority to law enforcement requests concerning the events of
September 11. SSA's Inspector General and our then Office of Disclosure
Policy established a streamlined process to handle law enforcement
requests pertaining to these tragic events.
9. The SSA Inspector General mentioned in his testimony that a person
is able to receive credit toward Social Security benefits based on
illegal work. Does current statute explicitly say SSA may credit work
toward Social Security eligibility and benefits, regardless of whether
the person is a citizen or authorized to work in the U.S.? Would you
describe how SSA would process this application for benefits? What
proof would SSA request, and would SSA use the illegal work to
determine his eligibility and benefit amount? Would SSA refer him INS
for the illegal work?
Section 210 of the Social Security Act states that all work
performed in the United States is considered employment under the
Social Security program with specific, but limited, exceptions. The Act
does not specifically address ``employment'' of persons who lack INS
authorization to work and, therefore, these aliens working without
authorization are not specifically ``excepted'' from engaging in
covered employment. The Act concerns itself with the kind of work done,
rather than who is performing the work.
As long as the individual has worked in employment covered by the
Act, and once they meet all the other factors of entitlement including
lawful presence in this country, and submit the required proofs, they
can receive benefits. If the individual had worked under an assumed or
invalid SSN, we would request evidence of this and develop to determine
which earnings belong to him/her.
Thus, the receipt of benefits hinges on work in covered employment
rather than immigration status at the point of employment. However,
lawful presence in this country at the point of entitlement is
required.
10. Under current law, a non-citizen applying for benefits today cannot
collect Social Security benefits if he is not legally residing in the
United States, but he can get credit toward Social Security for illegal
work. Also, a person can earn credit toward Social Security while
breaking immigration law. Should these inconsistencies be rectified in
your view?
Under present law, a non-citizen living in the United States will
only receive benefits if he is legally residing in this country. If
Congress wished to reconsider the issue, a key concern would be whether
a change would drive more employees into the non-tax-paying
underground.
11. The Inspector General has recommended that legislation be enacted
preventing Social Security from using wages from unauthorized work to
determine eligibility and benefit amounts. A previous administration
did not agree with the recommendation--where does the current
Administration stand? What would be the policy arguments for and
against the SSA OIG's proposal to prohibit crediting wages earned from
illegal work toward Social Security benefits and eligibility? Could you
also elaborate on whether INS has sufficiently complete data on
immigrants' work authorization status over time to enable SSA to pursue
this recommendation?
A proposal to deny credit for covered earnings on which the
employee and employer paid the required Social Security taxes would be
a major shift in public policy. The Administration has not reviewed
this proposal.
Current law already provides that individuals can be paid benefits
within the United States only if they are lawfully present. Thus, this
proposal would reduce benefits primarily for individuals who are, at
the time they apply for benefits, either U.S. citizens or otherwise
legally within the country.
To administer such a change, it would be necessary to know exactly
which periods in the past that a person was authorized to work and not
authorized to work. However, it is our understanding that INS does not
maintain an electronic historical record of the alien status of each
noncitizen in this country. Without this information it would be
impossible to implement this change. We defer to INS for a more
thorough explanation of their databases.
12. This year, SSA began mailing letters to all employers who submit
information in which the name or SSN of the employee does not match
SSA's records. Could you explain what the purpose of this letter is,
since some employers may mistakenly believe they should no longer
employ a worker because of the letter?
The Internal Revenue Code provides that employers are responsible
for providing correct name/SSN information on the Form W-2. When an
employee's reported name and SSN do not match SSA's records, SSA may
send a ``no match'' letter informing the employer of the discrepancy
and requesting the employer's assistance in resolving the error. Our
purpose in sending these letters is to obtain the necessary information
to clean up our suspense file and ensure that number holders receive
proper credit for their earnings.
These letters are intended to remind employers about the importance
of providing SSA with correct names and SSNs of employees. They also
encourage employers to correct their records and to use SSA's Employee
Verification Service.
We are concerned that some employers may use SSA's letters to take
inappropriate adverse action against affected employees. We therefore
specifically advise employers not to take adverse action against an
employee because of the ``no-match'' letter, as indicated in the
following paragraph from the letter used for tax year 2001:
L``This letter does not imply that you or your employee
intentionally provided incorrect information about the
employee's name or SSN. It is not a basis, in and of itself,
for you to take any adverse action against the employee, such
as laying off, suspending, firing, or discriminating against an
individual who appears on the list. Any employer that uses the
information in this letter to justify taking adverse action
against an employee may violate state or Federal law and be
subject to legal consequences. Moreover, this letter makes no
statement about your employee's immigration status.''
13. It appears that many employers do not understand what they need to
do to fix the record mismatch, and may inadvertently violate other
laws. What guidance does SSA give to employers to help them fix the
problems identified?
SSA provides detailed, step-by-step guidance with every ``no-
match'' letter in order to help employers resolve the reported records
discrepancy. Instructions are provided for correcting SSNs and Filing
Tips for accurate annual wage reporting are automatically included when
``no-match'' letters are mailed.
Is this guidance consistent with that provided by INS, IRS, and the
Department of Justice (DOJ) regarding hiring practices and
documentation of an individual's work authorization status?
Yes.
Have you had discussions with these agencies to develop clear,
consistent guidelines for employers so that they do not violate other
laws in their efforts to comply with SSA's letters or out of fear of
IRS penalties associated with non-matching wage reports?
INS, IRS, and DOJ have been consistently involved in the
development of the no-match policy guidelines. SSA has met with various
agencies to discuss the Earnings Suspense File, ``no-match'' letters
and related policies to assure that the guidance SSA provides to
employers is consistent with INS, IRS and the DOJ policies.
14. Did SSA consult with business groups and others before implementing
the new policy of sending out no-match letters to all employers with
mismatched information? If not, why?
SSA discussed changes to the ``no-match'' letter process with both
the employer and payroll communities. We meet with groups such as
American Payroll Association, the American Society of Payroll
Management and the Payroll Service Bureau Consortium at our annual
National Payroll Reporting Conference. ``No Match'' was a major topic
at the Payroll Conference held in August, 2002. At this as well as
other meetings, employers consistently indicate willingness to actively
cooperate with SSA in order to resolve wage reporting discrepancies.
15. What has SSA heard back from employers and others since the mass
mailing of no-match letters began?
There has been an increased interest by employers in verifying
SSN's for their employees. Representatives of labor unions, immigrant
advocacy groups, and employer associations have expressed concerns
about possible misinterpretation and misuse of the mismatch
information. SSA has worked to address the issues identified by these
groups to try to alleviate their concerns.
16. How many employers have contacted SSA attempting to verify their
employee's SSNs?
Employers can verify their employees' SSNs in a variety of ways:
LApproximately 7,400 employers are registered to use
the batch verification system. In calendar year 2001, there
were 218 employers who used the batch verification system.
LEmployers can visit a local SSA field office or call
a teleservice center. We have no data on the verification
requests to SSA field offices and teleservice centers, but we
believe they probably receive thousands of SSN verification
requests from employers.
LThey can use the Employer Reporting Services Center
(an 800 number). SSA has very recently begun tracking the
numbers of SSN verification requests received here. For
September, October and November 2002 the average monthly volume
of verification requests received though the 800 number at the
Employer Reporting Service Center is about 60,000. No breakout
on the numbers of employers involved is available.
LIn addition, there are a select number of
participants using the pilot Social Security Number
Verification (online) Service (SSNVS). There are six companies
participating in the SSNVS pilot.
17. The INS is responsible for assisting State and Federal agencies to
train employees of those agencies in examining immigration documents
such as visas. Isn't it true that the SSA only reversed its policy on
checking INS records before issuing Social Security cards to aliens
after September 11, 2001?
SSA has had longstanding policies to verify documents with INS.
However, until recently we could not electronically confirm the
legitimacy of documents with the INS until the person had been in this
country for at least 30 days. Therefore we relied on visual inspection,
pursuant to security guidelines provided by INS, to verify documents.
In every case in which our own scrutiny led to any doubts about the
authenticity of the documents, we held up assignment of the SSN until
INS verified the documents, no matter how recent the entry.
The events of September 11, 2001, caused SSA's new management to
reexamine many of our internal processes and our interactions with
other agencies, including INS. INS has made improvements in the
timeliness of their data entry, and earlier this year gave SSA expanded
access to non-immigrant data. Based on a decision by Commissioner
Barnhart, no alien's SSN application is processed until SSA receives
verification of the alien's INS documents from INS. Full implementation
of this procedure was rolled out from July 15, 2002 through September
2002. Where the verification still cannot be done electronically, we
will request verification from INS, which could be for as many as a
half million of the 1.5 million non-citizens we enumerate each year.
18. More than 6 months after the initial request by the SSA, the INS
still has not completed any arrangements to provide automated record
checking against INS records, despite public statements that this was a
``top priority.'' Is the problem with INS or is the SSA request more
complicated than the press releases suggest?
SSA is now able to verify most INS documents online, using INS'
Systematic Alien Verification for Entitlements (SAVE) system. Online
access was provided by INS on May 25, 2002. The system was piloted in
SSA field offices in June 2002, and implemented in all SSA field
offices on September 1, 2002. For documents that cannot be verified
online, SSA sends a manual request to INS for verification.
19. Beginning in June 2002, SSA started contacting the State bureau of
vital statistics to verify a birth certificate presented for a SSN
application. Starting in July 2002 and nationwide by September 2002,
SSA started verifying immigration documents with INS. Before these
changes, SSA generally examined the documents and accepted them if they
appeared genuine. Did SSA consult with employers before changing its
verification procedures?
As indicated above, SSA's general policy prior to September 11 was
to verify documents with INS, except for certain new arrivals whose
records were scrutinized by our employees. The events of September 11
made it necessary for SSA to aggressively move forward in instituting
additional verification measures to further ensure the integrity and
security of the enumeration process. While we are working with the
employer community and others to make them aware of the additional
verification, we did not consult with them before changing our
procedures.
20. What feedback has SSA heard from employers, particularly those
employing seasonal workers, about the new verification procedures? Does
SSA plan to make any exceptions or accommodations for temporary/
seasonal workers? Under the new verification procedures, how long does
it take a non-citizen to obtain an original SSN?
We recognize that our efforts to enhance the integrity of the
enumeration process may result in a delay in receipt of an SSN or
replacement card and therefore could hamper employment of temporary or
seasonal workers. However, our procedural changes are designed to
assure that only those who meet the enumeration requirements receive an
SSN or replacement card. SSA is making no exceptions to its rules for
any applicant.
Some employers have contacted SSA expressing their concern about
the length of time it may take for us to verify records manually with
INS if the documents cannot be verified electronically. Any delays
affect how quickly their newly hired employees obtain SSN cards. SSA's
commitment is to assign an SSN within no more than a few days after
receiving verification from the INS. Paper verification from INS may
require as little as about a week or some number of weeks. SSA is
working with INS to minimize these delays. Generally, employers are
attempting to adjust their operations accordingly. Under IRS
regulations 26 CFR Ch.1 Sec. 31.6011(b)-2 employers may hire an
individual before he or she receives his/her SSN card.
SSA is committed to doing all we can to protect the SSN while
striking a balance among the needs of individuals, employers and SSN
integrity. We believe that this new process should provide adequate
safeguards for the integrity of the SSN while permitting individuals
and their employers to move forward with hiring decisions.
21. Is it true that State benefit agencies, via your data matches with
them, receive confirmation of their data or correct information from
SSA's databases if their data is incorrect, for purposes of preventing
fraud? State Departments of Motor Vehicles (DMVs) and employers only
receive information on whether their data matches SSA's data or a note
saying which piece of information did not match (without the correct
information from SSA), even though they are also trying to prevent
fraud, correct? In addition, is it also correct that the match with
State DMVs may not provide information on whether the person on whom
information was submitted shows up as deceased in SSA's records,
depending on the system the State is using (online vs. batch file)? Why
does SSA provide different levels of information to State DMVs than to
State benefit agencies when they request matches with SSA data? Why
don't the matches with Departments of Motor Vehicles or employers
consistently include notification that a SSN belongs to a deceased
individual? When do you expect SSA will provide information to
employers and DMVs on whether a SSN is for a deceased person in these
data matches?
It is true that SSA provides different levels of information to
State benefit paying agencies, DMVs and employers. We are working to
enhance our verification systems as part of SSNVS. The next step in
that process is to expand the pilot to additional employers.
22. Why doesn't SSA require a photo ID with SSN and benefit
applications? Do you plan to change your procedures to require a
picture ID when anyone does business with you? If not, why? If so, what
is your time frame?
SSA requires convincing evidence of identity (evaluated on a case-
by-case basis) from all applicants for original or replacement SSN
cards. Most people can provide some reliable evidence of identity, such
as a drivers license, passport, or school ID, that is acceptable for
SSA purposes.
In determining what identity documents to accept, SSA is mindful of
the public burden, considering:
LNot all SSN card applicants are adults;
LNot every applicant, even if age 16 and older, has a
picture identity document; and
LNot every applicant has more than one identity
document that meets SSA's criteria.
It must be noted that there are many commercial organizations that
sell identity cards with photographs. Anyone can easily purchase a
photo ID card on the Internet. SSA does not accept these because they
are generally issued based solely upon the person's allegations and the
issuing agents cannot verify them. A photo ID is only as good as the
documentation used to obtain it.
However, SSA has a pilot in certain SSA offices that will test and
gather photographic identification to address the issue of complicit
impersonation in the disability claims process. The pilot is expected
to start in mid 2003, once necessary actions resulting from the
publication of the Federal Register notice on November 15, 2002 are
completed.
23. The SSA IG suggested in a September 2001 report that SSA limit the
number of replacement cards to 3 in a year and 10 over a lifetime,
except in extraordinary circumstances. Does SSA agree with the
recommendation? If so, when will SSA implement it? If not, what other
actions will SSA undertake to prevent misuse of replacement SSN cards?
Also is SSA planning to take any action to restrict replacement cards
issued to persons with non-work SSNs who report earnings?
We are currently considering various options for limiting the
number of replacement cards an individual can receive.
24. I understand that the Federal statute does not specifically
prohibit somebody from selling his or her own validly issued SSN with
intent to deceive. Is this correct? If so, do you think Congress should
consider changing the law to make this illegal?
Section 208 of the Social Security Act (42 U.S.C. 408) does
prohibit a person from selling a Social Security card that is, or
purports to be, a card issued by SSA. This provision also prohibits a
person from possessing a Social Security card with the intent to sell
it, for the purpose of obtaining anything of value ``or for any other
purpose.'' See 42 U.S.C. 408(a)(7). However, the section does not
prohibit selling an SSN.
Nonetheless, that section does prohibit unlawful use of another
person's SSN. If the number holder (NH) conspired with another person
to unlawfully use the SSN, including selling it, knowing that it would
be used unlawfully, then the NH could be charged with conspiracy and,
perhaps other offenses (e.g., aiding and abetting).
Moreover, selling the SSN might violate State laws concerning
fraud, consumer protection, and so forth., depending on how the SSN is
used.
We note that the Subcommittees' bill, H. R. 2036, would remedy
this. SSA would be glad to continue to work with you on such
legislation.
25. When do you expect to have the first Enumeration at Entry Center
running? What has been the reason for delay? Will only persons admitted
for lawful permanent residence be processed through these centers? Does
SSA have any near-term plans to expand these centers to persons
temporarily admitted to the Untied States who are authorized to work?
Enumeration at Entry (EAE) is a process that enables aliens
applying for immigrant visas at DoS's Foreign Service posts to apply
for SSNs at the same time. The process started in October 2002. DoS
passes the SSN application data to INS along with the visa application
data. INS, in turn, passes the SSN application data on to SSA for
issuance of the SSN. Significant programming and systems modifications
on the part of all three agencies were necessary to make EAE a reality.
Furthermore, EAE implementation requires that DoS staff physically
install software containing the EAE changes at each post.
EAE is already operational in the posts in Manila, Philippines;
London, England; and Cuidad Juarez, Mexico. As of December 18, 2002, we
have issued 1,943 SSNs using this process.
Beginning January 2003, DoS will begin to install EAE software at
other Foreign Service posts around the world. When this phase is fully
implemented, more than 90 per cent of the people applying for immigrant
visas at DoS posts will be able to apply for SSNs at the same time.
SSA, INS and DoS will soon begin discussions on expanding the
process to other groups of aliens.
26. The IG has urged SSA to implement additional protections against
issuance of multiple SSNs to children and to help State bureau of vital
statistics to ensure records of hospital birth units and registered
births match. For example, it can take a couple of months to get a SSN
through enumeration at birth, and parents may come into the Social
Security office to request a SSN at the same time it is processing the
information from the State BVS, sometimes causing infants to be issued
multiple SSNs. Also, some hospitals do not separate the duties of
clerks gathering birth information from parents and clerks entering
information into the hospital database, making it easier for someone to
enter births for children who do not exist. Is SSA implementing any of
the SSA IG's suggestions?
The current Enumeration at Birth (EAB) contract expires on December
31, 2002. SSA is pursuing OIG's recommendation for the Bureaus of Vital
Statistics to perform periodic independent reconciliation of registered
births with statistics obtained from the hospitals to verify the
legitimacy of sample birth records by building it into its negotiations
for the new EAB contracts, which will be effective January 1, 2003.
27. Fingerprints and photos have been accepted biometric identification
for government documents for more than fifty years. Why does the Social
Security Administration not employ any sort of biometric identification
to confirm identity? Doesn't the absence of biometric identity
confirmation put at risk innocent citizens with regard to their bank
accounts, their credit, sometimes even their mortgage loans?
From the inception of the program, the Social Security number (SSN)
card was never intended for use as an identity document. If the Social
Security Administration were to use biometrics to link the SSN card to
the bearer to allow identity confirmation, the agency would become the
trusted authority and authenticator of individual identity in the U.S.
We believe this task would have an adverse impact on our ability to
fulfill our mission. In addition, the use of biometrics would require
the re-enumeration of every Social Security number holder at
considerable cost.
We provided a report to Congress in 1997 on replacing the Social
Security card with a plastic card that could include identifying
information, such as a picture or biometric identifiers. Several of the
prototypes developed in this study are still valid examples of the kind
of identity document in question. The report found that issuing new
Social Security cards with biometric information would cost from about
$4 billion to $9 billion (in 1996 dollars), depending on the form of
the card, and would require about 70,000 work years.
SSA's Office of Inspector General and other SSA components continue
to actively pursue information about potential technologies that we
could use to support more accurate earnings reporting and to reduce
benefit and SSN fraud.
28. The Social Security card is generally accepted to be very easily
counterfeited. Has the SSA looked into the processes used by the State
Department for passports or visas or by the INS for the ``Permanent
Resident Card (green card)'' or the Border Crossing Card?
We do not agree that the SSN card is ``very easily'' counterfeited.
It has numerous sophisticated security features that help to prevent
counterfeiting. These include:
LThe front contains a marbleized light blue security
tint, with the words ``Social Security'' in white.
LIntaglio printing is used in some areas on the front
of the card. (Intaglio printing can be done only by certain
security printing companies, on registered machinery.)
LThe front and back contain yellow, pink, and blue
planchettes (small discs). These can appear anywhere on the
card, including the area on the card that contains the
Department of Health and Human Services or Social Security
Administration seal and the number holder's name and SSN.
Further, there are additional security features that we do not make
a matter of public record.
While we have confidence in the current security features of the
card, we are open to considering options that would make it even less
subject to counterfeiting and use by identity thieves.
29. Should the Social Security Administration, or another federal
agency such as the INS start issuing a number that can be used for
identification, so that the SSN can be reserved only for payroll tax
withholding and benefit awards?
SSA does not have a position on whether it or another Federal
agency should issue numbers that could be used for identification. We
believe that this is an issue for the new Department of Homeland
Security, and we will be happy to work with them and provide any
support needed.
30. How many individuals have been issued more than one SSN? How does
this happen? What measures exist to prevent this from happening?
Before SSA implemented the Systems controls explained below, there
were occasional rare instances where more than one SSN was erroneously
assigned to a single individual. We also know that there are limited
cases where SSA has purposefully assigned a new SSN for domestic
violence victims, those suffering continued harm due to identity theft,
and so forth.
In July 1990, SSA implemented the Modernized Enumeration System
(MES), which gave FO personnel the capability to take an SSN
application using online screens rather than on a paper application
form. As part of the application process, MES searches the SSN database
and returns possible matches when an application for a new SSN is
entered. This helps the field office identify a previously assigned
SSN, and prevents assignment of a new one.
31. We know that non-citizens who are authorized to work are able to
legitimately obtain SSNs for work purposes. However, if they no longer
are working in this country or have left the country, the SSN issued to
them remains on record as being assigned to them. Should some notation
on SSA's record be placed to indicate that the individual is no longer
working and/or residing in this country? Should that number be valid
for all times?
It should remain an INS responsibility to determine who is
authorized to work, and to keep track of entry/exit from the U.S.
Employers, as part of the hiring process, can determine current status
and work authorization by following INS' I-9 rules. We do not think SSA
should duplicate this function.
Regarding the validity of the SSN for all times, the SSN needs to
remain valid in case the number holder returns to the United States and
is once again authorized to work. The number is used to keep an
accurate record of each individual's earnings and to pay and monitor
benefits, including those paid under a Totalization agreement.
Chairman GEKAS. Thank you, Sam.
Yes, we invite the second panel to begin to take their
places at the witness table. We call upon Charisse Phillips,
Director of Fraud Prevention Programs, Bureau of Consular
Affairs, U.S. Department of State; Robert Bond, Deputy Special
Agent in Charge, Financial Crimes Division, U.S. Secret
Service; Grant D. Ashley, Assistant Director, Criminal
Investigative Division, Federal Bureau of Investigation; Hon.
James G. Huse Jr., Inspector General, Social Security
Administration in Baltimore; Matthew Reindl, Operator of
Stylecraft Interiors Inc. of Great Neck, New York; and, Chris
Hoofnagle, Legislative Counsel, Electronic Privacy Information
Center.
We state to the witnesses that their written statements
will be accorded a place in the record, without objection. We
will ask them each to try to limit their remarks, their reviews
of their written testimony, to about 5 minutes. We will begin
in the manner in which we introduced the panel, starting with
Charisse Phillips.
You may proceed.
STATEMENT OF CHARISSE M. PHILLIPS, DIRECTOR, OFFICE OF FRAUD
PREVENTION PROGRAMS, BUREAU OF CONSULAR AFFAIRS, U.S.
DEPARTMENT OF STATE
Ms. PHILLIPS. Mr. Chairman, thank you very much. I am very
pleased to be here to testify before the Subcommittee this
afternoon.
I have had the privilege of serving as the Director of
Fraud Prevention Programs in the Bureau of Consular Affairs for
2 years now. Previously, I served in a number of consular
sections abroad, where I had frontline experience with document
fraud, and with attempts by criminals, terrorists, and hostile
governments to obtain U.S. travel documents. I have been a
consular officer for almost 17 years now.
The State Department has an integral interest in the
quality of identity documents and vital records produced in the
United States because those documents form the basis of U.S.
passport issuance. The U.S. passport is perhaps the most highly
valued document in the world, because of the many benefits and
privileges it confers. It is not ``just a document,'' it is the
passkey into our country.
Let me tell you about the methadone moms. As these low-
income women leave their drug-rehab clinics, they are targeted
by alien smugglers. They are offered money, maybe a couple
hundred dollars, to apply for passports for their own kids, but
here's the catch. They will substitute photos of different
kids, photos supplied by the alien smugglers.
Who are these substitute kids? In the majority of cases,
they are the children of people who cannot bring those kids to
the United States legally immediately. Those parents pay
thousands of dollars for these fraudulent passports.
How do we know about this? Well, the proverbial alert
passport employee. We are fortunate to have a cadre of trained,
experienced, and loyal personnel who detect these attempts to
obtain our passports through fraud.
The Bureau of Consular Affairs is in the business of
preventing this kind of abuse of children and of travel
documents. We have developed an extremely tamper-resistant
passport. In fact, just last week, Members of the Five Nations
Conference told me what we have noticed ourselves, that our
passports are now so good that alien smugglers have stopped
trying to alter them.
Instead, now they are trying to get hold of them by other
means. They are using look-alike travelers to match passports
stolen from American tourists overseas. They are helping
imposters apply for U.S. passports, using identities stolen
from U.S. citizens in the United States. They are selling
counterfeit documents--birth certificates, drivers' licenses,
Social Security cards--to aliens for use in applying for
passports. All these documents are available cheap on the
Internet.
We are pretty good at detecting these false documents. We
have done studies of our passport issuances, and we provide
training and information to our passport staff to keep them
alert. As home computers, the Web, and high-tech scanners, and
photocopiers become more accessible, we need more and better
tools for our people.
We need to be able to confirm Social Security numbers
easily and routinely. Right now, our people put a lot of energy
into developing informal contacts to help them confirm Social
Security numbers and work histories. They rely on this
information in suspect cases to help them quickly identify
Americans who are just taking an innocent trip from the aliens,
sometimes criminal aliens, who are seeking U.S. passports to
evade the scrutiny of immigration officials around the world.
Our people also need help in confirming the bone fides of
U.S. birth certificates. This country has more than 8,000
authorities issuing birth certificates and more than 50,000
different versions issued by States, counties, and
municipalities.
We also need an easy way to verify drivers' licenses, the
usual proof of ID submitted with passport applications. High-
quality duplicates of State drivers' licenses are available on
the Internet with only a removable sticker warning ``novelty
item'' to deter criminals. Our passport workers have no way of
verifying drivers' licenses either online or through routine
access.
We call these kinds of documents ``breeder documents''
because they can all be used to obtain more identity documents.
My office has, therefore, purchased the Social Security CD-ROM
with death records of Social Security recipients going back to
1936. We have made this available to our passport and our visa
personnel online.
We have begun to brief Social Security fraud investigators.
We are trying to work with Social Security on a way to identify
Social Security numbers online.
[The prepared statement of Ms. Phillips follows:]
Statement of Charisse M. Phillips, Director, Office of Fraud Prevention
Programs, Bureau of Consular Affairs, U.S. Department of State
Mr. Chairman and Members of the Committees:
Thank you for the opportunity to appear at this hearing on
Preserving the Integrity of Social Security Numbers and Preventing
Their Misuse by Terrorists.
I have had the privilege of serving as the Director of Fraud
Prevention Programs, in the Bureau of Consular Affairs, for two years
now. Previously I served in a number of consular sections abroad where
I had front-line experience with document fraud, and with attempts by
criminals, terrorists, and hostile governments to gain U.S. travel
documents. I have been a consular officer for almost 17 years.
The Bureau of Consular Affairs is in the business of preventing
travel document fraud. We have an integral interest in the quality of
identity documents and vital records produced in the United States,
because those documents form the basis of U.S. passport issuance. The
U.S. passport is perhaps the most highly valued document in the world,
because of the many benefits and privileges it confers. It is not
``just a document''--it is the pass-key into our country.
We have developed an extremely tamper-resistant passport. In fact,
passport and immigration authorities in other countries have told us
what we have found ourselves--the U.S. passports now being issued are
now so difficult to alter or counterfeit that alien smugglers have
stopped trying to alter them.
Instead they are acquiring authentic passports that have been lost
or stolen and then using ``look-alike'' travelers to match passports
stolen from American tourists overseas. They are helping impostors
apply for U.S. passports using identities stolen from U.S. citizens in
the USA. They are also producing and selling counterfeit documents--
birth certificates, driver's licenses, Social Security cards--to aliens
to use in applying for passports. All these documents are available--
cheap--on the Internet.
Personnel of the Bureau of Consular Affairs are experienced at
detecting these false documents. We have done studies of our passport
issuances, and we provide training and information to our passport
staff to kept them alert. But as home computers, the Web, and high tech
scanners and copiers become more accessible, we need more and better
tools for our people.
One tool that will help our officers is on-line access to Social
Security Administration records. Comparing the documents submitted in
support of passport and visa applications against the official
databases of the issuing authorities will greatly improve the accuracy
and integrity of the citizenship and identity confirmation process. We
are currently working closely with the Social Security Administration
and state vital records offices toward this goal.
I will begin by giving some examples of document fraud cases.
Alien Smuggling Ring Exposed
Let me tell you about the methadone moms. As these low-income women
leave their drug-rehab clinics, they are targeted by alien smugglers.
They are offered money--several hundred dollars, maybe--to apply for
passports for their own kids. But, here's the catch. They will submit
photos of different kids, supplied by the alien smugglers. Who are
these substitute kids? In the majority of cases, they are the children
of people in the U.S. either illegally, or as permanent residents, but
who cannot bring their kids to the U.S. immediately through any legal
means. Their parents pay thousands of dollars for those fraudulent
passports. How do we know about this? An alert passport employee. We
are fortunate to have a cadre of trained, experienced and loyal
personnel who detect these attempts to obtain our passports through
fraud.
Operation Oak Park: Passport Agency Uncovers Criminal Document Ring
Late in 2000, the Chicago Passport Agency's Fraud Program Manager
(FPM) linked 25 passport applications to a document fraud ring
involving Nigerian nationals. A subsequent investigation conducted by
the State Department's Diplomatic Security Field Office in Chicago
revealed the fraud ring involved one document broker, who was already
under investigation by the U.S. Postal Inspector's Office, the Social
Security Administration's Inspector General's Office, the Immigration
and Naturalization Service (INS), and the Drug Enforcement Agency. With
Diplomatic Security as the catalyst, the agencies and others formed a
task force, ``Operation Oak Park,'' under the direction of the U.S.
Attorney.
The ringleader and his associates provided young women with
computer-generated counterfeit birth certificates and immunization
records that named the women as the mothers of non-existent newborn
babies. They used those documents to apply for Social Security cards,
which they passed on to the ringleader. He then created other
counterfeit birth certificates, using the name on the Social Security
card but with the date of birth of the ultimate recipient or purchaser
of the documents. The recipients could then use the birth certificates
and Social Security cards to obtain driver's licenses and apply for
passports. The ringleader charged about $5,000 for each fraudulent
identity.
The investigation developed leads into Jamaican and Nigerian
community-based criminal activities and implicated two Illinois State
Bureau of Vital Statistics employees and one Federal employee, who
actively participated in the broader fraudulent documents scheme.
Operation Blind Date
When Federal investigators arrested the ringleader, he agreed to
cooperate, spawning a subsidiary investigation, Operation Blind Date.
Under guidance from the task force he arranged for his network of
brokers to fly to Chicago to pick up their documents and meet a
supposedly corrupt Social Security supervisor, who was in reality an
undercover Secret Service agent. The Chicago Police Department was
included in the operation and arrested eight of the ringleader's
associates ostensibly in routine traffic stops as they left his office
so they wouldn't suspect him of turning them in. Those arrested
included six Nigerian nationals, a Kenyan and a Jamaican posse street
gang leader who was sought at the time by U.S. Customs and the DEA for
narcotics trafficking.
As part of a plea agreement, the ringleader took responsibility for
preparing more than 100 sets of false documents. He was charged with
fraudulently obtaining and selling passports and Social Security cards
and counterfeiting birth certificates. He faced a possible sentence of
10 years imprisonment and a $250,000 fine. However, he did not give up
as easily as it appeared at the time. In December 2001, his family
informed Federal agents that the individual, who was at home on
electronic detention while awaiting sentencing, had passed away.
However, when a Secret Service agent went to the morgue to identify the
body he discovered that the corpse was not the ringleader's. The family
and their doctor allegedly conspired to kidnap and murder a homeless
man, pass him off as the convicted individual and planned to have the
body cremated as soon as the morgue released it. A manhunt for the
ringleader ensued, and Federal agents were able to track him to
Massachusetts. He was apparently planning to flee the country to Poland
where he had ties. He is still awaiting sentencing. The U.S. Attorney
in Chicago has added capital murder charges to the document fraud
charges.
West African Fraud in Texas
Interagency cooperation is also active in other parts of the
country to combat document fraud. The Houston Passport Agency's region
has two of the country's largest enclaves of West African nationals in
the U.S. The majority resides in Dallas and Houston, which has over
50,000 Nigerian residents. The number of scams involving West African
nationals in this region grew so great that a Federal task force
comprised of various Federal and local law enforcement agencies
convened several years ago in an effort to share case information and
develop joint strategies. The majority of passport fraud cases by West
Africans detected involved additional crimes, such as marriage fraud,
narcotics trafficking, credit card fraud, insurance fraud and Social
Security fraud.
Falsified Visas Also Used for Social Security Fraud
Another type of fraud we have seen involves altered visas used by
people who are already in the U.S. to obtain a benefit. Copies of
fraudulent visas have been submitted to the Social Security
Administration and the INS. The SSA applications are most commonly
submitted by citizens of the Former Soviet Union who have legitimately
issued visitor visas. The visas are altered, however, to show work
classification so that the person will appear eligible for a Social
Security number.
Why Social Security Number Checking is Critical to Passport and Visa
Processing
Passport Applications
As state and local vital statistics offices improve the security
features of their birth certificates to deter counterfeiters, deceased
identity fraud will become an increasingly popular mode of fraud.
Confirming a deceased identity is often difficult for Passport Agency
Fraud Program Managers (FPMs) since many states have not cross-matched
out-of-state birth and death records. Social Security data can be very
useful in exposing attempts at passport fraud.
FPMs have learned to recognize potential fraud cases by spotting
anomalies in passport applications. Among the most frequent indicators
of passport fraud are:
LThe breeder document phenomenon
In this scenario, a birth certificate is used to generate a series
of new documents, culminating in an application for a passport. One
hallmark of such activity is a readily identifiable timeline sequence
of the respective transactions. First, a birth certificate appears,
then a Social Security card or a document such as a state ID or
driver's license, and finally, the passport application is executed.
LLittle evidence to support the deposed facts
Often, a passport application shows omissions and references to
third parties (e.g., a friend as the person-to-be-notified in the event
of an emergency). In person, the applicant is generally unfamiliar with
the assumed identity, thus tending to respond evasively and making
claims that are generally inconsistent with his appearance.
LUnusual signatures
Signatures on the applications may appear labored or obviously
forged. FPMs are trained to detect handwriting that is not American in
style.
Passport agency personnel frequently check whether a previously
issued passport was issued in error. The most useful method to do so is
to obtain a copy of the previous application and verify the subject's
Social Security number and check birth/death records and the FBI's
National Crime Information Center files.
If the passport was issued in a deceased identity a possible
indicator would be a recently issued SSN or a record of two SSN's
issued in that identity. There will also be minimal personal data on
the original application. If the passport was obtained based on a
counterfeit or falsely filed delayed birth certificate, a new SSN in
the applicant's identity may have been issued weeks after the first
passport was issued. The previous application may show a different SSN.
Immigrant Visa Utility
Consular sections at U.S. Embassies and Consulates also rely on
Social Security records when handling immigrant visa cases. Consular
Sections overseas are sometimes hard pressed to determine whether an
elderly petitioner in an immigrant visa case is still alive,
particularly in cases where the petition was filed many years before.
In other cases, the follow-to-join beneficiaries may claim the original
petitioner is deceased in order to avoid a likely visa refusal
resulting from ineligibility under the public charge section of the
Immigration and Nationality Act. Sometimes there are also fraud
problems when employment-based immigrant visa cases filed many years
before for beneficiaries to care for elderly or seriously ill
individuals raise questions whether the individuals still need such
assistance. A check of the SSA database will in some cases provide
definitive evidence of misrepresentation.
How the Department of State Combats the Fraud
Purchasing SSA Database
My office has purchased from Social Security a CD ROM with death
records of Social Security recipients dating back to 1936. We have made
this available to our passport and visa personnel on-line. Fraud
Prevention Managers in consular sections and passport agencies now have
access to over 77 million U.S. death records via the Office of Fraud
Prevention Programs' Intranet Web page. Over 98% of the death records
in the database are for individuals who died after 1962. However, the
database only includes death records of individuals for whom a death
benefit claim was made to SSA. It may therefore not provide a positive
response if the decedent never worked or never had a Social Security
number, even if that person is indeed deceased.
LMultiple Passport Issuance Verification Helps Detect Fraudulent
Passport Applications
Passport Services' Multiple Passport Issuance Verification (MIV)
feature of the new Photodigitized Passport Issuance System is a quantum
leap forward in fraud prevention technology that is already paying
handsome dividends.
Acting much like a name-check system, MIV automatically searches
the passport files database for records of passport issuance during the
past ten years and notifies the adjudicating officer if an applicant
was issued a previous passport. It tells the officer how many passports
were issued and for each issuance provides the name, date and place of
birth, passport number, issuance and expiration dates. Some records
also provide the Social Security number. This is proving to be a
powerful tool for passport agency FPMs. A recent survey of ten passport
agencies revealed that the MIV system detected an average of 25
additional fraud cases per month.
Liaison with Vital Records Offices
When questions arise concerning the authenticity of a U.S. birth
certificate submitted with a passport application, FPMs often seek to
verify the questioned document with appropriate local authorities. Over
the years, FPMs have established informal working relationships with
most of the state registrars in their regions.
Consular personnel also work with the National Association for
Public Health Statistics and Information Systems (NAPHSIS). At their
annual conference in 2001 NAPHSIS members approved a Consular Affairs-
drafted resolution recommending cooperation with the Department of
State's anti-fraud program. In the resolution, NAPHSIS recognized that
cooperation with the State Department is essential to the integrity of
the passport issuance process and the states' vital records operations.
The resolution encouraged all vital statistics offices to establish and
maintain liaison with the FPM whose passport agency is responsible for
their state.
What the Problem Needs Now
We need to be able to confirm Social Security numbers easily and
routinely. Right now our people put a lot of energy into developing
informal contacts to help them confirm Social Security numbers and work
histories. They rely on this information in suspect cases to help them
quickly identify the bona fide Americans taking an innocent trip from
the aliens, sometimes criminal aliens, who are seeking U.S. passports
to evade the scrutiny of immigration officials around the world.
Our people also need help with confirming the bona fides of U.S.
birth certificates and driver's licenses. This country has more than
8,000 authorities issuing birth certificates, and more than 50,000
different versions issued by states, counties and municipalities. One
commonly accepted proof of identity is the driver's license. It is not
commonly known, however, that high-quality duplicates of state licenses
are available on the Internet, with only a removable sticker warning
``novelty item'' to deter criminals. Our passport workers have no way
of verifying driver's licenses, either on-line or through routine
access. We call these documents ``breeder documents'' because they can
all be used to obtain more identity documents. Over the past several
years we have been working with other agencies to combat fraudulent use
of these documents and detect counterfeits and other fraud.
We have begun to brief Social Security fraud investigators in
identifying foreign passports presented with Social Security number
applications. We are also working closely with the Social Security
Administration to identify a way for us to routinely verify Social
Security numbers on-line.
We are working with the National Association of Public Health
Statistics and Information Systems and the Social Security
Administration to encourage states to automate their birth and death
records. My office is also building a database of lost-or-stolen blank
documents, such as birth certificates. We are also part of an
interagency working group, headed by INS, on developing standards for
U.S. birth certificates, to make it easier to identity counterfeits.
In addition, we are talking to the American Association of Motor
Vehicle Administrators on standardizing driver's license features. My
office recently sponsored a pilot program at one passport agency to
purchase readers to verify that the information on the front of
driver's licenses at least matches that on the barcodes or magnetic
strips on the back--police departments use these same devices to detect
underage drinkers. We are also developing a pilot program with one
state Department of Motor Vehicles to construct a train-the-trainers
program on foreign passports, and share information on trends in
document fraud.
If we have this much difficulty with fraudulent documents in the
United States, it is easy to imagine the problem encountered in our
consular sections overseas. Some countries have automated, centralized
records that are verified before passports are issued, and their
documents are therefore easy to accept. In others, wars and natural
disasters have destroyed vital local records, where they even existed.
Poorly paid civil registry workers are also subject to pressure to
fraudulently issue legitimate documents.
To counter this problem, my office maintains information on lost-
or-stolen blank foreign travel documents. Every consular section has a
designated Fraud Prevention Manager who is responsible for helping new
officers learn the local documents, and for maintaining exemplars for
reference. We have on-line country fraud summaries available for visa
adjudicators to refer to. We train consular officers to detect altered
or counterfeit documents, even when they have never seen such documents
before. In addition, the U.S. Government has several programs to
encourage countries to centralize and automate their vital records.
As much progress as we believe we have made, we continue to explore
possibilities for improving our fraud detection. For instance, we would
like to explore the use of commercial databases to help identify
fraudulent applications. We will work with INS to obtain additional
information from its records that would be helpful.
We in the State Department are proud of our fraud prevention
programs and the technological improvements we are making. We will
continue to work with the Social Security Administration, other Federal
agencies, and the states to aggressively combat document fraud.
Chairman GEKAS. We thank the lady for the testimony. I take
it she is not completed with all that she wants to render, but
perhaps during the question and answer period, some commentary
will be forthcoming.
We will go to the second witness. You may proceed.
STATEMENT OF ROBERT BOND, DEPUTY SPECIAL AGENT IN CHARGE,
FINANCIAL CRIMES DIVISION, U.S. SECRET SERVICE
Mr. BOND. Mr. Chairman, thank you. Members of both
Subcommittees, thank you for the opportunity to address the
subject of identity theft and the Secret Service's efforts to
combat this problem. I am particularly pleased to be here with
my colleagues and partners in fighting identity theft from the
Federal Bureau of Investigation, the State Department, and the
Social Security Administration.
With the passage of new Federal laws in 1982 and 1984, the
Secret Service was given primary jurisdiction for the
investigation of access device fraud and parallel authority
with other law enforcement agencies in identification fraud
cases. The explosive growth of these crimes has resulted in the
evolution of the Secret Service into an agency that is
recognized worldwide for its expertise in the investigation of
all types of financial crimes.
While advances in technology and the burgeoning use of the
Internet has provided numerous benefits to the consumer through
readily available credit and consumer-oriented financial
services, it has also created a target-rich environment for
today's sophisticated criminals, many of whom are organized and
operate across international borders.
Identity theft is almost always a component of one or more
crimes, such as financial crimes, violent crimes, or, possibly,
the facilitation of terrorist activities.
Identity theft can affect all Americans, regardless of age,
gender, nationality, or race.
The events of September 11 have focused the priorities and
actions of law enforcement throughout the world, including the
Secret Service. Immediately following the attacks, the Secret
Service assisted the FBI and the joint terrorism task forces
with their investigations through the leveraging of our
established relationships, especially within the financial
sector, in an attempt to gather information as expeditiously as
possible.
The Secret Service is also involved in a collaborative
effort to analyze the potential for identity theft to be used
in conjunction with terrorist activities through our liaison
efforts with Operation Green Quest, Operation Direct Action,
FinCEN, and the Terrorist Financing Operations section of the
FBI.
Since our inception in 1865, the twin pillars of the Secret
Service have been prevention and partnership building.
We simply could not fulfill our dual missions of protecting
our Nation's elected leaders and safeguarding our financial
infrastructure without two essential elements, incorporating
preventative strategies and training, and building cooperative,
trusted relationships with our local and Federal law
enforcement partners.
A central component of the Secret Service's preventive and
investigative efforts with regard to identity theft has been
educate consumers and provide training to law enforcement
personnel through a variety of partnerships and initiatives,
including our 37 financial and cybercrime task forces the
Secret Service has developed throughout the country.
The Secret Service has already undertaken a number of
unique initiatives aimed at increasing awareness and providing
the training necessary to combat identity theft and assist
victims in rectifying damage done to their credit. This
includes the development of a number of training tools designed
to assist local law enforcement partners.
Ultimately, most identity theft cases are reported to and
investigated at the local level, but too often, local law
enforcement agencies lack the expertise, experience, and
resources to sufficiently investigate electronic-based crimes
such as identity theft.
In partnership with the International Association of Chiefs
of Police, the Secret Service produced the ``Best Practices for
Seizing Electronic Evidence Manual.'' This pocketsize guide
instructs law enforcement officers in seizure of evidence from
personal computers to wireless telephones to digital cameras.
To date, the Secret Service has distributed over 315,000 copies
of this guide free of charge to local law enforcement
officials.
We have also worked with this group and our private sector
partners to produce the interactive and computer-based training
program known as ``Forward Edge,'' and this is ``Forward
Edge.'' It is a computer-based training program that takes the
next step in training officers to conduct electronic crimes
investigations. ``Forward Edge'' incorporates virtual reality
features as it presents different investigative scenarios to
the trainee.
Copies of State computer crime laws for each of the 50
States, as well as corresponding sample affidavits, are also
part of the training program and are immediate accessible for
instant implementation.
In short, any police department in the country, regardless
of the size and the resources that they may have, now has
access to state-of-the-art training on the seizure and
preservation of electronic forensics evidence, which can be
central to an identity theft investigation. To date, we have
distributed over 35,000 of these training CDs, again, free of
charge, to our local law enforcement partners.
Finally, the Secret Service and the International
Association of Chiefs of Police are developing an ``Identity
Theft Roll-Call Video'' geared toward local police officers
throughout the Nation. This video will emphasize the need for
police to document a citizen's complaint of identity theft,
regardless of the location of the suspects. The video will also
provide officers with instructions to assist victims who are
seeking their reputations and credit worthiness.
In addition to preventive measures, legislation currently
pending in Congress can further enhance law enforcement efforts
to combat identity theft. Stronger penalties, increased
enforcement, and continued focus on prevention and training are
the ingredients to successfully combating identity theft in the
future.
Mr. Chairman, that concludes my prepared statement. I will
be happy to answer any questions that you or the other Members
of the Subcommittee may have. Thank you, sir.
[The prepared statement of Mr. Bond follows:]
Statement of Robert Bond, Deputy Special Agent in Charge, Financial
Crimes Division, U.S. Secret Service
Mr. Chairman, I would like to thank you for the opportunity to
address both Subcommittees on the issue of identity theft and the
Secret Service's efforts to combat this problem. I am particularly
pleased to be here with my colleagues and partners in fighting identity
theft from the Federal Bureau of Investigation, the Department of
State, and the Social Security Administration.
The Secret Service was originally established within the Department
of the Treasury in 1865 to combat the counterfeiting of U.S. currency.
Since that time, this agency has been tasked with the investigation of
other Treasury related crimes, as well as the protection of our
Nation's leaders, visiting foreign dignitaries and events of national
significance. With the passage of new Federal laws in 1982 and 1984,
the Secret Service was given primary authority for the investigation of
access device fraud and parallel authority with other law enforcement
agencies in identification fraud cases. The explosive growth of these
crimes has resulted in the evolution of the Secret Service into an
agency that is recognized worldwide for its expertise in the
investigation of all types of financial crimes.
The burgeoning use of the Internet and advanced technology coupled
with increased investment and expansion has led to fierce competition
within the financial sector. Although this provides benefits to the
consumer through readily available credit and consumer oriented
financial services, it also creates a target rich environment for
today's sophisticated criminals, many of whom are organized and operate
across international borders.
Information collection has become a common byproduct of the newly
emerging e-commerce. Internet purchases, credit card sales, and other
forms of electronic transactions are being captured, stored, and
analyzed by entrepreneurs intent on increasing their market share. This
has led to an entirely new business sector being created which promotes
the buying and selling of personal information. Consumers routinely
provide personal, financial and health information to companies engaged
in business on the Internet. They may not realize that the information
they provide in credit card applications, loan applications, or with
merchants they patronize are valuable commodities in this new age of
information trading. With the advent of the Internet, companies have
been created for the sole purpose of data mining, data warehousing, and
brokering of this information. These companies collect a wealth of
information about consumers, including information as confidential as
their medical histories. Like all businesses, data collection companies
are profit motivated, and as such, may be more concerned with
generating potential customers rather than safeguarding their
information to prevent its misuse by unscrupulous individuals. The
private sector represents the first line of defense in identity theft
and has a responsibility to safeguard the data that it has collected.
The greater the protections that industry provides to the public, the
fewer the opportunities for identity theft.
Based upon this wealth of available personal information, the crime
of identity theft can be perpetrated with minimal effort on the part of
even relatively unsophisticated criminals.
There is no area today that is more relevant or topical than that
of identity theft. Simply stated, identity theft is the use of another
person's identity to commit fraudulent activity.
Identity theft is not typically a ``stand alone'' crime. It is
almost always a component of one or more crimes, such as financial
crimes, violent crimes, or possibly, the facilitation of terrorist
activities. In many instances, an identity theft case encompasses
multiple types of fraud. According to statistics compiled by the FTC
for the year 2001, 20% of the 86,168 victim complaints reported
involved more than one type of fraud. The major complaints compiled by
the FTC, which include multiple types of fraud reported in multiple
categories, were:
L42% of complaints involved credit card fraud--i.e.
someone either opened up a credit card account in the victim's
name or ``took over'' their existing credit card account;
L20% of complaints involved the activation of
telephone, cellular, or other utility service in the victim's
name;
L13% of complaints involved bank accounts that had
been opened in the victim's name, and/or fraudulent checks had
been negotiated in the victim's name;
L7% of complaints involved consumer loans or mortgages
that were obtained in the victim's name;
L9% of complaints involved employment-related fraud;
L6% of complaints involved government documents/
benefits fraud; and
L17% of miscellaneous fraud, such as medical,
bankruptcy and securities fraud.
IMPACT
Identity theft, unlike many types of crime, affects all types of
Americans, regardless of age, gender, nationality, or race. Victims
include everyone from restaurant workers, telephone repair technicians,
and police officers, to corporate and government executives,
celebrities and high-ranking military officers. What victims do have in
common is the difficult, time consuming, and potentially expensive task
of repairing the damage that has been done to their credit, their
savings, and their reputation. Obviously, the impact is magnified when
it affects one of America's most valued assets, our senior citizens, as
they represent a generation with a trusting nature that is easy to
exploit. This group is particularly dependent on other caregivers for
assistance, such as relatives, medical staff, service personnel, and
oftentimes, complete strangers. This dependency increases their
vulnerability to certain schemes involving identity theft.
LEGISLATION
In past years, victims of financial crimes such as bank fraud or
credit card fraud were identified by statute as the person, business,
or financial institution that incurred a financial loss. All too often
the individuals whose credit was ruined through identity theft were not
even recognized as victims. This is no longer the case. The Identity
Theft and Assumption Deterrence Act was passed by Congress in 1998.
This represented the first comprehensive effort to re-write the Federal
criminal code to address the insidious effects of identity theft on
private citizens. This new law amended Section 1028 of title 18 of the
United States Code to provide enhanced investigative authority to
battle the growing problem of identity theft. These protections
included:
LExpanding the scope of the statute to include as
victims those individuals whose identity information was stolen
and whose primary loss is creditworthiness and reputation
rather than financial loss;
LThe establishment of the Federal Trade Commission
(FTC) as the central clearinghouse for victims to report
incidents of identity theft. This centralization of all
identity theft cases allows for the identification of systemic
weaknesses and provides law enforcement with the ability to
retrieve investigative data at one central location. It further
allows the FTC to provide victims with the information and
assistance they need in order to take the steps necessary to
correct their credit records;
LAsset forfeiture provisions were enhanced to allow
for the repatriation of funds to victims; and
LThe closing of a significant gap in existing
statutes. Previously, only the production or possession of
false identity documents was unlawful. With advances in
technology such as e-commerce and the Internet, criminals did
not need actual, physical identity documents to assume an
identity. This legislative change made it illegal to steal
another person's personal identification information with the
intent to commit a violation, regardless of actual possession
of identity documents.
We believe that the passage of this legislation was the catalyst
needed to bring together both Federal and state government resources in
a focused and unified response to the identity theft problem. Today,
law enforcement, regulatory and community assistance organizations have
joined forces through a variety of working groups, task forces, and
information sharing initiatives to assist victims of identity theft.
The United States Sentencing Guidelines have also been amended
since the passage of the 1998 Act to better address identity theft.
Section 2B1.1 now provides an offense level of 12 in cases involving
the possession of device-making equipment, the production of or
trafficking in an unauthorized or counterfeit access device, the
unauthorized transfer or use of any means of identification to
unlawfully produce or obtain any other means of identification, or the
possession of five or more means of identification that were lawfully
produced from, or obtained by the use of, another means of
identification.
The guidelines amendments also provide a revised minimum loss rule
for offenses involving counterfeit or unauthorized access devices.
Specifically, a minimum loss amount of $500 per access device is to be
used when calculating the loss involved in the offense, with the
exception of the possession, not the use of, telecommunications access
devices, in which case the minimum loss per unused device is $100.
Finally, the guidelines now include grounds for an upward departure
in identity theft cases in which the penalty range, which is largely
based on financial loss, does not adequately reflect the seriousness of
the offense. Specifically, courts may now consider whether the offense
conduct harmed the victim's reputation or credit record, whether the
victim suffered substantial inconvenience related to repairing that
reputation or credit record, whether the victim was erroneously
arrested or denied a job due to the theft, and whether the defendant
produced or obtained numerous means of identification such that he or
she essentially assumed the victim's identity.
Violations of the Act are investigated by Federal law enforcement
agencies, including the Secret Service, the U.S. Postal Inspection
Service, the Social Security Administration (Office of the Inspector
General), and the Federal Bureau of Investigation. Schemes to commit
identity theft or fraud may also involve violations of other statutes,
such as credit card fraud, computer fraud, mail fraud, wire fraud,
financial institution fraud, or Social Security fraud, as well as
violations of state law. Because identity theft is often connected to
criminal activity that falls under the jurisdiction of the Secret
Service, we have taken an aggressive stance and continue to be a
leading agency for the investigation and prosecution of such criminal
activity.
Given the relative ease with which criminals can steal the
identities of others and the allure of enormous profits with few, if
any, repercussions, relying on the current sentencing structure to
deter the victimization of our citizens, is shortsighted. Recently, S.
2541, the Identity Theft Penalty Enhancement Act of 2002 was introduced
in the Senate with the intent to establish increased penalties for
aggravated identity theft, that is, identity theft committed during and
in relation to certain specified felonies. This Act, in part, would
provide for two (2) years imprisonment for aggravated offenses, in
addition to the punishment associated with the related felony;
committing the crime of identity theft in relation to specified felony
violations, in addition to the punishment provided for such felony; and
five (5) years imprisonment for the same related felonies associated
with terrorism. Additionally, the Act prohibits the imposition of
probation for those convicted of such violations and allows for
consecutive sentences. While this particular legislation cannot be
expected to completely suppress identity theft, it does recognize the
impact identity theft has on society and the need to punish those
engaging in criminal activity for personal or financial gain. The
Administration strongly supports this bill.
SECRET SERVICE INVESTIGATIONS
Although financial crimes are often referred to as ``white collar''
by some, this characterization can be misleading. The perpetrators of
such crimes are increasingly diverse and today include organized
criminal groups, street gangs and convicted felons. This can be
attributed to many factors including:
LThe probability of high financial gain versus low
sentencing exposure;
LThe increased availability of goods or services which
can be obtained on credit; and
LThe proliferation of computer technology in our
society that provides easy access to the information needed to
commit many financial crimes, as well as a means for committing
them remotely.
The personal identifiers most often sought by criminals are those
generally required to obtain goods and services on credit. These are
primarily Social Security numbers, names, and dates of birth.
The methods of identity theft vary. It has been determined that
many ``low tech'' identity thieves obtain personal identifiers by going
through commercial and residential trash, a practice known as
``dumpster diving.'' The theft of both incoming and outgoing mail from
mailboxes is a practice used equally as often by individuals and
organized groups, along with thefts of wallets and purses.
With the proliferation of computers and increased use of the
Internet, many identity thieves have used information obtained from
company databases and web sites. A case investigated by the Secret
Services that illustrates this method involved an identity thief
accessing public documents to obtain the Social Security numbers of
military officers. In some cases, the information obtained is in the
public domain, and in others, it is proprietary, and is obtained by
means of a computer intrusion.
The method that may be most difficult to prevent is theft by a
collusive employee. The Secret Service has discovered that individuals
or groups who wish to obtain personal identifiers or account
information for a large-scale fraud ring will often pay or extort an
employee who has access to this information through their employment at
workplaces such as a financial institution, medical office, or
government agency.
In most of the cases our agency has investigated involving identity
theft, criminals have used another individual's personal identifiers to
apply for credit cards or consumer loans. Less commonly, they are used
to establish bank accounts, leading to the laundering of stolen or
counterfeit checks, or are used in a check-kiting scheme.
The majority of identity theft cases investigated by the Secret
Service are initiated on the local law enforcement level. In most
cases, the local police department is the first responder to the
victims once they become aware that their personal information is being
used unlawfully. Credit card issuers as well as financial institutions
will also contact a local Secret Service field office to report
possible criminal activity.
It is quite probable that older Americans will become an
increasingly attractive target by criminal elements given the fact that
70% of our Nation's wealth is controlled by those 50 years of age and
older. Additionally, the common perception is that it is difficult for
elderly victims to repair the effects of identity theft due to a lack
of technical knowledge and uncertainty on how to protect themselves.
Often, the level of diligence in monitoring personal finances decreases
among the elderly or, after discovering the fraudulent activity, some
are embarrassed and unsure of the steps necessary to report the
compromise.
TERRORISM
The events of September 11, 2001 have altered the priorities and
actions of law enforcement throughout the world, including the Secret
Service. Immediately following the attacks, Secret Service assisted the
FBI with their terrorism investigation through the leveraging of our
established relationships, especially within the financial sector, in
an attempt to gather information as expeditiously as possible.
The Secret Service has become involved in several collaborative
efforts with respect to the investigation of terrorist activities
through our liaison efforts with Operation Green Quest, Operation
Direct Action, FinCEN, and the Terrorist Financing Operations Section
of the FBI. As part of these collaborative efforts, the Federal law
enforcement community is analyzing the potential for identity theft to
be used in conjunction with terrorist activities.
COORDINATION
The Secret Service continues to attack identity theft by
aggressively pursuing our core Title 18 investigative violations,
including access and telecommunications device fraud, financial
institution fraud, computer fraud and counterfeiting. Many of these
schemes would not be possible without compromising the personal
financial information of an innocent victim.
Our own investigations have frequently involved the targeting of
organized criminal groups that are engaged in financial crimes on both
a national and international scale. Many of these groups are prolific
in their use of stolen financial and personal information to further
their financial crime activity.
It has been our experience that the criminal groups involved in
these types of crimes routinely operate in a multi-jurisdictional
environment. This has created problems for local law enforcement
agencies that generally act as the first responders to their criminal
activities. By working closely with other Federal, state, and local law
enforcement, as well as international police agencies, we are able to
provide a comprehensive network of intelligence sharing, resource
sharing, and technical expertise that bridges jurisdictional
boundaries. This partnership approach to law enforcement is exemplified
by our financial and electronic crime task forces located throughout
the country, pursuant to our section 1030 computer crime authority.
These task forces primarily target suspects and organized criminal
enterprises engaged in financial and electronic criminal activity that
falls within the investigative jurisdiction of the Secret Service.
Members of these task forces, who include representatives from local
and state law enforcement, private industry and academia, pool their
resources and expertise in a collaborative effort to detect and prevent
electronic crimes.
While our task forces do not focus exclusively on identity theft,
we recognize that a stolen identity is often a central component of
other electronic or financial crimes. Consequently, our task forces
devote considerable time and resources to the issue of identity theft.
OUTREACH EFFORTS
Another important component of the Secret Service's preventative
and investigative efforts has been to increase awareness of issues
related to financial crime investigations in general, and of identity
theft specifically, both in the law enforcement community and the
general public. The Secret Service has tried to educate consumers and
provide training to law enforcement personnel through a variety of
partnerships and initiatives.
For example, criminals increasingly employ technology as a means of
communication, a tool for theft and extortion, and a repository for
incriminating information. As a result, the investigation of all types
of criminal activity, including identity theft, now routinely involves
the seizure and analysis of electronic evidence. In response to this
trend, the Secret Service developed, in conjunction with the
International Association of Chiefs of Police (IACP), the ``Best
Practices for Seizing Electronic Evidence Manual,'' to assist law
enforcement officers in recognizing, protecting, seizing and searching
electronic devices in accordance with applicable statutes and policies.
As a follow-up to this guide, the Secret Service and the IACP
developed ``Forward Edge,'' a computer-based training application
designed to allow officers to ``virtually'' seize different types of
evidence, including electronic evidence, at various crime scenes.
Further, the Secret Service, in conjunction with the U.S. Postal
Inspection Service and the Federal Reserve Bank System, produced an
identity theft awareness video. The video, which explains how easily
one can become a victim and what steps should be taken to minimize
damage, has been made available to Secret Service offices for use in
public education efforts.
In April of 2001, the Secret Service assisted the FTC in the design
of an identity theft brochure, containing information to assist victims
on how to restore their ``good name,'' as well as how to prevent their
information and identities from becoming compromised.
Finally, the IACP and the Secret Service have partnered to produce
an ``Identity Theft Roll-Call Video'' geared toward local police
officers throughout the Nation. The purpose of this video is to
emphasize the need for police to document a citizen's complaint of
identity theft, regardless of the location of the suspects. In
addition, the video and its companion reference card will provide
officers with information that can assist victims desperate to restore
their reputations and creditworthiness.
The Secret Service is also actively involved with a number of
government-sponsored initiatives. At the request of the Attorney
General, the Secret Service joined an interagency identity theft
subcommittee that was established by the Department of Justice. This
group, which is comprised of Federal, state, and local law enforcement
agencies, regulatory agencies, and professional agencies, meets
regularly to discuss and coordinate investigative and prosecutive
strategies as well as consumer education programs.
Last spring, the Secret Service's Financial Crimes Division
assigned a full-time special agent to the Federal Trade Commission
(FTC) to support all aspects of their program to encourage the use of
the Identity Theft Data Clearinghouse as a law enforcement tool. The
Identity Theft and Assumption Deterrence Act established the FTC as the
central point of contact for identity theft victims to report all
instances of identity theft. The FTC has done an excellent job of
providing people with the information and assistance they need in order
to take the steps necessary to correct their credit records, as well as
undertaking a variety of ``consumer awareness'' initiatives regarding
identity theft. To date, the Secret Service representative at the FTC
has:
LMet with and made presentations to Federal, state and
local law enforcement about the FTC's Identity Theft Data
Clearinghouse and it's victim assistance program;
LWorked closely with agents in the field to ensure
that they have access to the Consumer Sentinel system and are
comfortable using the Identity Theft Data Clearinghouse
database;
LUsed the Identity Theft Data Clearinghouse to
identify possible case leads, and developed a protocol for
selecting which victim complaints are most likely to be
successful case leads for criminal law enforcement agencies;
LDeveloped points of contact at the local, state and
Federal levels of government to receive case lead referrals
from the Identity Theft Data Clearinghouse database, and also
identified routines and procedures to be followed when
referring such cases; and
LServed as both a presenter and an instructor at 11
law enforcement training conferences hosted by various law
enforcement agencies or organizations, such as the
International Association of Financial Crimes Investigators
(IAFCI) and the U.S. Marshal's Investigators Conference.
It is important to recognize that public education efforts can only
go so far in combating the growth of identity theft. Because Social
Security numbers, in conjunction with other personal identifiers, are
used for such a wide variety of record keeping and credit related
applications, even a consumer who takes appropriate precautions to
safeguard such information is not immune from becoming a victim.
PRECAUTIONS AND REMEDIES
The Secret Service recommends that consumers take the following
steps to protect themselves from credit card fraud and identity theft:
LMaintain a list of all credit card accounts that is
not carried in a wallet or purse so that immediate notification
can occur if any cards are lost or stolen;
LAvoid carrying any more credit cards in a wallet or
purse than is actually needed;
LCancel any accounts that are not in use;
LBe conscious of when billing statements should be
received, and if they are not received during that window,
contact the sender;
LCheck credit card bills against receipts before
paying them;
LAvoid using a date of birth, Social Security number,
name or similar information as a password or PIN code, and
change passwords at least once a year;
LShred or burn pre-approved credit card applications,
credit card receipts, bills and other financial information
that you do not want to save;
LOrder a credit report once a year from each of the
three major credit bureaus to check for inaccuracies and
fraudulent use of accounts; and
LAvoid providing any personal information over the
telephone unless you initiated the call, and be aware that
individuals and business contacted via the Internet may
misrepresent themselves.
Should an individual become the victim of identity theft, the
Secret Service recommends the following steps:
LReport the crime to the police immediately and get a
copy of the police report;
LImmediately notify your credit card issuers and
request replacement cards with new account numbers. Also
request that the old account be processed as ``account closed
at consumers' request'' for credit record purposes. Ask that a
password be used before any inquiries or changes can be made on
the new account. Follow up the telephone conversation with a
letter summarizing your requests;
LCall the fraud units of the three credit reporting
bureaus, and report the theft of your credit cards and/or
numbers. Ask that your accounts be flagged, and add a victim's
statement to your report that requests that they contact you to
verify future credit applications. Order copies of your credit
reports so you can review them to make sure no additional
fraudulent accounts have been opened in your name;
LNotify the Social Security Administration's Office of
Inspector General if your Social Security number has been used
fraudulently;
LFile a complaint with the Federal Trade Commission
(FTC) by calling 1-877-ID-THEFT or writing to them at Consumer
Response Center, Federal Trade Commission, 600 Pennsylvania
Ave. NW, Washington, DC 20580. Their web site can also be
accessed at www.ftc.gov/ftc/complaint.htm; and
LFollow up with the credit bureaus every three months
for at least a year and order new copies of your reports so
that you can verify that corrections have been made, and to
make sure that no new fraudulent accounts have been
established.
CONCLUSION
For law enforcement to properly prevent and combat identity theft,
steps must be taken to ensure that local, state and Federal agencies
are addressing victim concerns in a consistent manner. All levels of
law enforcement should be familiar with the resources available to
combat identity theft and to assist victims in rectifying damage done
to their credit. It is essential that law enforcement recognize that
identity theft must be combated on all fronts, from the officer who
receives a victim's complaint, to the detective or Special Agent
investigating an organized identity theft ring. The Secret Service has
already undertaken a number of initiatives aimed at increasing
awareness and providing the training necessary to address these issues,
but those of us in the law enforcement and consumer protection
communities need to continue to reach out to an even larger audience.
We need to continue to approach these investigations with a coordinated
effort--this is central to providing a consistent level of vigilance
and addressing investigations that are multi-jurisdictional while
avoiding duplication of effort. The Secret Service is prepared to
assist this committee in protecting and assisting the Nation's largest
growing population segment, with respect to the prevention,
identification and prosecution of identity theft criminals.
Mr. Chairman, that concludes my prepared remarks and I would be
happy to answer any questions that you or other Members of the
Committee may have.
Chairman GEKAS. We thank the gentleman, we turn to the next
witness, Mr. Ashley.
STATEMENT OF GRANT D. ASHLEY, ASSISTANT DIRECTOR, CRIMINAL
INVESTIGATIVE DIVISION, FEDERAL BUREAU OF INVESTIGATION
Mr. ASHLEY. Thank you, Mr. Chairman and Members of the
Subcommittee. The FBI, along with Federal, State, and other
agencies investigates persons who assume the identities of
others to carry out violations of Federal law. These crimes
include bank fraud, credit card fraud, violent crimes, mail
fraud, money laundering, drug trafficking, bankruptcy fraud,
computer crimes, terrorism, organized crime, and fugitive
cases.
These crimes, as has been previously mentioned, include the
use of false identity, both at the planning of as well as
carrying out and continuation of the crime.
The false identity is providing a cloak of anonymity for
the offender to prepare their crime, obtaining things such as
covert mail drops, residence, office space, vehicles, and such,
and then, finally, to carry on with the deception. This theft
of identity or assumption of identity is not new to law
enforcement. What is new is the pervasiveness through all the
crimes. We are seeing it throughout most of our investigative
programs in the FBI.
We do not see it as a separate and distinct crime in the
FBI, but it is a component of the various investigative
programs.
As has been previously mentioned, possession of a Social
Security number is key to laying the groundwork for the process
of taking over someone's identification and then obtaining
other false documents, which can lead to drivers' licenses,
loans, credit cards, and so on. It is also a crucial step in
actually taking over a person's existing identity and then
possibly, as has been mentioned before, depleting people's
financial accounts, destroying their credit, and so on.
The FBI works very closely with other law enforcement
agencies at the Federal, State, and local level to address
crimes which are carried out through the use of stolen
identities, as well as with the Inspector General of the Social
Security Administration.
The FBI has participated in a recent identity theft sweep,
which the Attorney General discussed earlier in May, as well as
efforts to strengthen existing Federal laws and penalties with
respect to identity theft. I believe that is in Senate bill
2541.
I was asked to provide an example of a case. Our New York
division investigated the identity theft of six corporate
executives, whose names were drawn from ``Who's Who in
America.'' Three of them were deceased. This case has been
adjudicated. The victims were executives from Hilton, Coca-
Cola, other major corporations. Essentially through an online
information-broker, the offender obtained Social Security
numbers and then other identification, and then made online
purchases and others, using these persons' names. The total
attempted amount was almost $1 million, and I think about
$340,000 was obtained before this was shut down.
We are also seeing where people in positions of trust, both
inside government and outside, are abusing their positions to
access information about people that they can subsequently use
for obtaining false identification. Our cyberdivision, which
was recently created in our reorganization, will have a
component of it that will address online identity theft issues,
which will support our other investigative programs.
That concludes my remarks.
[The prepared statement of Mr. Ashley follows:]
Statement of Grant D. Ashley, Assistant Director, Criminal
Investigative Division, Federal Bureau of Investigation
Good afternoon Chairmen and Members of the Subcommittees. On behalf
of the Federal Bureau of Investigation (FBI), I would like to express
my gratitude to the Subcommittees for affording us the opportunity to
participate in this forum and to provide comment regarding preserving
the integrity of Social Security numbers and preventing their misuse by
terrorists and identity thieves.
As the Subcommittees are well aware, the FBI, along with other
Federal law enforcement agencies, investigates individuals who use the
identities of others to carry out violations of Federal criminal law.
These crimes include bank fraud, credit card fraud, wire fraud, mail
fraud, money laundering, bankruptcy fraud, computer crimes, terrorism,
organized crime, and fugitive cases. These crimes, carried out using a
stolen identity, make the investigation of the offenses much more
complicated. The use of a stolen identity enhances the chances of
success in the commission of almost all financial crimes. The stolen
identity provides a cloak of anonymity for the subject while the
groundwork is laid to carry out the crime. This includes the rental of
mail drops, post office boxes, apartments, office space, vehicles, and
storage lockers as well as the activation of pagers, cellular
telephones, and various utility services.
Identity theft is not new to law enforcement. For decades fugitives
have changed identities to avoid capture, and check forgers have
assumed the identity of others to negotiate stolen or counterfeit
checks. What is new today is the pervasiveness of the problem. The FBI
does not view identity theft as a separate and distinct crime problem.
Rather, it sees identity theft as a component of many types of crimes
which we investigate.
The recent ``sweep'' of identity theft prosecutions that the
Attorney General announced on May 2, 2002, reflects how widespread
identity theft has become and how it is associated with a wide range of
criminal activities. The sweep involved 73 criminal prosecutions
against 135 individuals in 24 districts. The crimes charged in these
cases involving identity theft ranged from traditional fraud to murder.
In one indictment in the Northern District of Illinois, for example,
the defendant, who was facing Federal counterfeiting charges, allegedly
murdered a homeless man and tried to fake his own death by making it
look as though the deceased victim was the defendant. Other cases
involved defendants who allegedly located houses owned by elderly
citizens and assumed their identities in order to fraudulently sell or
refinance the properties; a defendant charged with selling Social
Security numbers on eBay; and a hospital employee allegedly stole the
identities of 393 hospital patients to obtain credit cards using the
false identities.
This sweep, it should be noted, was the first part of a two-pronged
strategy by Federal law enforcement to combat identity theft. The
second prong involves efforts to strengthen existing Federal identity
theft criminal statutes. Under S. 2541, which the Administration
strongly supports, sentencing in a wide range of cases involving
identification document fraud would be subject to a mandatory two-year
enhanced penalty (over and above the sentence that would otherwise
apply in a particular case). S. 2541 also would amend 18 U.S.C.
1028(b)(2) to increase the maximum imprisonment for a section
1028(a)(3) offense from three to five years, and would otherwise
broaden the reach of the identity theft offense. In addition, S. 2541
specifically would allow judges the discretion to impose consecutive
sentences in cases involving multiple counts of aggravated identity
theft, and it authorizes the Sentencing Commission to issue guidelines
and policy statements governing the exercise of such discretion. We
believe that these changes, if enacted, would go a long way to
strengthening the penalties that could apply when defendants are
dealing in multiple identification documents.
Possession of someone else's Social Security number is key to
laying the groundwork to take over someone's identity and obtain a
driver's license, loans, credit cards, cars, and merchandise. It is
also key to taking over an individual's existing account and wiring
money from the account, charging expenses to an existing credit line,
writing checks on the account or simply withdrawing money.
The FBI works closely with other law enforcement agencies at the
Federal, state and local level to address crimes which are carried out
through the use of stolen identities. This includes working closely
with the Social Security Administration's (SSA) Office of Inspector
General to confirm the authenticity (i.e., the existence or non
existence, of Social Security numbers being utilized by criminals).\1\
Our Detroit and St. Louis offices participate in official task forces
established specifically to investigate crimes involving identity
theft. In Memphis and Mobile, official task forces are being created
and our offices will be participating in these task forces which will
specifically investigate crimes involving identity theft. Numerous
field offices have task forces that investigate various financial
crimes which include an element of identity theft. Other offices simply
address the crimes the FBI has always investigated, but now include an
element of identity theft.
---------------------------------------------------------------------------
\1\ In addition to the SSA's Office of Inspector General, the
Federal Trade Commission and the United States Secret Service, among
others, do important work in combatting identity fraud at the Federal
level.
---------------------------------------------------------------------------
A number of identity theft related problems are being seen by law
enforcement that are caused by people in trusted positions within a
business or government office that misuse the personal identifying
information to which they have access. Additionally, people are
improperly obtaining Social Security numbers without any legitimate
access. Increases in security features on Social Security cards, alone,
would not solve this problem as an actual card is seldom required for
verifying someone's Social Security number. However, additional
security and safeguards of the actual Social Security numbers could
have a substantial impact.
One case under investigation by one of our offices in conjunction
with the U.S. Postal Inspection Service involves an individual who
obtained personal identifying information such as the names, and dates
of birth of attorneys in the Boston area from the Martindale-Hubbell
directory of attorneys. Using this information, his co-conspirator
visited the Massachusetts Bureau of Vital Records which has an open
records policy and was able to obtain copies of birth certificates of
his victims. According to interviews with the defendants, using the
combined information, they were able to contact the Social Security
Administration and obtain the victims' Social Security numbers. Once
they obtained the Social Security numbers, they were able to order
credit reports and look at the credit scores for these victims to
determine their creditworthiness and where accounts already existed.
Using this information they were able to make pretext calls to at least
one bank and obtain the account number. This enabled them to wire
transfer $96,000 from one of the victim's bank accounts, half of which
went to a casino and the remainder went to one of the subject's
personal accounts. One of these suspects also added authorized users to
the victims' credit card accounts and ordered emergency replacement
cards which were sent to them by overnight delivery. At the time of
arrest, this individual was found to be in possession of at least 12
different license or identification cards from three states and at
least four or five credit cards, all in the names of the victims whose
identity he had stolen. Although there are a number of enabling flaws
in the system, including open records policies in some states, there
was also an apparent lack of verification by the Social Security
Administration as to whether or not the person armed with the
information and requesting the Social Security number was truly the
person to whom the Social Security number belonged.
One of our field offices is currently investigating a case whereby
Social Security numbers for children of various ages have been sold to
individuals with bad credit for future use in obtaining credit. It is
unknown at this time as to how these numbers were obtained. However,
individuals who obtained these numbers acted as middlemen. As part of
the sale of the Social Security numbers to the actual users, they
formed companies which they used to falsely report positive credit
information on these Social Security numbers to the credit reporting
agencies. Such information included loan payoffs and information on
other fictitious credit accounts which were paid off. This information
boosted the user of the number's credit history and thereby the user's
credit score. Next the users applied to legitimate credit issuers,
including mortgage companies and were able to obtain credit. The users
were instructed they could use their true names with these Social
Security numbers, but not to use any previous addresses or other
information similar to their previous credit record that could cause
the credit reporting agencies to possibly merge their old and new
credit files. Since the victims are children and are not applying for
any credit, they are not aware their Social Security numbers were used
in this way. As a result, these victims are not filing any complaints
with law enforcement, the credit reporting agencies or any of the
defrauded creditors. When these victims later become old enough to
attempt to establish credit, they will learn about this activity.
A case our New York office investigated included the use of the
personal identifying information of six prominent executives, three of
whom were deceased. Although this information was not received directly
from the Social Security Administration, using the names of these
deceased executives, this individual, who was later convicted, paid
Internet information brokers to obtain these executives' Social
Security numbers. After obtaining their Social Security numbers, he
fraudulently obtained bank account and credit card numbers as well as
other personal identifying information for these executives. He then
impersonated these executives and purchased diamonds and Rolex watches
over the Internet, and either wire transferred money from one of his
victim's bank accounts or used one of his victim's credit card numbers.
This individual had ordered approximately $730,000 in diamonds and
Rolex watches but was only able to take delivery on just over half of
this merchandise. There needs to be some serious review of the
availability of personal identifying information, including the Social
Security number, over the Internet, especially through these types of
information brokers who can provide this information for a fee.
Like some other States, Hawaii utilizes the drivers' Social
Security number as its drivers license number. One significant case in
our Honolulu field office, operation CARD SHARKS, was a financial
institution fraud investigation that also targeted businesses dealing
in the production of false identifications. Several of the subjects
identified during the investigation utilized stolen Hawaii driver's
licenses, including real identities and Social Security numbers to make
their false identifications. These individuals then opened bank
accounts under their assumed names to commit financial institution
fraud. Other aspects of this investigation included subjects who
utilized real names and addresses, but would make up Social Security
numbers to commit their crimes. This was a joint investigation with
Federal and local law enforcement that resulted in seventeen
indictments. Search warrants were executed on six different locations
and all six sites had evidence of violations of Title 18, United States
Code, Section 1028.
As far as terrorism matters are concerned, since December 2001, the
Social Security Administration has provided prompt support to the FBI's
Terrorist Financing Operations Section's initiative of identifying
misuse of Social Security numbers. The FBI has been taking Social
Security numbers identified through past or ongoing terrorist
investigations and providing them to the Social Security Administration
for verification. This multi-phase project seeks to identify potential
terrorist related individuals through Social Security number misusage
analysis.
Once the validity or non-validity of a Social Security number has
been established, investigators look for misuse of Social Security
numbers by checking immigration records, Department of Motor Vehicle
records, and other military, government, and fee-based data sources.
Incidents of Social Security number misusage are separated according to
type and forwarded to the appropriate investigative and prospective
entity for follow-up.
With assistance from the Social Security Administration,
approximately 150 instances of potential Social Security number
misusage have been identified. Each identified instance of potential
Social Security number misuse must be resolved through field
investigation. This process is continuing with ongoing investigations.
The Social Security Administration's information should have very
stringent limitations placed on its access and availability to the
general public. However, we must be careful not to make it more
difficult for law enforcement to conduct their investigations and
access this information. There appears to be a need for various
businesses, including the banking community, as well as government
agencies to run verifications of the legitimacy of Social Security
numbers used by individuals when conducting business. However, this
could be accomplished without providing broad access to the universe of
Social Security numbers.
In addition to these general concerns, there are some other, more
specific potential issues involving access to Social Security
Administration information that I would prefer not to discuss in open
session so as not inadvertently to aid potential criminals.
Mr. Chairmen and Members of the Subcommittees, that concludes my
prepared remarks. I would be happy to attempt to answer your questions
at this time.
Chairman GEKAS. Thank you, Mr. Ashley. We now turn to Mr.
Huse, the Inspector General of Social Security.
STATEMENT OF THE HON. JAMES G. HUSE, JR., INSPECTOR GENERAL,
SOCIAL SECURITY ADMINISTRATION
Mr. HUSE. Good afternoon, Mr. Chairman, Mr. Johnson, and
Members of both Subcommittees. I am pleased to be back here for
the seventh time to talk about Social Security number integrity
issues this year. So, I guess this is a pretty important topic.
Chairman GEKAS. You have to get it right this time.
[Laughter.]
Mr. HUSE. I will get it right this time.
[Laughter.]
Mr. HUSE. I am going to dispense with most of these oral
comments because I think they've been made by others and just
try to sum my testimony up into some key points.
One, I think as you heard from our Deputy Commissioner, the
Social Security Administration has made an awful lot of
progress since September 11 in dealing with the enumeration
business process and trying to strengthen it. I have to
acknowledge that.
However, there are still some things that have to be done.
One of the most critical areas is the need for some
legislation, and I know Chairman Shaw has his bill introduced,
and that would be a big help.
The legislation we need would limit the use and display of
the Social Security number already in circulation in the public
and private sectors; enhance the present arsenal of criminal,
civil, and administrative penalties to deter and/or punish
identity thieves; and require cross-verification of Social
Security numbers through both governmental and private sector
systems of records to identify and address those anomalies that
will come out of that process.
This is the most common-sense way and readily available way
to bring back some integrity into the Social Security number
without a lot of new bureaucracy. I can't urge anything more.
That is what I really came to say this afternoon.
I think that there has been a significant amount of focus
on these issues, but we come to a point where there is a
natural dilemma that is present between the legitimate
interests of law enforcement and the legitimate interests of
social insurance and privacy. These all collide, and we need
the Congress's help in determining how we go forward from here,
while we preserve the best intentions of each of those pieces
of legislative action in the past.
There is a tension there, and it can't be ignored. Some of
the problems that we speak to here today come from those issues
that need to be addressed.
That is the substance of why I came here this afternoon,
and I would be glad to answer any questions during the question
period.
[The prepared statement of Mr. Huse follows:]
Statement of the Hon. James G. Huse, Jr., Inspector General, Social
Security Administration
Introduction
Good afternoon, Chairman Shaw, Chairman Gekas, Ranking Member
Matsui, Ranking Member Jackson Lee, and Members of the Subcommittees on
Social Security and Immigration, Border Security, and Claims. I welcome
the opportunity to be here today to discuss homeland security as it
relates to the integrity of the Social Security number (SSN). This is
my seventh appearance before a congressional hearing this year to
discuss the importance of extending protections for SSN integrity, and
I cannot bring this message to Congress too often.
My testimony today follows up my June 25th testimony before
Chairman Gekas, Ranking Member Jackson Lee, and Members of the
Subcommittee on Immigration, Border Security, and Claims. Today I would
like to examine further the role SSN fraud plays in crime and terrorist
activity, and some methods by which criminal fraud is executed
utilizing stolen or fraudently-obtained SSNs.
The problem of SSN fraud as it applies to terrorist activities can
be very different from using the SSN for illicit gain. Let me focus on
the challenge of homeland security, because while the financial crimes
involving SSN misuse are also serious, they are perhaps less deadly and
yet better known to Congress. Both aspects are part of the growing
phenomenon of false identity, and both call for protecting the
integrity of the SSN.
Let me say at the outset that the Social Security Administration
(SSA) has worked very hard in recent years and made significant
progress in strengthening the defenses of the SSN, implementing
important suggestions our office has made and working with us to find
solutions. There is more to be done, and it includes legislative
action.
Our audit and investigative work identifies three distinct
approaches to SSN integrity for which legislation is critically needed.
The first area is limiting the use and display of the SSN already in
circulation in the public and private sectors. Second, the present
arsenal of criminal, civil, and administrative penalties is clearly
insufficient to deter and/or punish identity thieves. The third
approach is requiring the cross-verification of SSNs through both
governmental and private sector systems of records to identify and
address anomalies in SSA's files, and in data bases at various levels
of government and the financial sector. I will discuss these further
below.
The Risk to Homeland Security
In calendar year 2000 alone, SSA issued approximately 1.2 million
SSNs to non-citizens, out of some 5.5 million SSNs issued in all. A
recently conducted Office of Inspector General (OIG) study indicates
that 8 percent (about 96,000) of those 1.2 million SSNs were based on
invalid immigration documents, which SSA processes did not detect. We
have no way of determining how many SSNs have been improperly assigned
to non-citizens.
The issuance of SSNs based on invalid documentation creates a
homeland security risk. My office has participated in 24 airport
security operations across the country with the Department of Justice
(DOJ) and its Joint Terrorism Task Forces and other Federal agencies
since the 9/11 terrorist attacks a year ago. The aim is to ensure that
no airport employee who has misrepresented his or her SSN and identity
has access to secure areas of the Nation's airports. OIG's focus in
airport security operations has been SSN misuse and false statements.
Hundreds of people have been arrested to date, and more importantly,
have been denied access to the secure areas that represent a
significant vulnerability to terrorism.
Immediately after the terrorist attack of September 11, 2001, we
sought to determine if and how the hijackers might have obtained SSN's.
We may never know with absolute certainty how many of the 19 hijackers
of September 11th used improperly obtained SSNs, or how they obtained
them. The investigation into the events of that day, and related work,
revealed the importance of the SSN in any attempt at assimilation into
American society. Today, it is unrealistic to believe that the SSN is
simply a number for tracking workers' earnings and the payment of
social insurance benefits. The SSN has become the de facto national
identifier. Protecting the integrity of that identifier is as important
to our homeland security as any border patrol or airport screening.
Let me give you an example of this threat from a case that is just
completing the sentencing phase. The Anti-Terrorist Task Force arrested
a naturalized American citizen who had trained with Palestinian
guerrilla groups in Lebanon since he was 12 years old. He was carrying
a loaded semi-automatic pistol and an assault rifle in the back seat of
his car, along with four loaded 30-round magazines for the rifle and
hundreds of rounds of additional ammunition. In his home were a
calendar with September 11th circled in red, three different Social
Security cards in his name, a false Alien Registration Card, evidence
of credit card fraud and $20,000 in cash, as well as a wood carved
plaque with the name of the terrorist group ``Hamas'' on it. We
determined he had obtained the three different SSNs from SSA by
falsifying two of his three SSN applications. He had used them to get
jobs as a security guard and as an employee with the multi-billion-
dollar Intel Corporation, when a criminal history check would have kept
him from getting either job under his true identity.
Failure to protect the integrity of the SSN has enormous financial
consequences for the Government, the people, and the business
community. We must protect the number that has become our national
identifier and the key to social, legal, and financial assimilation in
our country.
It is becoming more and more apparent that those connected with
terrorism will at some point obtain SSNs. They may buy them, they may
create them, or they may obtain them from SSA directly through the use
of falsified immigration records. But to operate in the United States,
they need those numbers, and we must take those steps necessary to
ensure that those numbers do not come from SSA.
While SSA alone cannot solve the complicated problem of homeland
security, no government agency, system or policy should be ignored.
Congress and SSA, as public stewards, must continue their efforts to
strengthen the systems and processes that minimize the use of SSNs for
illegal purposes. SSN integrity is a link in our homeland security that
must be strengthened and sustained.
Federal Interagency Coordination and Cooperation
You have asked that I comment on Federal interagency coordination
and cooperation to verify identification documents and to detect and
prevent fraud. We recently issued a Management Advisory Report entitled
Social Security Number Integrity: An Important Link in Homeland
Security. This report said it is critical that SSA independently verify
the authenticity of the birth records with States, immigration records
with Immigration and Naturalization Service (INS), as well as other
identification documents presented by an applicant for an SSN.
Additionally, in other reports, we have urged full and expedited
implementation of a joint Enumeration at Entry program in which the
Agency would issue SSNs to non-citizens upon their entry into the
United States, based on information obtained from INS and the
Department of State. Until September 11th, SSA had limited success
encouraging INS to move quickly on these planned initiatives.
We continue to work with other Federal officials to ensure that we
are doing all that we can to assist the DOJ and others to use SSN
information in the homeland security context. We are in constant
contact with these Federal officials and agencies and with other
committees of both houses of Congress to provide expertise and
assistance in the analysis of data and the creation of legislation
aimed at protecting the SSN and preventing it from being used
improperly. We appreciate your interest in these issues, and your
support of increasing cooperation, coordination, and information
sharing between SSA and the Departments of Justice, State, and
Treasury.
Legislative Proposals to Combat SSN Misuse and Protect Privacy
Let me take this opportunity to recommend some legislative
proposals aimed at combating SSN misuse and protecting privacy. While
no legislation can eradicate SSN misuse and identity theft altogether,
the criminal penalties that exist today are clearly insufficient to
either deter or punish identity thieves. Members of both houses of
Congress have introduced legislation over the past several years to
deal with the national dilemma presented by SSN misuse and identity
theft.
The felony provisions of the Social Security Act have no civil or
administrative counterparts. Federal prosecutors cannot pursue every
SSN violation criminally, or even civilly. We have found the Civil
Monetary Penalty program to be an effective tool in the similar area of
program fraud, and could have a useful impact in the area of SSN misuse
if Congress would grant us such authority. We have asked before, and I
ask again--vest in us the authority to impose penalties against those
who misuse SSNs.
We also believe it is time to consider enhancing the penalties for
identity theft violations. Congress should also move beyond the
penalties for the improper use of another person's identity to address
the problem of selling SSNs and other Social Security information. We
should strengthen the laws on sales and enhance the sentencing
guidelines to allow us to better address this aspect of identity theft
today. Congress might consider something on the order of escalating
penalties, perhaps parallel to the treatment of drug cases.
Controlling SSNs in Circulation
Another area in which legislation is sorely needed is in limiting
the use and display of the SSN in the public and private sectors.
Although we cannot return the SSN to its simple status of a half-
century ago, we must take steps to limit its use and to limit the
expansion of its use. First and foremost, it is time to make the
difficult determinations as to those uses that are appropriate and
necessary, and those that are merely convenient.
One easy decision can be made now. The public display of SSNs--on
identification cards, motor vehicle records, court documents, and the
like--must be curtailed immediately. Those who use the SSN must share
the responsibility for ensuring its integrity. We can prevent identity
thieves and other criminals from walking out of a municipal courthouse
with the means of committing state-facilitated identity theft. The cost
to the victims of identity theft, and to all of us, is too great. And
the potential for using SSNs to support acts of violence and terrorism
is unthinkable.
Congress should consider requiring the cross-verification of SSNs
through both governmental and private sector systems of records to
identify and address anomalies in SSA's files, and in data bases at
various levels of government and the financial sector. Only in such a
way can we combat and limit the spread of false of identification and
SSN misuse. In this way can we correct errors on a timely basis that
might otherwise keep workers from receiving full credit for years of
labor, credit that can be nullified by simple typographical errors in
submitting their data. Similarly, all law enforcement agencies should
be provided the same SSN cross-verification capabilities currently
granted to employers. The rewards of cross-verification can be great,
and it does not require major expenditures of money or the creation of
new offices or agencies. It would use data the Federal, State and local
governments and the financial sector already have.
I have come before you today not only to report on what has been
done so far, but also to ask that Congress instruct us on the path to
follow in resolving conflicts of law and policy. We face contradictions
among serious and legitimate interests regarding the sharing of
information between agencies--and, indeed, often within a single
agency--and privacy, and between Federal laws pertaining to immigration
and our Nation's economic interests.
In this vein, I would urge Congress to examine whether sufficient
authority--and, indeed, requirement--for data-sharing exists in current
law. In recent months, SSA has sent about 800,000 letters to employers
and some 7 million letters to workers in an attempt to clean up
discrepancies created when employers submit employee names and SSNs
which do not match information in SSA files. SSA provides the Internal
Revenue Service (IRS) with information on the employers with the
highest volume of discrepancies, because only the IRS can levy
penalties. SSA has no authority to levy penalties when employers submit
invalid name and SSN combinations. SSA does not have a similar process
in place to share this mismatched data with the INS. As we have learned
since September 11 of last year, agencies must be able to share
information that can make linkages that will help head off threats and
enforce our laws. That authority must be made clear in statute.
We still need legislation that regulates the use of the SSN and
provides enforcement tools to punish its misuse. If we are to head off
the many crimes identity theft breeds--the fraud against public and
private institutions, the ruin of people's security, possibly even the
disguising of terrorists as ordinary people--we need legislation with
provisions such as:
LRestrictions on the private and governmental use of
SSNs. This should include restrictions on the sale of SSNs by
governmental agencies, prohibition of the display of SSNs on
government checks and driver's licenses or motor vehicle
registrations, and some prohibitions of the sale, purchase, or
display of the SSN in the private sector.
LProhibitions of prison inmate access to SSNs.
LRestrictions on unfair or deceptive acts or
practices, such as refusals to do business without receipt of
an SSN.
LConfidential treatment of credit header information.
Two Small Changes in Existing Law Would Strengthen SSN Integrity
We have recently had several cases in which an individual with a
legitimate SSN sells that SSN to a third person. The seller may or may
not then go to SSA and request a replacement Social Security card. This
furthers the phenomenon of false identity.
The issue is this: how can we charge the individual who sells his
SSN? The identity theft statute forbids the use of another person's
means of identification without lawful authority. Likewise, the Social
Security Act prohibits a person from presenting another person's SSN as
his or her own. It does not appear to address the situation of a person
selling his or her own SSN to a third person.
We are currently researching whether there is a criminal statute
such as conspiracy or aiding and abetting that may be applicable. We
are also looking at whether such people may be prosecuted for making
false statements if they return to SSA and request a replacement card.
Legislative action should resolve this problem. A suggested
solution may be to amend section 208 of the Social Security Act, 42
U.S.C. 408, to add a subsection prohibiting the sale of an individual's
SSN by that individual. SSA assigns an individual a unique SSN to
accurately track the wages and earnings of the individual. SSA
regulations state that ``Social Security number cards are the property
of SSA and must be returned upon request.'' Such language should also
apply to the number itself. The SSN was not meant to be the property of
the individual it identifies, and its sale by any person, including the
persons identified by the number, should be made illegal.
I would mention one other problem that could be easily remedied
with minor changes in the law. Current language in 18 U.S.C. Sec. 1028
primarily addresses fraud in connection with identification documents.
It has been a problem to proceed under the statute when we arrest
someone with a sheet or printout of, say, 50 to 100 SSNs as these SSNs
are not technically on a Social Security card. Therefore, in any
amendment or new legislation put forth, I would urge you to address
both the Social Security card and SSN.
SSNs, Immigrants, and the Earnings Suspense File
SSA's Earnings Suspense File (ESF) is an indicator of the problem.
The ESF is the Agency's record of annual wage reports submitted by
employers for which employee names and SSNs fail to match SSA's
records.
Most immigrants--about 75 percent--come to the United States
legally, many to join close family members. However, INS estimated the
illegal immigrant population reached about 5 million in 1996, not
including the 3 million who were given amnesty under the Immigration
Reform and Control Act of 1986. INS estimates the number of
undocumented (i.e., illegal) immigrants continues to grow by about
275,000 each year.
To acquire an SSN improperly, undocumented immigrants either apply
for a ``legitimate'' SSN using false documents, or they create or
purchase a counterfeit Social Security card. Since an undocumented
immigrant is not required to show a Social Security card prior to
hiring, he or she may simply invent a nine-digit number. These are all
criminal acts. This SSN may be one the Agency has already assigned to
another individual (stolen SSN) or one never assigned (fake SSN).
SSA acknowledges that illegal immigrants account for a significant
portion of items in the ESF. Three industries--agriculture, food and
beverage, and services--account for almost half the wage items in the
ESF. Agriculture is the largest contributor, representing about 17
percent of all ESF items. In one study of 20 agriculture employers, we
determined that 6 of every 10 wage reports submitted by these employers
had incorrect names or SSNs. From 1996 through 1998, these 20 employers
submitted over 150,000 wage items for which the employee's name and/or
SSN did not match SSA records, representing almost $250 million in
suspended wages over the 3-year period.
A moment ago, I discussed SSA's letters to employers and workers
aimed at clearing up discrepancies in the ESF. As I noted, SSA has no
legal authority to levy fines and penalties against employers or
employees who submit incorrect SSN information on wage reports. As
provided by law, SSA must rely on the IRS to enforce penalties for
inaccurate wage reporting and upon the INS to enforce immigration laws.
IRS has been reluctant to apply penalties, and SSA and the INS have had
limited collaboration on the issue.
Applying penalties would have a ripple effect on employers who
consistently submit wage reports for employees whose names and SSNs do
not match SSA's records. Although SSA is primarily interested in
penalizing the most egregious employers, IRS staff expressed concern
with the application of even these penalties. IRS senior staff members
believe they and SSA would have a difficult time determining whether an
employer exercised appropriate diligence in obtaining the necessary
information from employees. We believe SSA could provide the IRS with
sufficient evidence to show an employer knew or should have known its
employees' SSNs were incorrect. Despite the concerns of IRS, the two
agencies held discussions to explore the enforcement of an existing
penalty provision ($50 per incorrect wage report) for employers who
repeatedly submit erroneous name and/or SSN information.
In calendar year 2000, based on this agreement, SSA provided a list
of 100 of the most egregious employers to the IRS. These employers
submitted the largest number of name/SSN match failures in consecutive
years. The IRS expressed interest in the listing but, to date, has not
assessed penalties.
SSA's coordination with the INS has been minimal. For example, SSA
does not provide the INS a list of employers who repeatedly submit
erroneous name and/or SSN information. In a previous audit report, we
recommended that SSA:
(1) Lcollaborate with INS to develop a better understanding of
the extent that immigration issues contribute to SSN misuse and
growth of the ESF, and
(2) Lre-evaluate its application of existing disclosure laws or
seek legislative authority to remove barriers and allow SSA to
share with the INS information regarding employers who
chronically submitted incorrect wage reports. SSA disagreed
with our recommendations and stated that its interpretation of
the privacy and disclosure issues is accurately applied and
continues to provide appropriate disclosure guidance within
existing authority.
The intent of our recommendations was to suggest that the Agency
look for avenues under current law and regulations first before seeking
legislative authority. We acknowledge SSA's efforts to combat SSN
misuse and reduce the ESF's growth. However, given the magnitude of SSN
misuse by unauthorized non-citizens, we continue to believe SSA should
take preemptive and preventive measures to ensure the SSN's integrity.
We continue to believe that the sharing of such information in certain
situations would stem the growth of SSN misuse for employment purposes.
The Fruits of Illegal Labors
SSA allows an individual to present evidence of a work history on a
non-work SSN or as an illegal alien, and to receive credit for the work
towards Old-Age, Survivors and Disability Insurance (OASDI) benefits.
SSA provides these benefits to people based upon their lifetime
earnings reported under a valid SSN. The number of quarters of earnings
maintained on the ESF determines whether an individual has enough
credits for insured status. SSA creates a work history for all
individuals with a valid SSN, even when:
Lthose earnings are based on a non-work SSN, or
Lthose earnings are added later for an individual who
was in the country illegally at the time of earnings but who
subsequently becomes eligible for a valid SSN.
As long as an individual can prove that earnings belong to him or
her, SSA will provide earnings credits to that individual. Once these
earnings are recorded, these individuals are essentially treated as any
other individual applying for OASDI benefits.
One problem is the widespread use of non-work SSNs by people who
work in the economy illegally. The earnings from illegal work from
these people is recorded directly in the SSA claims systems for their
future credit. In our September 1999 report, Review of Controls Over
Non-work Social Security Numbers (A-08-97-1002), we estimated that
unauthorized earnings associated with non-work SSNs may have already
cost SSA's trust funds $287 million, and could cost the trust funds as
much as $63 million annually. In our report, we recommended that SSA
propose legislation to prohibit the crediting of non-work earnings and
related quarters of coverage for purposes of benefit entitlement.
In addition, people who are in the country illegally and working
under a created SSN, or misusing someone else's SSN, can later rebuild
their earnings record from wage items posted to the ESF. In such a
case, an individual could work illegally in the United States for 25
years, later request and receive a valid SSN, and then ask SSA to
locate those suspended earnings that SSA could not post due to an
invalid name/SSN combination. Once found, SSA can reinstate these
earnings to this individual's earnings record. The individual claiming
the wages would only need to provide corroborating documents, such as
relevant wage reports, for the period of claimed earnings. These newly
posted earnings can then be used to make the individual eligible for
OASDI benefits.
Our reviews of the suspended wages in the ESF suggest that illegal
work is the primary cause of suspended wages. These claims represent a
future obligation to the SSA that is growing at a rapid rate. Under
current SSA procedures, workers who are subsequently issued a legal
residency card under an amnesty or other INS procedures can
subsequently recover most of these wage claims.
In addition, we do not have a good number for illegal aliens
receiving work credits. We routinely identify some of them through our
audits and investigations, but these are not all-encompassing. For
example, in a recent report, we projected that almost 100,000 non-
citizens obtained SSNs in calendar year 2000 with false documents.
Approximately 42 percent of those had earnings posted to their
accounts, thereby receiving work credits. Nonetheless, this figure does
not take into account any future wages these 100,000 may earn.
Furthermore, the 100,000 figure does not include illegal aliens using
other people's SSNs for work purposes and whose earnings either end up
in the ESF or incorrectly posted to the legitimate number-holders'
accounts.
SSA has recently changed its policies governing the issuance of
non-work SSNs so that it is likely that fewer than 30,000 non-work SSNs
will be issued in 2002. However, many non-work SSNs remain in
circulation. Prior to the recent curtailment, SSA had issued roughly
7.3 million non-work SSNs since 1974.
Viewed another way, although such aliens may be residing and
working illegally in our country, they are doing work for pay, they are
paying taxes, and they are accumulating earnings records with SSA in
the same manner as legal workers. SSA's policy of allowing such workers
who subsequently obtain bona fide SSNs to recreate their files so as to
capture the fruits of their labors are drawn from the agency's mission,
history, and understanding of the Social Security Act, rather than from
a lack of concern for immigration law.
Here, once again, I submit that we are in need of this body's
guidance to resolve a dilemma of legitimate interests. We find
ourselves stuck in a quagmire of contradictory interests that has
resulted in the absense of clear, controlling laws and regulations, or
in the ignoring of those laws and regulations that do exist.
Conclusion
We believe SSA has a clear and important role in homeland security.
We appreciate your interest in these issues, and your support of
increasing cooperation, coordination, and information sharing between
SSA and the Departments of Justice, State, and Treasury. We believe our
earlier recommendations and legislative proposals should be considered
in any future discussion on homeland security. It is also important
that we be able to reduce the growth of the ESF, and I commend SSA for
the efforts it has made. More needs to be done, even though the ESF
problem is more a symptom of the undermining of SSN integrity rather
than a cause of it. Finally, we need to change the current laws which
allow illegal work to be used in obtaining Federal benefits. Ours is a
Nation of laws, and those laws originate here. I ask for your help in
clarifying and strengthening the laws, and toughening the penalties
that are designed to improve the integrity of the SSN, which is a key
component of homeland security.
Thank you.
Chairman GEKAS. We thank you, and now we turn to Mr. Reindl
from New York.
STATEMENT OF MATTHEW JAMES REINDL, OPERATOR, STYLECRAFT
INTERIORS INC., GREAT NECK, NEW YORK
Mr. REINDL. Chairman Gekas and Members, thank you for the
privilege to testify today. My name is Matthew Reindl. I
operate of a small family owned woodworking factory. I am here
to speak for the tens of thousands of law-abiding small-
businessowners who are being adversely affected, many forced to
close, because of the illegal hiring practices of some of our
competitors. These unlawful employers are able to operate
because of the lack of enforcement by some Federal agencies,
such as INS and IRS.
On behalf of the majority of businesses who carefully
comply with Federal tax and wage reporting requirements, I want
applaud Commissioner Barnhart for directing the Social Security
Administration to send out the much-publicized letters to
employers and employees with mismatched W-2 wage items.
If a mismatch of Social Security numbers is not a typo, it
means that the person has false identification. The government
has no idea who this person is, where this person came from, or
what the person is doing in the country. We have no way of
knowing if this undocumented person is a terrorist here with
the intent to harm our Nation.
In the wake of the September 11 murders, no American can
oppose the Social Security Administration's need to share
information with the INS. The INS needs to investigate those
companies which knowingly employ illegal workers and penalize
them.
I hope that President Bush will require the other Federal
agencies to enforce wage and labor laws so that my company will
no longer have to compete from a disadvantage. Our company is a
family business formed by my grandfather in 1951. It took him
20 years from when he entered the country legally to open a
woodworking factory with the money he saved.
With other legal immigrants at his side, he made the
American dream happen. The factory was passed on to my father
and now on to me, the third generation.
Our company has employed Turks, Armenians, Haitians,
Italians, Yugoslavians, and also a Jewish Holocaust survivor
from Holland. The diversity of our shop makes our conversations
lively.
Many of my employees waited 5 to 7 years to enter our
country legally. They did the right thing. They obeyed our
laws. Now people who broke the law are keeping down their
wages. They wonder why both the Federal and State governments
refuse to enforce any laws when it comes to illegal immigrants.
Our company pays withholding taxes and fair wages to our
workers. We pay the entire cost of health insurance. However,
with increasing competition from employers using illegal
aliens, I fear we will not be able to provide health insurance
to our employees. In fact, I may even be forced out of
business. Unfortunately, my company has to compete with
employers who are paying off the books and committing workers'
compensation fraud, unemployment fraud, Federal and State tax
fraud, and Social Security fraud.
In my written testimony, I have created a simple
illustration that compares the cost of a legitimate employer to
that of a lawbreaking employer who pays $500 per week off the
books. My example shows that the labor costs for the honest,
law-abiding employer are roughly 80 percent higher than for the
employers hiring illegal workers.
Chairman and Members of the Subcommittee, Federal law
prohibits anyone from hiring illegal aliens. Local governments,
private and church organizations, are setting up so-called
hiring sites so that legal and illegal immigrants can work off
the books and disregard Federal and State laws. Long Island
towns, such as Farmingville, Glen Cove, Freeport, Huntington,
and Farmingdale, have these unorganized and organized hiring
sites and many more are emerging.
Without employment or the hope of employment, illegal
aliens would not be tempted to enter our country in violation
of our laws. Employers need to be prosecuted for hiring illegal
workers, and legal immigrant workers need to believe that all
employers respect our laws.
I honestly believe that there are a growing number of
businesses that hire illegal aliens. If there is no
enforcement, that number will grow and grow and grow.
The Federal Government cannot allow a criminal minority of
employers to profit from illegal labor practices. It undermines
the founding principles of our Nation. When employers ignore
immigration law, it tends to lead to other laws being broken,
such as Social Security fraud, workers' compensation fraud, and
income tax fraud. Because of the lax enforcement from other
agencies of government, honest, law-abiding employers are being
punished.
That concludes my testimony, and I look forward to your
questions. Thank you.
[The prepared statement of Mr. Reindl follows:]
Statement of Matthew James Reindl, Operator, Stylecraft Interiors Inc.,
Great Neck, New York
Mr. Chairman and Members of the Subcommittee: I am extremely
honored, and I thank you for the privilege to testify at today's
hearing. My name is Matthew Reindl and I am an operator of a small
family owned woodworking factory. I am not a paid lobbyist, and I do
not draw a salary from any political or social advocacy group. I
believe I am speaking for the tens of thousands of law abiding small
business owners, who are being adversely affected, many forced to
close, because of illegal hiring practices of employers.
I am thankful that President Bush has appointed someone to the
Social Security Administration who has taken steps to have businesses
comply with the law. On behalf of those tens of thousands of small
businesses who carefully comply with Federal tax and wage reporting
requirements, I want to applaud Commissioner Barnhart for directing the
agency to send out the much publicized letters to employers and
employees with mismatched W-2 wage items.
A mismatch of Social Security numbers could mean two things. In
many cases it could be a simple typographical error. Our company is
familiar with this type of error. The correct number can be resubmitted
to the Social Security Administration, and the problem will be solved.
However, if it is not the case of a simple mix-up, it means that
the person supplying the documents has falsified his or her
identification, and neither the employer nor the government has any
idea who this person is, or where this person came from or what this
person is doing here in this country. We have no way of knowing if this
unknown undocumented person is a terrorist here with the intent to
destroy this Nation. If verifying Social Security numbers can prevent
terrorism it is a necessity. In the wake of the 9/11 murders, no
American can be opposed to the Social Security Administrations need to
share this information with INS. INS needs to investigate those
companies which knowingly employ illegal workers and penalize them.
Our country has maintained rational laws for legal immigrants. Our
immigration laws provide an organized procedure for people to enter our
country legally and obtain legal employment. Our company has been
employing legal immigrants with for more than fifty years. Seven of our
ten current employees were legal immigrants when they joined us. In
fact, our company's skilled workforce has been built by the positive
effects of our immigration laws.
The Reindl Family Business
Many Americans emigrated from another country. Parents,
grandparents, great grandparents made a journey for America and came
for the opportunities America had to offer. My grandfather, who was a
trained cabinetmaker, made that journey from Europe in 1930. Back in
those days an immigrant had to be sponsored in order to enter our
Nation legally, and thus he did so. He was a man that always obeyed the
law and taught his family to respect the rules and laws of the country.
In 1951, 20 years after he entered this country, he was bold enough
to open a woodworking factory with the money he saved through the
years. With other legal immigrants at his side he made the American
dream happen. Hand in hand different cultures working together to
fulfill many dreams. The factory was passed onto my father and now onto
me, the 3rd generation. Today as it was 50 years ago I work with
American citizens and legal immigrants. Our company has employed Turks
and Armenians, Jamaicans and Haitians, Italians and French, Polish and
Germans, Yugoslavians and Dutch, El Salvadorians and also a Jewish
holocaust survivor from Holland. The diversity of our shop makes our
conversations lively. It seems like a UN assembly meeting. Our employee
with the longest longevity (25 years) is a Muslim immigrant from
Turkey. The company went through all the legal channels to sponsor him.
In addition to him, our company has sponsored other employees
throughout the years. We work hard. And no job is too demeaning for
anyone, including myself. I normally work at least 60 hours a week.
This is what is required to run a small business. This is the strength
of America.
One thing I am grateful for is the fact that my grandfather
instilled in my father excellent morals and taught him to always abide
by the law. This philosophy too, was passed on to me. Our company has
always paid its fare share of taxes and its fair share of salary. We do
everything ethically and by the book. We also have always paid the
entire cost for the employee's health benefits, years before others in
our industry did. However, if illegal immigration continues to drive
our selling price down, I fear we will not be able to provide health
insurance to our employees in the future. In fact, I may even be forced
out of business.
The following is the diversified representation of the current
employees in my shop.
Ahmet LLegal immigrant now American
citizen born in Turkey
Luis LLegal immigrant from Colombia
Alrick LLegal immigrant from Jamaica
Chaplin LLegal immigrant from Jamaica
John LAmerican born citizen
Roberto LAmerican born citizen from Puerto
Rico
Borgdan LLegal immigrant from Croatia
Krzystof LPolish legal alien under 1986
amnesty
Mark Reindl LAmerican born family member
Fred Reindl LAmerican born father of family
Employer's Responsibility
The INS has placed the responsibility of immigration enforcement on
American employers. Every employer receives a handbook for completing
form I-9, and in this handbook it states:
L``Employment is often the magnet that attracts persons to
come to or stay in the United States illegally. The purpose of
the law is to remove the magnet by requiring employers to hire
only citizens and aliens who are authorized to work here.''
This law requires that every newly hired employee and employer to
fill out an I-9 and proper documentation must be verified by the
employer. As a small business, we certainly know the requirements of
the law and how to pick one from column A--OR--one from column B and
one from column C. It is hard to believe that a big corporation with a
professional staff cannot figure out how to fill this I-9 out.
Stylecraft Interiors Inc. complies with these Federal laws:
LVerify immigration status and complete Federal form I-9.
LDeduct Federal income tax and process W-4 forms.
LDeduct Social Security and Medicare contributions.
LMatch Social Security and Medicare contributions.
LPay Federal Unemployment Tax.
Stylecraft Interiors Inc. also complies with these New York State
Laws:
LDeduct state income tax.
LDeduct Disability Insurance.
LPay New York State Workers Compensation Insurance.
LPay New York State Unemployment insurance tax.
LPay New York State disability insurance.
LFill out State form N-96-2. And send that and a copy of W-4 or
equivalent to the State.
These are the labor laws that every New York State employer is
required to obey. However, from the newspapers articles it is clear
that a growing percentage of businesses are not complying. If laws are
not enforced, even a greater number of businesses will not comply with
these labor laws thus driving wages down.
If the laws, which I just mentioned, were enforced and obeyed, I
believe that there WOULD BE MUCH LESS ILLEGAL IMMIGRATION. I know
people in my community are well aware that many day workers who are
illegal aliens work for employers who are paying off the books and
committing workers compensation fraud, unemployment fraud, Federal and
State tax fraud, and Social Security fraud.
Several years ago a hiring site emerged in Glen Cove, NY. In 1995
we lost two legal immigrant employees to this Glen Cove site. They both
left our company because they made more money standing at the Glen Cove
site, or street corner working off the books and not paying taxes. They
told me they were clearing between $75 to $100 a day off the books,
much more than what I could pay them after taxes. They where very happy
that the local government set up a site where they would be hired
illegally, and not pay into the tax system. When I asked about health
insurance for their family they replied if I get sick, I go to the
hospital and it is free. Organized and unorganized hiring sites are
popping up on Long Island. Towns such as Farmingville, Farmingdale,
Freeport and Huntington have these sites and many more are emerging.
Bishop Murphy of the Roman Catholic Church has gone on record saying
the Catholic Church will do everything it can to help establish day
laborer sites. Local governments and Catholic Charity organizations
seem eager to build them. Illegitimate contractors are not getting
audited at these sites. Business owners and we the taxpayers foot the
bill for our ex-employees health care. Also, the employers who hire
illegal aliens are not paying into workers compensation insurance. When
they get hurt, guess who pays the bill?--The law abiding business owner
and taxpayer. I believe that the sole purpose of hiring sites is to try
to indoctrinate the American people into believing that it is somehow
legal for illegal aliens to be here and to be hired at these sites.
I believe that the endorsement of any hiring of illegal aliens is
an attack on our laws and on every single law abiding employer. All it
is doing is undermining the labor laws of this great country.
Economics of Illegal Labor Practices
The contractors and factory owners that disregard immigration laws
and disregard labor and insurance laws result in a profitable but
illegal advantage over legitimate business owners who play by the
rules. I am not an accountant but I do pay bills, and our company has
prepared the following breakdown for a single person with himself as a
dependent. It compares the cost of a legitimate employer to that of a
lawbreaking employer who pays $500 per week off the books.
Gross pay on the books would have to be $670 to net $500 because:
Social Security & Medicare L$51.26
Federal withholding L$83.63
N.Y. State withholding L$35.62
N.Y. State disability L$00.60
This equals $499 net pay.
Now the legitimate employer also has additional costs. He has to
match Social Security, Medicare and pay New York State workers
compensation and New York State unemployment insurance.
Social Security & Medicare L$51.26
Workers Comp (+/-) L$50.25
N.Y. State unemployment (+/-) L $5.06
The legitimate employer is now paying $776.57 a week compared to
$500 net pay ``off the books.'' This represents a 55% higher cost to
the honest law-abiding employer.
Add health insurance, which is $77.86 a week.
And 1 week vacation and 5 holidays averages out to $35.00 a
week.
The total cost a legitimate employer would be paying to equal that
$500 net pay a week now adds up to $889.43. This represents a 78%
higher cost to the honest law-abiding employer.
The Federal Government loses $83.63 in Federal withholding when
employers pay ``off the books.'' However, in view of the fact that
current Federal accounting standards comingle Social Security &
Medicare contributions into the Federal budget (not into a separate
trust fund) we must add the $51.26 employee contribution plus the
$51.26 employer contribution, totaling $102.52 for the total Social
Security & Medicare contribution. Add $83.63 plus $102.52 and the total
cost to the Federal Government becomes $186.15--37% of the $500 net pay
a law-abiding worker would receive.
Please note unemployment and workers compensation rates are
variable. Low rates were used, and Federal unemployment contributions
were not included. Also note that only 1 week vacation and 5 holidays
create a very low comparison. The actual cost to a legitimate employer
would probably be higher.
Due to the unscrupulous employers that hire illegal aliens I do not
know if Stylecraft Interiors can continue to survive. Illegal
immigration lowers my wage and that of my employees too. The legal
immigrants in my shop are very aware of this. Many of my employees
waited 5 to 7 years to enter our country legally. They did the right
thing. They obeyed our laws, and now people who broke the law are
keeping down their wages. They wonder why both our Federal and State
governments refuse to enforce any laws when it comes to illegal
immigrants. They ask me why people who did not wait their turn are
being rewarded.
Conclusion
Without employment or the hope of employment, illegal aliens would
not be tempted to enter our country in violation of our immigration
laws. Employers need to be actively penalized for hiring illegal
workers, and legal immigrant workers need to believe that all employers
respect our laws. I honestly believe that there are a growing number of
businesses that hire illegal aliens. If there is no enforcement, that
number will grow and grow and grow. The Federal Government can't allow
a criminal minority of employers to profit from illegal labor
practices, because it undermines the founding principles of this
country.
As an employer, I am pleased to know that the Social Security
Administration is finally cracking down on workplace fraud.
When employers ignore immigration laws it tends to lead to other
laws being broken, such as Social Security fraud, workers compensation
fraud, and income tax fraud. Because of the lax enforcement from all
other agencies of the government, honest employers are being punished.
Lax enforcement of immigration and labor laws penalizes all those
employers that comply with Federal and State laws. Our company obeys
the law and we refuse to hire illegal aliens. If my competitors are
allowed to break the law, and hire low-wage illegal immigrant workers,
they gain an unfair and illegal advantage over my company. My
competitors will undercut my prices, and take away my business and
could possibly cause me to be put out of business.
Chairman GEKAS. Thank you. We turn to the final witness,
Mr. Hoofnagle.
STATEMENT OF CHRIS JAY HOOFNAGLE, LEGISLATIVE COUNSEL,
ELECTRONIC PRIVACY INFORMATION CENTER
Mr. HOOFNAGLE. Good afternoon. Mr. Chairman and Members of
the Subcommittee, my name is Chris Hoofnagle, and I am
Legislative Counsel with the Electronic Privacy Information
Center (EPIC). The EPIC is a not-for-profit research center
that focuses on privacy and civil liberties.
Since our founding in 1994, we have been extensively
involved in the privacy of the Social Security number. Most
recently, we submitted an amicus brief in Remsburg v.
Docusearch, the Amy Boyer case.
As many of you probably remember, in that case, a young
woman was stalked and killed based on information provided by a
commercial Social Security number lookup company.
We believe that good privacy can make good security, and
that in this area, we need to protect the Social Security
number so that criminals and terrorists do not use it to attack
us and our country.
The Social Security number plays an unparalleled role in
the identification, authentication, and tracking of all
Americans. Identity thieves know the value of a Social Security
number, and that is why we believe that limiting the collection
and the use of the Social Security number is critical to
stemming the growing tide of identity theft.
My colleagues on this panel have outlined the extreme harm
that identity theft causes. According the Privacy Rights
Clearinghouse, somewhere between 500,000 and 700,000 Americans
are victimized by this crime every year. Victims often do not
discover the crime has occurred until many months after their
identity has been stolen. They spend many hours of their time
and substantial sums of their money to fix their credit report
and to expunge criminal records that might have been created in
their name.
Since September 11, 2001, there has been a renewed focus on
this crime, as identity theft could be used both to raise funds
for and to actually commit acts of incredible destruction.
The majority of identity thieves still use low-tech methods
to acquire our personal data. While there are general fears of
transmitting credit card numbers and other personal information
over the Internet, the biggest risk from identity theft still
comes from criminals who steals our mail or sorts through our
trash in order to get our personal identifiers.
Other low-tech methods to steal identifiers are also
common. Employees of businesses that collect the Social
Security numbers are in a unique position to obtain many
personal identifiers. In my written testimony, I cite to a
recent case involving a branch of Bally's Health Spa in
Cambridge, Massachusetts. There an employee was caught stealing
Social Security numbers to open bank accounts, possibly for the
commission of terrorism.
The Bally's case raises an important point about private
sector use of the Social Security number. In most cases, it is
wholly unnecessary for a business to even collect the Social
Security number. Collecting the Social Security number creates
risk for the individual. Businesses should be encouraged to use
alternative identifiers.
Discouraging the use of the Social Security number should
be a primary concern of Congress, especially when one considers
how the business community uses the identifier. Some businesses
use the Social Security number to identify individuals while
other businesses use it as a password. This means that the
Social Security number is used widely as both an identifier and
as an authenticator.
From a security perspective, this doesn't make sense. It is
the equivalent of using the same user name and password to
access your e-mail, for instance, but identity theft risks are
not only created by bad business practices. Public records are
increasingly playing an increasing role identity theft. As
Americans have more interaction with our growing government, we
leave trails of our activities in the form of public records.
Court case files, marriage license, and other public records
are creating a trail of our personal identifiers from cradle to
grave.
It is important that Congress act now to remove the Social
Security number from public records.
Two States, California and Georgia, have both recently
enacted common-sense Social Security number legislation that
will likely stem the tide of some identity theft.
In California, Senate bill 168 was signed into law last
year. The bill prohibits public posting of the Social Security
number. It also prohibits the printing of the Social Security
number on an identity card. Most importantly, it prevents the
mailing of an invoice or a bill to a consumer with an Social
Security number on it.
In Georgia, Senate bill 475 now requires businesses to
safely dispose of documents that might contain personal
identifiers on it. They have to shred records, or they have to
actually erase computer hard drives.
Despite these significant steps forward, we still lack
comprehensive protections. We believe that H.R. 2036, the
Social Security Number Privacy and Identity Theft Protection
Act of 2001, which enjoys strong bipartisan support, would
create a framework of protection to reduce identity theft and
to protect privacy.
With that, let me conclude my remarks, as I have run out of
time. Thank you.
[The prepared statement of Mr. Hoofnagle follows:]
Statement of Chris Jay Hoofnagle, Legislative Counsel, Electronic
Privacy Information Center
My name is Chris Hoofnagle and I am legislative counsel with the
Electronic Privacy Information Center (EPIC), a not-for-profit research
organization based in Washington, D.C.
Founded in 1994, EPIC has participated in cases involving the
privacy of the Social Security number (SSN) before Federal courts and,
most recently, before the Supreme Court of New Hampshire.\1\ EPIC has
also taken a leading role in campaigns against the use of globally
unique identifiers (GUIDs) involving the Intel Processor Serial Number
and the Microsoft Corporation's Passport identification and
authentication system.
---------------------------------------------------------------------------
\1\ Estate of Helen Remsburg v. Docusearch, Inc., et al, C-00-211-B
(N.H. 2002). In Remsburg, the ``Amy Boyer'' case, Liam Youens was able
to locate and eventually murder Amy Boyer through hiring private
investigators who tracked her by her date of birth, Social Security
number, and by pretexting. EPIC maintains information about the Amy
Boyer case online at http://www.epic.org/privacy/boyer/.
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I appreciate the opportunity to testify this afternoon. I will
briefly summarize identity theft developments, review historical and
recent attempts to regulate the use of the SSN, and make
recommendations.\2\
---------------------------------------------------------------------------
\2\ EPIC maintains an archive of information about the SSN online
at http://www.epic.org/ privacy/ssn/.
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The states have taken effective, common sense steps to reduce
private and public-sector reliance on use of the SSN. Congress should
take action now to implement these protections on a national level.
Long-term approaches to the problem of privacy and identity theft need
a comprehensive legislative framework of protections for individuals.
Accordingly, it will be necessary for Congress to pass legislation
limiting the collection and use of the SSN to mitigate risks of
identity theft and the risk that terrorists will use credit or identity
fraud to harm the Nation. H.R. 2036, the Social Security Number Privacy
and Identity Theft Protection Act of 2001, which enjoys bipartisan
support, would establish much of the framework needed to address these
risks.
I. The Problem of Identity Theft is Far Reaching
Identity theft accounts for over 80 percent of Social Security
number misuses reported to the Social Security Administration.\3\ The
cost of identity theft is expected to reach eight billion dollars by
the year 2005.\4\ However, this represents one tenth of a percent of
the credit industry's income and only a small fraction of the amount of
loss due to fraud and stolen credit cards. The average loss to the
financial industry is $17,000 per identity loss, but the loss to the
victim is potentially much greater, especially because most victims do
not discover the crime until many months after its occurrence.\5\
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\3\ Analysis of Social Security Number Misuse Allegations Made to
the Social Security Administration's Fraud Hotline, Management Advisory
Report, SSA (Aug. 1999).
\4\ Identity Theft Complaint Data, Identity Theft Data
Clearinghouse, Federal Trade Commission (2001).
\5\ Statewide Grand Jury Report: Identity Theft in Florida, Case
No. SC 01-1095 (Jan. 10, 2002).
---------------------------------------------------------------------------
Most victims of identity theft face significant credit bills and
the destruction of their credit history. The immediate consequence
could be the loss of securing a job or purchasing a home, or worse.\6\
Other victims face arrest for crimes that an impersonator has committed
in their name. If the arrest occurs, it may be impossible to expunge
the criminal record. Identity theft has been used to obtain employment,
drivers' licenses, receive government benefits, and evade criminal
prosecution. Identity theft indirectly affects everyone because it
causes interest rates to increase to cover the industry's losses.
---------------------------------------------------------------------------
\6\ Id.
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Identity thieves have proven themselves to be crafty criminals.
Earlier this year, Experian, one of the principal credit reporting
agencies, experienced an unprecedented breach of security involving
individuals' personal information. In that case, identity thieves posed
as Ford Motor Credit employees to gain access to almost 13,000 credit
files of wealthy individuals.\7\ In another case this year, identity
thieves used stolen SSNs to engage in a series of fraudulent sales
designed to strip equity from elderly homeowners in the Detroit
area.\8\
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\7\ Security: Hackers pose as Ford Motor Credit workers to take
confidential data about wealthy individuals, Los Angeles Times, May 17,
2002.
\8\ Thieves Steal Homeowners' Identities and Their Equity, New York
Times, May 28, 2002.
---------------------------------------------------------------------------
But criminals do not necessarily have to be resourceful to obtain
credit or identification in another person's name. The problem of
identity theft has been exacerbated by the financial service industry's
hunger to issue credit. Aggressive marketing of credit, including
unsolicited direct mail credit advertising, gives ``dumpster divers''
and people with access to mailboxes opportunity to obtain credit in
another's name.
Since September 11, 2001, public attention has also focused on how
identity theft can facilitate terrorism or raise funds for terrorist
activities. For instance, a terrorist suspect reportedly connected to
the Al Qaeda network was recently charged with selling the SSNs of
twenty-one people who were members of the Bally's Health Club in
Cambridge, Massachusetts. The SSNs were sold in order to create false
passports and credit lines for bank accounts.\9\ The situation could be
avoided by not collecting the SSN and by issuing health club members
alternative identifiers. If the SSN was collected in order to run a
credit check, the health club could have purged the SSN after the check
was complete.
---------------------------------------------------------------------------
\9\ Robert Ellis Smith, Privacy Protects Against Terror, Privacy
Journal, Mar. 2002.
---------------------------------------------------------------------------
Several times this year, news reports have been published outlining
theft of blank identity cards, equipment, and personal information.\10\
Most recently, burglars entered a Colorado DMV office, and stole all
the equipment and information necessary to manufacture identity cards
that include a biometric identifier.\11\ It is clear that the burglars
involved are sophisticated criminals who disabled alarms and performed
two different break-ins in one week. It is unclear how the criminals
will use the identification cards and equipment.
---------------------------------------------------------------------------
\10\ A series of these reports are online at http://www.aamva.org/
weekinreview/branchtheftnotices.asp.
\11\ A major identity crisis: Info stolen from motor vehicles
offices has residents worried, Rocky Mountain News, August 20, 2002, at
http://www.rockymountainnews.com/drmn/state/article/
0,1299,DRMN__21__1336085,00.html.
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II. LCongress and the Courts Have Regulated the Collection and Use of
the SSN
The Social Security number (SSN) was created in 1936 as a nine-
digit account number assigned by the Secretary of Health and Human
Services for the purpose of administering the Social Security laws.
SSNs were first intended for use exclusively by the Federal Government
as a means of tracking earnings to determine the amount of Social
Security taxes to credit to each worker's account. Over time, however,
SSNs were permitted to be used for purposes unrelated to the
administration of the Social Security system. For example, in 1961
Congress authorized the Internal Revenue Service to use SSNs as
taxpayer identification numbers.
A major government report on privacy in 1973 outlined many of the
risks with the use and misuse of the Social Security number. Although
the term ``identify theft'' was not yet in use, Records Computers and
the Rights of Citizens described the risks of a ``Standard Universal
Identifier,'' how the number was promoting invasive profiling, and that
many of the uses were clearly inconsistent with the original purpose of
the 1936 Act. The report recommended several limitations on the use of
the SSN and specifically said that legislation should be adopted
``prohibiting use of an SSN, or any number represented as an SSN, for
promotional or commercial purposes.'' \12\
---------------------------------------------------------------------------
\12\ Department of Health, Education, and Welfare, Records,
Computers, and the Rights of Citizens 108-35 (MIT 1973) (Social
Security Number as a Standard Universal Identifier and Recommendations
Regarding Use of Social Security Number).
---------------------------------------------------------------------------
In response to growing risks over the accumulation of massive
amounts of personal information and the recommendations contained in
the 1973 report, Congress passed the Privacy Act of 1974.\13\ Among
other things, this Act makes it unlawful for a governmental agency to
deny a right, benefit, or privilege merely because the individual
refuses to disclose his SSN. This is a critical principle to keep in
mind today because consumers in the commercial sphere often face the
choice of giving up their privacy, their SSN, to obtain a service or
product. The drafters of the 1974 law tried to prevent citizens from
facing such unfair choices, particularly in the context of government
services. But there is no reason that this principle could not apply
equally to the private sector, and that was clearly the intent of the
authors of the 1973 report.
---------------------------------------------------------------------------
\13\ 5 U.S.C. 552a. Marc Rotenberg, Privacy Law Sourcebook: United
States Law, International Law, and Recent Developments (EPIC 2001).
---------------------------------------------------------------------------
Section 7 of the Privacy Act further provides that any agency
requesting an individual to disclose his SSN must ``inform that
individual whether that disclosure is mandatory or voluntary, by what
statutory authority such number is solicited, and what uses will be
made of it.'' At the time of its enactment, Congress recognized the
dangers of widespread use of SSNs as universal identifiers. In its
report supporting the adoption of this provision, the Senate Committee
stated that the widespread use of SSNs as universal identifiers in the
public and private sectors is ``one of the most serious manifestations
of privacy concerns in the Nation.'' Short of prohibiting the use of
the SSN outright, the provision in the Privacy Act attempts to limit
the use of the number to only those purposes where there is clear legal
authority to collect the SSN. It was hoped that citizens, fully
informed where the disclosure was not required by law and facing no
loss of opportunity in failing to provide the SSN, would be unlikely to
provide an SSN and institutions would not pursue the SSN as a form of
identification.
It is certainly true that the use of the SSN has expanded
significantly since the provision was adopted in 1974. This is
particularly clear in the financial services sector. In an effort to
learn and share financial information about Americans, companies
trading in financial information are the largest private-sector users
of SSNs, and it is these companies that are among the strongest
opponents of SSN restrictions. For example, credit bureaus maintain
over 400 million files, with information on almost ninety percent of
the American adult population. These credit bureau records are keyed to
the individual SSN. Such information is freely sold and traded,
virtually without legal limitations.
Outside the financial services sector, many companies require the
SSN instead of assigning an alternative identifier. These requirements
appear in a myriad of commercial interchanges, many of which absolutely
do not require the SSN. For instance, Golden Tee, a popular golf video
game, requires players to enter their SSN in order to engage in
``tournament play.'' \14\ The company could assign its own identifier
for players, but instead relies upon the SSN, which puts players at
risk by requiring them to further circulate personal information.
---------------------------------------------------------------------------
\14\ Official ITS Rules, at http://www.itsgames.com/ITS/
its__rules.htm.
---------------------------------------------------------------------------
It is critical to understand that the legal protection to limit the
collection and use of the SSN is still present in the Privacy Act and
can be found also in recent court decisions that recognize that there
is a constitutional basis to limit the collection and use of the SSN.
When a Federal Appeals court was asked to consider whether the State of
Virginia could compel a voter to disclose an SSN that would
subsequently be published in the public voting rolls, the Court noted
the growing concern about the use and misuse of the SSN, particularly
with regard to financial services.\15\ The Fourth Circuit said:
---------------------------------------------------------------------------
\15\ Greidinger v. Davis, 988 F.2d 1344 (4th Cir. 1993) and brief
amicus curiae for CPSR (Marc Rotenberg and David Sobel) (SSN
requirement for voter registration) (lead case on privacy of Social
Security number).
LSince the passage of the Privacy Act, an individual's concern
over his SSN's confidentiality and misuse has become
significantly more compelling. For example, armed with one's
SSN, an unscrupulous individual could obtain a person's welfare
benefits or Social Security benefits, order new checks at a new
address on that person's checking account, obtain credit cards,
or even obtain the person's paycheck. . . . Succinctly stated,
the harm that can be inflicted from the disclosure of a SSN to
an unscrupulous individual is alarming and potentially
financially ruinous.\16\
---------------------------------------------------------------------------
\16\ Id.
---------------------------------------------------------------------------
The Court said that:
LThe statutes at issue compel a would-be voter in Virginia to
consent to the possibility of a profound invasion of privacy
when exercising the fundamental right to vote. As illustrated
by the examples of the potential harm that the dissemination of
an individual's SSN can inflict, Greidinger's decision not to
provide his SSN is eminently reasonable. In other words,
Greidinger's fundamental right to vote is substantially
burdened to the extent the statutes at issue permit the public
disclosure of his SSN.\17\
---------------------------------------------------------------------------
\17\ Id.
The Court concluded that to the extent the Virginia voting laws,
``permit the public disclosure of Greidinger's SSN as a condition of
his right to vote, it creates an intolerable burden on that right as
protected by the First and Fourteenth Amendments.'' \18\
---------------------------------------------------------------------------
\18\ Id.
---------------------------------------------------------------------------
In a second case, testing whether a state could be required to
disclose the SSNs of state employees under a state open record law
where there was a strong presumption in favor of disclosure, the Ohio
Supreme Court held that there were privacy limitations in the Federal
Constitution that weighed against disclosure of the SSN.\19\ The court
concluded that:
---------------------------------------------------------------------------
\19\ Beacon Journal v. City of Akron, 70 Ohio St. 3d 605 (Ohio
1994) and brief amicus curiae for CPSR (Marc Rotenberg and David Sobel)
(SSN disclosure of city employees).
LWe find today that the high potential for fraud and
victimization caused by the unchecked release of city employee
SSNs outweighs the minimal information about governmental
processes gained through the release of the SSNs. Our holding
is not intended to interfere with meritorious investigations
conducted by the press, but instead is intended to preserve one
of the fundamental principles of American constitutional law--
ours is a government of limited power. We conclude that the
United States Constitution forbids disclosure under the
circumstances of this case. Therefore, reconciling Federal
constitutional law with Ohio's Public Records Act, we conclude
that [the provision] does not mandate that the city of Akron
discloses the SSNs of all of its employees upon demand.\20\
---------------------------------------------------------------------------
\20\ Id.
In an important recent case from the U.S. Court of Appeals for the
D.C. Circuit, a Court upheld the Federal Trade Commission's
determination that SSNs are nonpublic personal information under the
Gramm-Leach-Bliley Act.\21\ The Court rejected First and Fifth
Amendment challenges to regulations that restricted the use of the SSN
without giving the individual notice and opportunity to opt-out.
Additionally, the Court upheld regulations that prohibited the reuse of
SSNs that are furnished to credit reporting agencies.\22\
---------------------------------------------------------------------------
\21\ Trans Union L.L.C. v. Fed. Trade Comm'n, No. 01-5202, 2002
U.S. App. LEXIS 14321 (D.C. Cir. July 16, 2002), at http://
pacer.cadc.uscourts.gov/common/opinions/200207/01-5202a.txt.
\22\ Id. In another recent case, the D.C. Circuit rejected a First
Amendment challenge to the use of credit reports for marketing
purposes. Trans Union v. FTC, No. 00-1141 (D.C. Cir. 2001), cert.
denied, 536 U.S. ________ (2002).
---------------------------------------------------------------------------
While it is true that many companies and government agencies today
use the Social Security number indiscriminately as a form of
identification and authentication, it is also clear from the 1936 Act,
the 1974 Privacy Act, and these three cases--Greidinger v. Davis,
Beacon Journal v. City of Akron, and Trans Union v. FTC--that there is
plenty of legislative and judicial support for limitations on the
collection and use of the SSN. The question is therefore squarely
presented whether the Congress will at this point in time follow in
this tradition, respond to growing public concern, and establish the
safeguards that are necessary to ensure that the problems associated
with the use of the SSN do not increase.
III. States Have Acted to Address Privacy and Identity Theft
California and Georgia have both recently enacted legislation that
will increase protections against identity theft. Recognizing that most
identity theft occurs when malicious actors steal personal identifiers
from invoices and solicitations from mail or waste bins, California and
Georgia have enacted legislation to limit the reproduction of the SSN
in the private sector. Both states have incorporated common sense
protections that could be adopted at the Federal level to reduce
identity theft.
In California, Senate Bill 168 was signed into law in October
2001.\23\ The bill gives individuals the ability to request that a
``security alert'' be placed on their credit record via a toll-free
phone number. The bill also enables Californians to request a
``security freeze'' that prevents credit agencies from releasing
personal information from an individual's credit report. The bill
places important restrictions on use of the SSN--public posting of a
SSN and printing the SSN on an identity card or document used to obtain
a product or service is prohibited. Businesses that use the SSN to
identify customers, such as utility companies, will no longer be
permitted to print the SSN on invoices or bills sent through the mail.
---------------------------------------------------------------------------
\23\ California Senate Bill 168, at http://info.sen.ca.gov/pub/
bill/sen/sb__0151-0200/sb__168__bill__20010914__enrolled.html.
---------------------------------------------------------------------------
In Georgia, businesses are now required to safely dispose of
records that contain personal identifiers.\24\ Business records--
including data stored on computer hard drives--must be shredded or in
the case of electronic records, completely wiped clean where they
contain SSNs, driver's license numbers, dates of birth, medical
information, account balances, or credit limit information. The Georgia
law carries penalties up to $10,000.
---------------------------------------------------------------------------
\24\ Georgia Senate Bill 475, at http://www.legis.state.ga.us/
Legis/2001__02/fulltext/sb475.htm; New law takes effect to fight
identity theft; Businesses face fines of up to $10,000 for not
protecting data, Atlanta Journal-Constitution, July 4, 2002.
---------------------------------------------------------------------------
IV. LH.R. 2036, The Social Security Number Privacy and Identity Theft
Protection Act of 2001, Is a Good Proposal
The Social Security Number Privacy and Identity Theft Protection
Act of 2001, sponsored by Chairman Shaw, contains a comprehensive set
of rights to protect individuals from identity theft. As of this
writing, the bill enjoys the bipartisan support of 77 Representatives.
Title I establishes important protections against public-sector
sale or display of SSNs. We commend the Chairman for including language
in the Act that would stem the unnecessary publication of the SSN.
These provisions will prohibit the display of the SSN on checks and
government-issued employment cards. We also commend the Chairman for
including a prohibition on disclosure of the SSN to inmates. Perhaps
most importantly, the language sweeps broadly enough to prohibit the
display of SSNs in public records. Increasingly, public records are a
source for the collection of personal identifiers that then can be
reused for any purpose. It is important now more than ever to limit the
appearance of SSNs in publicly-available case files and other public
records, such as marriage licenses.
Title II places needed restrictions on private sector sale of the
SSN. I believe it especially important that Section 202 of the bill
prohibits ``coercive disclosure''--the practice of denying a product or
service when an individual refuses to give a SSN. Additionally, Section
203 would place the SSN ``below the line'' on credit reports. This is
an important and much needed protection that would stem unregulated
trafficking in SSNs.
Title II, however, suffers a weakness that needs attention: the
rulemaking authority of the Department of Justice must be guided by the
principle that the private sector should minimize the use of SSNs. This
could be accomplished by adding another factor to the balancing test in
Section 201(c) that requires the Department of Justice to consider
whether an alternate identifier could be used in place of the SSN. In
many circumstances, private entities could use an alternate identifier,
and reduce privacy risk to individuals by stemming the circulation of
the SSN.
Title III creates a framework of accountability of civil and
criminal penalties for misuse of the SSN. We recommend that this
provision be expanded to include a private right of action for the
misuse of SSNs that provides for actual, liquidated, and punitive
damages and that provides for the awarding of attorneys fees and costs
to a plaintiff who has substantially prevailed in litigation.
Additionally, provisions allowing attorneys general to enforce these
protections should also be included. In recent years, state attorneys
general have zealously pursued privacy violators; the application of
their resources to identity theft prevention and privacy protection
should be expressly encouraged.
I believe it is important that individuals do not assume civil or
criminal liability for inadvertent disclosure of a false SSN, or for
intentional disclosure of a false SSN when the individual is attempting
to protect her privacy. Individuals often provide false information to
businesses when attempting to protect their privacy. Section 302 would
prohibit this form of ``privacy self-defense.'' That section prohibits
the false representation of one's Social Security number to any
individual. We recommend that this section be amended to only prohibit
individuals from falsifying a SSN when there is intent to commit fraud
or a crime.
V. Conclusion
Without a framework of restrictions on the collection and use of
the SSN and other personal identifiers, identity theft will continue to
increase, endangering individuals' privacy and perhaps the security of
the Nation. The best legislative strategy is one that discourages the
collection and dissemination of the SSN and that encourages
organizations to develop alternative systems of record identification
and verification. It is particularly important that such legislation
not force consumers to make unfair or unreasonable choices that
essentially require trading the privacy interest in the SSN for some
benefit or opportunity.
It is important to emphasize the unique status of the SSN in the
world of privacy. There is no other form of individual identification
that plays a more significant role in record-linkage and no other form
of personal identification that poses a greater risk to personal
privacy. Given the unique status of the SSN, its entirely inappropriate
use as a national identifier for which it is also inherently
unsuitable, and the clear history in Federal statute and case law
supporting restrictions, it is fully appropriate for Congress to pass
legislation.
I am grateful for the opportunity to testify this afternoon and
would be pleased to answer your questions.
Chairman GEKAS. I think we all have.
[Laughter.]
Chairman GEKAS. The Chair, in consultation with the Co-
Chair here, we have decided that we will pose whatever
questions we can with the remaining Members, and then ask the
panel to acquiesce to written interrogatories that we my submit
to them pertinent to their testimony.
Very quickly, I would like to ask Mr. Reindl if he believes
that there is more to this than the failure of the INS to crack
down on illegal aliens. Is the Social Security Administration
also at fault, in your view?
Mr. REINDL. I think it is good that they are putting out
those letters and putting people on notice if there is a
mismatch. So, in a way, it is kind of helping the illegal
immigration situation. So it is beneficial.
Chairman GEKAS. It is beneficial that the Social Security
Administration is using that procedure.
Mr. REINDL. Right, with the INS. I think so.
Chairman GEKAS. The sharing the information.
Mr. REINDL. The sharing information is good, yes.
Chairman GEKAS. The first three witnesses, I would like to
ask this question, having to do with the tamper-resistant
passport, which was mentioned, and also the fact that the
passport is the universal key to entry into the United States.
I remember an incident--in fact, we were briefed on it--
where, in Afghanistan, our personnel found in a cave many, many
different passports fraudulently produced that could have
ostensibly been used for the passkey to the United States.
How would we have stopped the use of such a passport, if it
were expertly, fraudulently produced? Would that have allowed a
terrorist to come in and do his worst?
Ms. PHILLIPS. Well, I can say that, for instance, my office
has created a database of blank foreign travel documents that
are reported missing, so that they cannot be used. We share
this information with INS. In fact, we put them out in the form
of intelligence alerts that goes to a number of Federal
agencies and State law enforcement offices, even to the
military.
We also train our personnel to detect counterfeit or
altered passports that people are presenting in the course of a
visa application.
Chairman GEKAS. So, you are saying that the routine conduct
of checking the passport would probably yield the fact that
this was fraudulently produced?
Ms. PHILLIPS. Most of the foreign passports that are
altered are something that we can train people to detect.
Chairman GEKAS. Do you have any comment on that?
Mr. BOND. From the Secret Service's perspective, we have
noticed in the cases where we are working identity theft, where
we seize an electronic piece of equipment--be it a computer,
Palm Pilot, whatever; in most cases, computers--that they will
have all different kinds of identities on those computers that
are being counterfeited. Some of the identity is changed or
altered off of originals that are stolen, and then they use
those base plates, I guess, for a passport or a driver's
license or a Social Security number, to then change different
numbers and identification pieces of information on that
document to make it look like an original document.
So, we are training our investigators in the field to take
a close look at computers when they are seized. It is a
partnership with law enforcement, be it at the State level, the
local level, or the Federal level, to ensure that we are
getting those guys that are in the process of making
identification out there.
Chairman GEKAS. From the FBI, how would you assess this
batch of passports found in a cave?
Mr. ASHLEY. Well, they do present a risk, obviously. It is
another means for somebody to try and get into our country. We
are fortunate with our joint task forces that there is presence
of INS and State Department on many of them.
In my previous experience, before I reported earlier this
year, I was assigned to Las Vegas as the agent in charge. We
had some issues, and the State Department personnel were very
helpful in resolving those on the scene.
So, I think that while it is a problem, the agencies are
working well together.
Chairman GEKAS. I begin to get the theme of what we are all
hoping will be the case, a complete sharing of information, and
helping one another find the culprit and produce investigations
and convictions and expulsions, and so forth.
I yield back the balance of my time.
Chairman SHAW. [Presiding.] Mr. Chairman, I would yield,
since we have only about 2 minutes before we are going to have
to go over the Capitol in order to cast our votes.
Are there any Members who wish for me to yield to them? Mr.
Hayworth?
Mr. HAYWORTH. Thank you, Mr. Chairman.
Ms. Phillips, hearing the testimony of the Deputy
Commissioner who proceeded you on panel one, I have real
questions about student visas and the issuance of same. Do you
have any documentation on the numbers of Iraqi students who
have come into this country to study?
Ms. PHILLIPS. We can tell how many visas we have issued to
people who are Iraqi citizens, but we are unable to say if they
have actually entered the United States or if they have entered
the United States in some other manner and then gained
permission from INS for student status. We could say how many
people of Iraqi heritage have gotten student visas.
Mr. HAYWORTH. So, again, for the student status, we would
look to the Immigration and Naturalization Service?
Ms. PHILLIPS. Right.
Mr. HAYWORTH. Okay, I thank you.
Chairman SHAW. I yield to anyone on the minority side. Mr.
Becerra?
Mr. BECERRA. Quick question. Thank you, Mr. Chairman.
To Mr. Hoofnagle, the laws that you mentioned, the State
laws in Georgia and California, since they have been
implemented, can you tell us how they have worked? Any results
yet? Have they worked well?
Mr. HOOFNAGLE. It is still too early to tell. The
California law takes effect partially in 2003, and then it will
take full effect in 2005. The Georgia law took effect in July
of this year, and many businesses are now coming into
compliance with it.
If I could use this opportunity to address Social Security
number use, Representative Hayworth earlier mentioned during
the previous panel that there is a problem with universities
requesting Social Security numbers perhaps fraudulently. That
practice could be limited. The problem we have is that many
universities and other places are requiring the Social Security
number as an identifier. If we can cut down on that practice,
we can cut down on circulation of Social Security numbers, just
how Georgia and California have.
Mr. BECERRA. Good point. Thank you very much, all of you,
for your testimony.
Chairman SHAW. Ms. Jackson Lee?
Ms. JACKSON LEE. Let me thank both Chairmen for this very
important hearing, and I just want to restate something--
Chairman Shaw, I don't think you were in the room. It is that
the task force is working, the combination of the State
Department and I believe the FBI and others along with the INS.
I want to state for the record that false passports are still
being made, but the technology and the expertise is more
enhanced, Mr. Chairman, inasmuch as I viewed firsthand the
connection between the State Department and the INS by Chinese
smugglers smuggling people into an international airport.
Because of a list that was given, the passports were checked
and scanned, determined to be false, and the individuals were
immediately intercepted as they got off the plane.
Systems are working. We just need to improve them and, as
well, to be able to provide the resources necessary.
Thank you, Mr. Chairman.
Chairman SHAW. I want to thank this very distinguished
panel. I have particularly a very long question, which I will
submit in writing, regarding seaport security, which is
something I am very concerned about, representing two very
active deepwater ports, Port of Everglades and the Port of Palm
Beach, which I will submit, together with some other questions.
I want to thank you all for being here. You have added
tremendously to our knowledge in trying to work through this
whole situation of the fraudulent use of Social Security
numbers. Both in the area of crime as well as we are finding in
the area of terrorism. It is becoming a big, big problem, and
it is something the Congress needs to address, and it something
the administration needs to address.
We will be very busy doing so for the balance of this
Congress and well into next year.
Thank you all very much for being here, and we are now
adjourned.
[Whereupon, at 2:57 p.m., the hearing was adjourned.]
[Questions submitted from Chairman Shaw to the panel, and
their responses follow:]
U.S. Department of State
Washington, DC 20502
1. Mrs. Phillips' testimony stated, ``One tool that will help our
officers is online access to Social Security Administration records.''
To what degree does the Department of State's Bureau of Consular
Affairs require information or other assistance from the Social
Security Administration (SSA)? For example, does the Bureau of Consular
Affairs currently have any automated data exchange with the SSA to
facilitate confirmation of valid Social Security numbers (SSNs) and the
associated identity of the person to whom the SSN was originally issued
included in U.S. Passport applications? Is there information you
currently need that you are not receiving or are not receiving timely
from the Social Security Administration? If so, what information, and
do you know the reasons for the non-receipt or the delay in receipt?
What results would receiving such information or receiving such
information more timely produce?
The Department needs access to the Social Security Administration's
(SSA) compilation of Social Security Numbers (SSNs), including year and
state of issuance, and death records. The death records consist of 70
million names of individuals whose estates have filed for death
benefits under their social security numbers. We could use these
databases to verify that SSNs provided by passport applicants are valid
and refer to the respective applicant, and were not issued to an
individual who is deceased.
Passport Services currently has very limited electronic
verification of SSNs. Our Passport Specialists use a static table
populated with SSN data, including the year and State of issuance,
covering the period 1951 through 1999. The Department is working with
the SSA to establish an electronic link that will give us more complete
access to current SSN data and to death records.
2. Operation Tarmac has just scratched the surface of the
potentially tens of thousands of illegal aliens and smaller number of
U.S. citizens using false identities who hold security clearances
issued by private companies under contract to municipal and government
agencies. If such people represent an unacceptable risk at airports,
aren't they also a risk for buildings and facilities operated by the
U.S. Department of State within the United States and worldwide? What
is the Department of State doing, going forward, to ``clear out'' these
high-risk workers?''
Perhaps the term ``security clearances'' used in this context, is a
misnomer. ``Access authorization'' may be a more fitting term. It
should be noted that private companies do not issue security
clearances. It is standard procedure to require all contract employees
be put through a vetting process, prior to granting access to the
Department's facilities. This is designed to mitigate the threat of
``high-risk'' employees in the workplace. The vetting process is
similar to the one used for determining eligibility for a secret level
clearance. This includes a national Agency Name Check to verify
identity, conduct criminal records inquiries, and determine hiring
eligibility. Upon successful completion of the vetting process, the
contract employee is granted authorization to access the Department's
facilities under escort by a direct-hire employee with Top Secret
clearance. We note that contract employees are not permitted to escort
others.
Access to national security information carries further
restrictions, limited on a case-by-case basis; granted only to those
having a ``need to know.'' Authorization is rescinded when the
employee's duties no longer require such access. Looking to the future,
the Department is proceeding with a revitalized security updating
program for all employees, and recently implemented a ``smart card''
identification card system to provide tighter access controls.
3. We know that identity theft is pervasive and is increasing at an
exponential rate. The U.S. Passport is the only equivalent to a
national identity document issued by an agency of the Federal
Government. Has the State Department any initiatives under
consideration to provide a ``wallet sized, tamper proof'' U.S. Passport
equivalent to U.S. Passport holders who would be willing to pay for
such an identity card?
The Department is researching the possibility of issuing an
advanced memory card to be used as a travel document that attests to
U.S. citizenship and identity. Eventual implementation requires
bilateral agreements with other governments willing to accept such
documents. An important first step has been taken by the international
community (through the International Civil Aviation Organization
(ICAO)) by defining a basic ``passport card'' standard. However, we in
the United States are focusing on technical capacity to produce such a
document. We are not yet ready to engage in formal discussions with
other governments as to acceptability.
The concept of a passport card has been discussed for at least 10
years, and early models of passport cards date back to the 1960's. With
recent technological advances, and advances in specifications that
enable the technology to be standardized, the concept of an
interoperable passport card is now closer to reality.
4. A March 2002 GAO study described a 40% increase in identity
thefts reported to the Social Security hotline during a 7-month period
in 2001, over the same period in 2000. Mrs. Phillips' testimony
described the assistance provided by the Consular Affairs' Office of
Fraud Prevention Programs to the SSA's fraud investigators. She also
described assistance to the National Association of Public Health
Statistics and Information Systems and Social Security Administration
to automate their birth and death records. What additional resources
are required from Federal Government agencies to stop the increasing
levels of identity theft?
First: Standardization of birth records and electronic access to
state birth and death records. These are most important--the birth
certificate is the primary document used to establish entitlement to
U.S. citizenship and is easy to obtain.
Also, access to the INS' naturalization database is a resource that
would benefit us immensely. Access to this database would help our
passport adjudication and identity confirmation process, prevent
citizenship fraud and avoid duplication of data entry and adjudicative
effort by both agencies. The Bureau of Consular Affairs has opened
discussions with INS on this.
Recently introduced bills in the Congress would mandate a common
national format and security features for driver's licenses. The
Department supports enactment of legislation to standardize U.S.
driver's licenses. The driver's license is a principal form of
identification that passport applicants present and is critical to our
adjudication process.
5. What should Congress consider to stop the wholesale document
fraud that has made it very difficult to distinguish illegal aliens
from U.S. citizens and made it easy for terrorists to obtain
counterfeit documents?
Determining an individual's identity and citizenship, whether in
the context of an application for a U.S. passport or otherwise, is
certainly complicated by the lack of uniformity between local
governments in the creation and maintenance of vital records, and in
the issuance of drivers licenses or state ID's. Nevertheless, the
Department of State believes that our passport process is quite secure
and that our process serves to both deter and to detect attempts to
commit citizenship fraud.
Local governments should not be in the position of adjudicating an
individual's citizenship. Nationality law cases can be both legally and
factually complex. In a small minority of cases, even individuals born
in the US may not have acquired US citizenship, or may have lost
citizenship at some point in time. At present, a US passport, a
Certificate of Naturalization, or a Consular report of Birth Abroad are
the principal documents establishing an individual's citizenship.
Because only twenty percent of US citizens have a passport, the
majority of citizens never apply for any official document attesting to
their citizenship.
6. It sounds like the INS has been the only agency that has
actively pursued organized criminals who manufacture counterfeit Social
Security cards for ``wholesale distribution.'' What programs has your
agency initiated to combat the widespread use of counterfeit Social
Security cards and false or stolen SSNs?''
Statutory authority limits the Department's involvement, through
the Bureau of Diplomatic Security (DSS), to violations pertaining to
passports and visas. Fraudulent social security cards, however, can and
indeed frequently do provide a nexus. Accordingly, DSS has conducted,
and continues to conduct undercover operations with a view toward
dismantling organizations, and apprehending individuals engaged in the
production or procurement of fraudulent documentation. Indeed, the bulk
of recently implemented DSS undercover operations are being conducted
with the active participation of INS, USCS, DEA, state and local law
enforcement entities. Recent DSS undercover operations have been
successful in closing down organizations engaged in the full-scale
production of fraudulent identity packages, which included birth
certificates, driver's licenses, and Social Security cards, used in
application for U.S. passports. Additionally, our undercover operations
successfully targeted organizations that had obtained genuine U.S.
passports, which were later altered for use by individuals who were not
entitled to them. Further, standard procedure calls for referring
developed case information to the appropriate authority whenever DSS
investigations uncover criminal activity outside of its core statutes.
It should be noted that fraudulently obtained Social Security cards are
often used as a means of identification, along with driver's licenses,
when submitting bogus passport applications (DSP-11). In block 6 of the
DSP-11, the applicant is requested to write or type his/her Social
Security number. Use of a fraudulent Social Security card for
identification purposes or providing a false Social Security number on
the DSP-11 constitutes a violation of 42 USC 408, a 5-year felony. For
this reason, DS agents in the field often conduct joint investigations
with Special Agents assigned to the Social Security Administration OIG.
7. The SSA IG has emphasized the need to quickly implement the
Enumeration at Entry (EAE) initiative, which will assign SSNs to
certain immigrants who need one at the point they are legally admitted
to the United States. Could you explain the Department of State's role
in EAE? Do you think it will help prevent fraud in assigning SSNs to
non-citizens? What other benefits do you think will result from EAE?
SSA has been working on this initiative since 1999; what has caused the
delay in implementation? What has the State Department been doing to
help get this initiative under way?
The Bureau of Consular Affairs welcomes the Social Security
Administration's efforts to obtain immigrant visa records
electronically to support its enumeration of newly arrived immigrants
admitted for permanent residence. We have updated the software in our
modernized immigrant visa system to accommodate Social Security's data
needs. We just deployed a beta test of this system to Manila. After
Manila, several other posts will also test it. This datasharing has
three partners, the Bureau of Consular Affairs at State, the
Immigration and Naturalization Service and Social Security. All parties
are working together very closely. The initiative will reduce fraud in
enumeration and encourage interagency cooperation in providing benefits
to immigrants.
8. We understand that the EAE initiative will assign numbers to
persons legally admitted for permanent residence. Will this initiative
be expanded to persons temporarily admitted to the U.S. for work
purposes (e.g. seasonal workers, au pairs, and so forth)? If not, what
would you suggest to help ensure SSNs are properly assigned to these
individuals in a timely manner?
The Social Security Administration has contacted the Bureau of
Consular Affairs about extending this initiative beyond immigrants to
nonimmigrants, such as temporary workers or exchange visitors, who need
Social Security numbers. The Bureau of Consular Affairs welcomes the
idea and our Bureau and Social Security are planning to hold an
interagency meeting, hosted by Social Security, on this topic before
the end of October.
9. In light of troubling reports from law enforcement at both the
Federal and State level that counterfeit birth certificates and loose
local control of birth and death certificates exist, what can Congress
do legislatively to tighten up such lax controls and make it more
difficult to counterfeit a birth certificate? What revisions and/or new
laws would provide law enforcement the necessary tools needed to stop
these types of crimes? What further recommendations can you provide to
Congress in this area?
The Department supports implementation of the provisions of IRAIRA
'96 which established the interagency Task Force, chaired by INS, to
define and publish as regulations security standards for State birth
certificates. The Task Force has been slow to act.
The Department also supports the enactment of legislation that
would mandate that only birth certificates issued by State authorities
(as opposed to local authorities) are valid for Federal uses. We also
believe that unrestricted public access to birth records via the
Internet should be prohibited.
More and more local governments across the nation are establishing
websites on the Internet that permit direct, unrestricted, on-line
access to actual birth records.
Since the Department generally accepts certified copies of state
and local U.S. birth records as primary evidence of U.S. citizenship
for passport application purposes, we are very concerned about the
vulnerability of vital records accessible over the Internet.
Records posted to the Internet can be accessed, downloaded, altered
and/or printed out by anyone with a home computer. Individuals can
match their age, gender or other facts of birth and request certified
copies of genuine records from the county or state.
The National Association of Public Health Statistics and
Information Systems (NAPHSIS), a locally based national association of
State vital records and public health offices, has contracted with the
Social Security Administration (SSA) to design the Electronic
Verification of Vital Events system (EVVE), an online verification
process. Short-term pilots began in August 2002. While we are
enthusiastic about the EVVE process, we recognize that this is a long-
term project involving non-government organizations and the fifty
states, each of which has different rules as to document availability,
systems development and funding. We anticipate that the project could
take 10 or more years to complete, but we believe that the project
could be expedited through increased Federal Government emphasis on the
initiative.
10. Terrorists exploited the weak procedures for document issuance
of several States to obtain valid, but improperly issued, identity
cards, which allowed them to engage in their terrorist activities on
September 11, 2001. Virginia has made reforms to drivers' license
procedures since then. Mrs. Phillips' testimony suggests it is still a
problem in many States. How do we get other States to reform their
practices to make it more difficult for terrorists to get State issued
identification?
Recent bills introduced in the Congress would mandate a common
national format and security features for driver's licenses. The
Department supports enactment of legislation to standardize U.S.
driver's licenses. The driver's license is a principal form of
identification that passport applicants present and is critical to our
adjudication process.
The American Association of Motor Vehicle Administrators (AAMVA) is
a voluntary, non-profit, tax exempt, educational organization. AAMVA
represents the state and provincial driver license and law enforcement
officials in the United States and Canada, who are responsible for
administration and enforcement of laws pertaining to the motor vehicle
and its use, including licensing. AAMVA encourages uniformity and
reciprocity among the States and provinces, and liaison with other
levels of government and the private sector. The States are generally
willing to accept standardization and AAMVA is developing uniform
standards, but we believe that implementation of a common national
format for U.S. driver's licenses could be expedited through a Federal
mandate.
11. Federal law enforcement has informed the Congress and the
public of a continuing threat from terrorists using false identities.
The practices of some Federal agencies and many State agencies have
made it relatively easy to obtain valid identity documents using
counterfeit source documents. Should there be Federal laws setting
minimum standards for confirming identity before issuing identity
documents to reduce this vulnerability?
The Federal law defining a passport states that it is a document
showing the bearer's origin, identity and nationality. The Department
may not issue a passport until it is satisfied with an applicant's
identity. See 8 USC 1101 (a) (30) and the supporting passport
regulations, 22 CFR, Part 51. We believe at this point that the present
broad cooperation among the states and Federal agencies creates the
right environment for achieving the national goal of secure basic
identity documents.
12. Mrs. Phillip's testimony indicated that on-line access to
Social Security records will enable your agency to compare documents
submitted against official data bases, and will improve the accuracy
and integrity of the citizenship and identity confirmation processes.
She also said that your Agency has done preliminary work with SSA and
State Vital Statistics Offices toward this goal. Can you describe
specifically what work has been done? Will this goal be achieved? What
is your timeframe?
The Department has discussed with the Social Security
Administration (SSA), the feasibility of establishing a data link that
would provide the Department with access to current SSN data and death
records. Both agencies have identified the fields that are available
that might be used in the data exchange process to confirm identities.
The next step will be to determine the feasibility of establishing a
communications network between the two organizations. Systems groups
from both organizations would need to be heavily involved in the
development process to ensure that the final goal is achieved.
Until the data link can be established, passport specialists
continue to have access to static SSN reference tables that assist in
determining that SSN data provided by passport applicants is accurate.
In addition, the Department recently upgraded its Photodig Travel
Document Issuance System to include a new Social Security matrix that
provides information that can be used to validate a Social Security
number and the state and date of birth provided by the applicant.
The Department has held discussions with SSA and NAPHSIS regarding
getting access to EVVE database that is currently being designed and
tested to bring all State-level records of births and deaths together.
Access to this database will enhance the integrity of the passport
issuance process by significantly inhibiting the use of false or
misappropriated supporting documents.
This is a long-term project that could take 10 or more years to
complete, but we believe that the project could be expedited through
increased Federal Government emphasis on the initiative.
U.S. Secret Service
Washington, DC 20223
October 31, 2002
The Honorable Clay Shaw
Chairman
Subcommittee on Social Security
House Committee on Ways and Means
U.S. House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman:
I am writing to respond to a series of questions the Subcommittee
has submitted for the record, pursuant to my testimony before the House
Ways and Means Subcommittee on Social Security and the House Judiciary
Subcommittee on Immigration on September 19, 2002. The subject of the
hearing was ``Preserving the Integrity of Social Security Numbers and
Preventing Their Misuse by Terrorists and Identity Thieves''. I hope
the information below is useful to the Subcommittee as it further
examines this important issue.
1. Sheik Mohamed Abdirahman Kariye is currently being held without
bail in Portland, Oregon under charges that include false information
while applying for and receiving three different Social Security cards
between 1983 and 1995. Does the Secret Service request information from
the Social Security Administration that would identify people who have
received multiple Social Security numbers and/or who have requested/
received multiple Social Security cards?
Answer: The Secret Service requests information from the Social
Security Administration when there is a specific investigative need in
a case involving a Secret Service core violation.
Does the Secret Service utilize ``data mining'' techniques to
identify investigative leads for professional identity thieves and
terrorists?
Answer: As part of our efforts to investigate identity theft and
other financial crimes, the Secret Service does apply such techniques
to data our agency receives from other sources.
Is there information you currently need that you are not receiving
or are not receiving in a timely manner from the Social Security
Administration?
Answer: No. The Secret Service consistently receives sufficient
information in a timely manner from the Social Security Administration.
2. Operation Tarmac has just scratched the surface of the
potentially tens of thousands of illegal aliens and smaller numbers of
U.S. citizens using false identities who hold security clearances
issued by private companies under contract to municipal and government
agencies. The Secret Service is an important security element for
Federal Government buildings and for key government officials. Has the
Secret Service sought the assistance from Immigration and
Naturalization Service (INS) and/or the Social Security Office of the
Inspector General to initiate similar reviews of security clearance
documents for contract employees with access to Federal buildings? If
not, why?
Answer: The Secret Service is responsible for the security of the
White House Complex--which includes the White House itself, the
Eisenhower Executive Office Building and the Department of the
Treasury--and the Naval Observatory, which serves as the residence of
the Vice President. The Secret Service follows a number of well-
established procedures to ensure that only appropriate individuals have
access to those buildings and sites under our control.
If people who have obtained security clearances using false
identity documents represent an unacceptable risk at airports, aren't
they also a risk for subway systems, railroads, Federal Government
offices, hazardous material sites, and government weapons laboratories
and nuclear power plants?
Answer: Individuals who obtain security clearances by any type of
deception are always of concern, especially when such individuals
access sensitive venues. However, security clearances are typically
provided by the government agency with oversight authority for a
specific location. The Secret Service has no jurisdiction to implement
security programs at subway systems, railroads, most Federal Government
offices, hazardous material sites, weapons laboratories and nuclear
plants.
Doesn't the Secret Service have a responsibility to initiate
actions to ``clear out'' these high risk workers?
Answer: The Secret Service does not have statutory authority to
initiate investigations of ``high risk'' workers other than those
employees or contractors who may be working at Federal buildings
secured by the Secret Service.
3. We know that identity theft is pervasive and is increasing at an
exponential rate. In your testimony, you noted that the Administration
strongly supports the provisions of S. 2541, the ``Identity Theft
Enhancement Act of 2002'' introduced in the Senate. Will the increased
penalties for identity thieves proposed in the bill be sufficient to
curb this kind of crime?
Answer: The Secret Service strongly supports the enhanced penalties
set forth in S. 2541. These increased penalties will not only provide
the appropriate level of punishment, but also serve as an effective
deterrent for those considering engaging in this form of fraud.
Are there other changes in law you would recommend?
Answer: The Secret Service supports any initiatives that will make
identity theft more difficult and our personal information more secure.
Specifically, we note that while section 1028 of Title 18 criminalizes
the use of another individual's information to commit a crime, it does
not address the sale of personal data. Currently, there are no Federal
criminal statutes to address such sales by brokers who are often found
in computer ``chat rooms'' and other similar forums.
4. What do you see as the next frontier for identity thieves, as
far as emerging sources of personal information? What changes in
current law could be made to cut off new avenues of information that
identity thieves would use?
Answer: The continued growth of the Internet, e-commerce, and the
increased connectivity between individuals, businesses, and government
will only increase the availability of personal information. We should
expect that as technology continues to evolve, so will its criminal
abuses. In order to preserve the security of confidential personal
information, there must be incentives for private industry to take
steps necessary to safeguard it.
5. A March, 2002 GAO study described a 40% increase in identity
thefts reported to the Social Security hotline during a 7-month period
in 2001, over the same period in 2000. Should we expect a continuation
of this rate increase?
Answer: The number of cases reported is likely to continue to
increase as the public becomes better educated about identity theft,
and greater efforts are made to statistically document the various
forms of identity theft.
6. What should Congress consider to stop wholesale document fraud
that has made it very difficult to distinguish illegal aliens from U.S.
citizens and made it easy for terrorists to obtain counterfeit
documents?
Answer: The issue of counterfeit documents, particularly
``breeder'' documents such as drivers' licenses and birth certificates,
has been a growing problem within the United States. Of particular
concern is the dependency of terrorist organizations on counterfeit
documents, particularly travel-related documents, which are used to
facilitate unimpeded travel between countries. Congress may wish to
further examine potential remedies to this problem, and include in that
discussion any interested law enforcement and government agencies, as
well as private sector representatives, who could provide valuable
insight and expertise with respect to this issue.
7. It sounds like the INS has been the only agency that has
actively pursued organized criminals who manufacture counterfeit Social
Security cards ``wholesale.'' What programs has the Secret Service
initiated to combat widespread use of counterfeit Social Security cards
and false or stolen SSNs?
Answer: As part of our investigative mission, the Secret Service
actively investigates the manufacturing of counterfeit Social Security
cards, birth certificates, driver's licenses, employment identification
cards and other counterfeit government documents. The Secret Service,
both individually and with task forces throughout the country, is
focused on the suppression of counterfeit identification plants.
8. Are operations similar to ``Operation Tarmac: (i.e., ID checks
conducted at airports) being considered at other entry points, such as
seaports? To what degree are full background checks being conducted?
Can you provide any particular details regarding recent arrests or
investigations relative to entry points into our country? What
suggestions do you have relative to the issues we are discussing today,
particularly preventing SSN fraud, to help secure our seaports?
Answer: The Secret Service does not have jurisdictional authority
over security at entry points and does not conduct background checks
for entry points.
I hope this information is helpful to the Subcommittees. If I can
answer any additional questions, or provide any further information,
please do not hesitate to contact me.
Sincerely,
Robert Bond
Deputy Special Agent in Charge
Federal Bureau of Investigation
Washington, DC 20535
Question #1: Is there information you currently need that you are not
receiving or are not receiving timely from the Social Security
Administration? If so, what information, and do you know the reasons
for the non-receipt or the delay in receipt? What results would
receiving such information or receiving such information more timely
produce?
Response #1
As a whole, there does not appear to be a problem for the FBI in
receiving necessary information from the Social Security Administration
(SSA). However, there is no way to identify whether or not on a case-
by-case basis there is an existing problem. The FBI does not routinely
receive fraud referrals from the SSA.
Question #2: Operation Tarmac has just scratched the surface of the
potentially tens of thousands of illegal aliens and smaller numbers of
U.S. citizens using false identities who hold security clearances
issued by private companies under contract to municipal and government
agencies. If such people represent an unacceptable risk at airports,
aren't they also a risk for subway systems, railroads, Federal
Government offices, hazardous materials sites, and so on? Is the
Federal Government going to take further initiatives beyond the airport
investigations? Shouldn't such agencies ``clear out'' these high-risk
workers?
Response #2
A number of FBI field offices participated in Operation Tarmac,
which was an Immigration and Naturalization Service (INS) initiative
mainly through government fraud task forces. Some offices have also
been active in similar type operations, with the Department of
Transportation and the U.S. Customs Service targeting individuals
employed in the same type of capacity. In cities such as Miami, Dallas,
Houston, Salt Lake City, and New York there have in the past few months
been hundreds of arrests in such sweeps. History has shown the
vulnerability of our airports. These sweeps were priorities due to the
vast number of workers and the fact that they were either in, had
unfettered access to, or controlled secured areas of the airport.
Any other immigration initiatives of this type would typically be
initiated by the INS, since these matters are primarily under their
jurisdiction. Such people targeted in Operation Tarmac would also be a
risk if employed in subway systems, railroads, Federal Government
offices, hazardous materials sites, and other such locations.
Question #3: We know that identity theft is pervasive and is increasing
at an exponential rate. The Attorney General has endorsed S. 2541,
introduced in the Senate. Will the increased penalties in that bill be
sufficient to curb this kind of crime?
Response #3
S. 2541 would substantially increase the criminal penalties
applicable to the most serious forms of identity theft, and would
streamline the requirements for prosecuting Federal identity theft
offenses. The actual deterrent effect of such measures can only be
determined over time, but we believe that these important reforms,
together with other measures designed to combat identity theft, will
strengthen the ability of federal law enforcement to address this
growing and serious problem.
Question #4: A March 2002 GAO study described a 40% increase in
identity thefts reported to the Social Security hotline during a 7-
month period in 2001, over the same period in 2000. Should we expect a
continuation of this rate of increase?
Response #4
It is difficult for the FBI to predict future increases in identity
theft reported to the SSA Hotline. However, without changes being made
to the availability of personal identifying information and without any
standardization of documents used to take over someone's identity such
as birth certificates, state issued identification cards, and state
issued driver's licenses, further identity theft increases are
probable.
Question #5: What should the Congress consider to stop the wholesale
document fraud that has made it very difficult to distinguish illegal
aliens from U.S. citizens and made it easy for terrorists to obtain
counterfeit documents?
Response #5
The safeguarding of personal identifying information, including
Social Security Numbers, appears to be a key component in protecting
one's identity from fraud. Safeguarding includes security features on
actual documents as well as limitations on the sale and distribution of
personal account information.
Question #6: It sounds like the INS has been the only agency that has
actively pursued organized criminals who manufacture counterfeit Social
Security cards for ``wholesale''. What programs has the FBI initiated
to combat the widespread use of counterfeit Social Security cards and
false or stolen SSNs?
Response #6
The FBI typically investigates fraudulent Social Security cards and
the use of false or stolen Social Security Numbers in conjunction with
other criminal matters, such as check fraud, credit card fraud, loan
fraud, mail fraud, wire fraud, computer crimes, and terrorism matters.
The FBI typically investigates organized groups involved in identity
theft activities including the misuse of someone's Social Security
Number.
An example of one of these cases investigated by the Detroit
Division relates to five subjects who used the identity of their
victims to obtain mortgages on the victims' homes, which had no liens.
Over $1.2 million was obtained by the subjects through this scheme.
They used the victims' identities, including their Social Security
Numbers, to complete documentation to receive these loans. At the
closings, they presented counterfeit Social Security cards and fake
driver's licenses to the title company representatives as
identification.
Another example of an FBI investigation involved 15 subjects and
over one half million dollars in fraud. These subjects used sources
inside businesses, such as car rental companies and hospitals, to
provide forms that had personal identifying information regarding their
customers. These forms were used to extract such information, as well
as to obtain the credit card number used as payment. The subjects then
contacted the credit card issuer purporting to be this person. They
used the information from the form to provide the Social Security
Number, date of birth, and home address of their victims to confirm
they were the accountholders. Then they requested to add authorized
users to the accounts and get additional cards issued. The subjects
then intercepted these cards, which were going to be delivered to the
various victims' homes, and used them to obtain merchandise as well as
cash advances.
Question #7: Are operations similar to ``Operation Tarmac'' (i.e., ID
checks conducted at airports) being conducted at airports being
considered at other entry points such as our seaports? To what degree
are full background checks being conducted? Can you provide any
particular details regarding recent arrests or investigations relative
to entry points into our country, particularly our seaports? What
suggestions do you have relative to the issues we are discussing today,
particularly preventing SSN fraud, to help secure our seaports?
Response #7
As stated in question number 2, the FBI participated in Operation
Tarmac, which was an INS operation as well as being actively involved
in other operations regarding airport workers. However, this question
would be better directed to the INS, the U.S. Customs Service, and any
other agency that has jurisdiction regarding matters occurring at entry
points into the United States. The FBI does not typically investigate
point of entry matters but may get involved in such matters where the
criminal violation is also under the FBI's jurisdiction. The U.S. Coast
Guard has also played a traditional role inside the international
waters contiguous to the United States.
Full background checks at the airports are conducted by the
employing companies, and spot checks of these background checks have
been made by FAA in past years. With the entrance of Homeland Security,
and through the Transportation Security Administration, oversight of
these background checks may indeed intensify. Such an intensification
would appear to be in line with their regulatory oversight of
transportation and transportation facilities.
Social Security Administration
Baltimore, Maryland 21235-0001
November 8, 2002
The Honorable E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
House of Representatives
Washington, D.C. 20515-0922
Dear Mr. Shaw:
In response to your letter of October 10, 2002, we submit the
following answers to your questions for the record to supplement my
testimony at your Subcommittees' joint hearing on Preserving the
Integrity of Social Security Numbers (SSN) and Preventing Their Misuse
by Terrorists and Identity Thieves held on September 19, 2002.
1. Expanding from the Operation Tarmac investigations by the
Immigration and Naturalization Service (INS) with the support of other
Federal agencies, there are potentially tens of thousands of illegal
aliens and smaller numbers of U.S. citizens using false identities who
hold security clearances issued by private companies under contract to
municipal and government agencies.
a. If such people represent an unacceptable risk at airports,
aren't they also a risk for subway systems, railroads, Federal
Government offices, hazardous materials sites, and so on?
Yes. Such people could present risks to facilities deemed part of
our nation's critical infrastructure. We recommend that the workload
required to address these vulnerabilities be prioritized in accordance
with the harm potential of each individual site. It is important to
stratify our priorities in order to meet these challenges in a cogent
manner.
b. Is the Federal Government going to take further initiatives
beyond the airport investigations?
Yes. Under the auspices of many United States Attorney's Offices
across the nation, we are reviewing nuclear plants, and informal
discussions are underway to expand our efforts to include sites such as
dams, bridges and seaports. Additionally, SSA/OIG has begun to review
Federal sites which employ contract guards under the purview of the
Federal Protective Service (FPS) and GSA.
c. Shouldn't it be made incumbent on such agencies to ``clear out''
such high-risk workers?
SSA/OIG believes that agencies should periodically review their
work force to identify high-risk workers. It is the responsibility of
each individual agency that employs high-risk workers at such sites to
review their own personnel files and take such steps as necessary to
properly screen their work force. SSA/OIG stands ready to assist these
agencies in matching files and records as allowed by law.
2. We know that identity theft is pervasive and is increasing at an
exponential rate. The Attorney General has endorsed legislation
introduced in the Senate to increase the penalties for identity theft.
Will that bill be sufficient to curb this kind of crime?
While SSA/OIG cannot state that S. 2541, the ``Identity Theft
Penalty Enhancement Act of 2002'' will, in and of itself, be sufficient
to curb identity theft, we are supportive of the legislation. In our
view it builds upon and strengthens the identity theft legislation
enacted in 1998 and codified at 18 U.S.C. Sec. 1028(a)(7). We have
reviewed and compared the felonies listed in the legislation with
felonies which Special Agents from our Office of Investigations have
used, or could use, in SSN misuse cases. Based on this review, we
suggest the addition of the following four felony violations to section
1028A(c), created by S. 2541. The four sections are: (1) 18 U.S.C.
Sec. 371 (Conspiracy to commit offense or to defraud the United
States); (2) 18 U.S.C. Sec. 641 (Public money, property or records);
(3) section 811 of the Social Security Act (42 U.S.C. Sec. 1011); and,
(4) section 1632 of the Social Security Act (42 U.S.C. Sec. 1683a). We
believe the addition of these four felony violations will strengthen S.
2541.
As discussed in more detail in response to the last part of
question 7 and to question 9, we also recommend additional legislative
initiatives we believe will help address SSN misuse and identity theft.
3. A March 2002 GAO study described a 40% increase in identity
thefts reported to the Social Security hotline during a seven-month
period in 2001, over the same period in 2000. Should we expect a
continuation of this rate of increase?
While SSA/OIG expects the calls reporting identity theft to
increase, SSA/OIG is currently taking steps to forward a significant
portion of these reports directly to the Federal Trade Commission
(FTC), which has been designated the national clearinghouse, in
accordance with Congress' wishes. Many of these are allegations
involving issues such as credit card misuse or obtaining loans, goods,
and/or services not directly related to SSA's programs and operations.
In this way, the callers information will be immediately available to
Federal, State and local law enforcement who have access to FTC's
Identity Theft database. SSA/OIG is also updating its brochure and
website information to direct victims of SSN misuse to the FTC.
Consequently, SSA/OIG will focus its resources on SSN misuse
allegations related to SSA programs and operations.
4. What should Congress consider to stop the wholesale document
fraud that has made it very difficult to distinguish illegal aliens
from U.S. citizens, and made it easy for terrorists to obtain
counterfeit documents?
SSA/OIG audit and investigative work has identified three distinct
approaches to SSN integrity for which legislation is critically needed.
The first area is limiting the use and display of the SSN already in
circulation in the public and private sectors. Second, the present
arsenal of criminal, civil, and administrative penalties is clearly
insufficient to deter and/or punish identity thieves. The third
approach is requiring the cross-verification of SSNs through both
governmental and private sector systems of records to identify and
address anomalies in SSA's files, and in data bases at various levels
of government and the financial sector (we discuss SSN verification
later in this document).
Specific needs for legislation to curtail the use of counterfeit
documents include:
LApplying the Civil Money Penalty to the felony
provisions of the Social Security Act in the area of SSN
misuse;
LEnhancing the penalties for identity theft
violations, to include selling SSNs and other Social Security
information;
LImmediately curtailing the public display of SSNs on
identification cards, motor vehicle records, court documents,
and the like;
LRestricting private and governmental use of SSNs,
including the display of SSNs on government checks and driver's
licenses or motor vehicle registrations, and some prohibitions
of the sale, purchase, or display of the SSN in the private
sector;
LProhibiting prison inmate access to SSNs;
LRestricting unfair or deceptive acts or practices,
such as refusals to do business without receipt of an SSN; and
LTreating credit header information as confidential.
5. What programs has your office initiated to combat the widespread
use of counterfeit Social Security cards and false or stolen SSNs?
SSA/OIG actively pursues cases involving the trafficking of SSNs.
SSA/OIG's Office of Investigations (OI) Field Divisions regularly
investigate allegations of SSN misuse related to program fraud.
Furthermore, five OI Field Divisions are active Members of identity
theft task forces, focusing on counterfeit documents and the
trafficking of documents.
Immediately after the tragic events of September 11, 2001, we
intensified our efforts to combat the enumeration of individuals who
use false evidentiary documents to suborn the enumeration process. As
part of these efforts, we continue our close liaison with Anti-
Terrorism Task Forces around the nation. With other Federal, State and
local law enforcement agencies, we continue to investigate allegations
of SSN misuse that affect the Nation's critical infrastructure, such as
airports.
SSA/OIG/OI personnel have been trained in the identification of
fraudulent documents. We are in the process of expanding and upgrading
our training efforts in the detection and identification of fraudulent
documents during the enumeration process. In conjunction with regional
antifraud initiatives, SSA/OIG/OI Field Divisions conduct training in
an effort to assist SSA Field Office personnel in detecting false
documentation.
Additionally, SSA/OIG, in partnership with SSA, has been heavily
involved in several pilot projects designed to detect fraudulent
documents. SSA/OIG continues to meet with SSA to enhance the Modernized
Enumeration System and subsequently reduce the enumeration of
individuals presenting false documents. SSA/OIG has also been
instrumental in effecting a policy change mandating that all INS
evidentiary documents be verified by INS, as discussed below.
Recognizing the SSN's importance in non-citizens' assimilation in
U.S. society, SSA established an Enumeration Task Force in November
2001 to examine and establish policy that would strengthen SSA's
procedures. As a Member of this Task Force, SSA/OIG has shared many
insights and ideas with SSA, which we believe will help increase
integrity of the enumeration process.
SSA/OIG's Office of Audit (OA) has issued numerous reports
addressing SSN integrity. These reports included recommendations that
addressed vulnerabilities in several SSA processes including assignment
and issuance, employer wage reporting, and death master file reporting
and issuance. SSA elected to implement many of these recommendations.
Additionally, after the events of September 11, 2001, SSA revisited its
position on many of our prior recommendations that it had either not
yet disagreed with or implemented. In several cases, SSA decided to
escalate the implementation of some recommendations, and reversed its
position on others.
In our May 2002 Management Advisory Report, Social Security Number
Integrity: An Important Link in Homeland Security, we provided insight
into what more needs to be done to ensure SSN integrity in a post-
September 11th environment. Our audit and investigative work has shown
that there are three stages at which protections for the SSN must be
put in place: upon issuance, during the life of the number holder, and
upon that individual's death. To address vulnerabilities at each of
these three stages, we suggested that SSA and Congress pursue the
following actions: (1) independently verify birth and immigration
records; (2) limit the SSN's public availability; (3) prohibit the sale
and limit the display of SSNs; (4) enact strong enforcement mechanisms
and stiff penalties; and (5) do more to protect the SSN after the
number holder's death.
We have also reviewed SSA programs that assist employers in
recognizing incorrect name and SSN combinations on their wage reports,
which could include false or stolen SSNs. Our September 2002 audit The
Social Security Administration's Employee Verification Service for
Registered Employers (A-03-02-22008) evaluated the policies and
procedures SSA had in place to provide information to registered users
of the Employee Verification Service (EVS). The purpose of the EVS
program is to ensure that employees' names and SSNs are valid before
employers' wage reports are submitted to SSA. The use of EVS is
voluntary, and can assist employers in eliminating common SSN reporting
errors. Employers who wish to verify 51 or more SSNs at one time are
encouraged to register for the EVS program. There are approximately
7,400 registered employers in the EVS program--including about 260
third-party users who submit requests on behalf of their clients.
However, while the number of employers registering with EVS has
increased since 1997, less than 1 percent of all U.S. employers are
registered to use the service. Furthermore, only 392 employers (5
percent of those registered) submitted data to SSA since 1999. Finally,
EVS did not disclose pertinent information that could have assisted
registered employers to detect potential SSN problems. Specifically,
SSA did not inform employers when a submitted SSN belonged to a
deceased individual. In response to our report, SSA states it planned
to review the information shared with employers. In addition, SSA is
piloting an online version of EVS, the Social Security Number
Verification Service, which SSA hopes will increase employer usage of
the SSA verification program.
6. Your office has issued several reports related to the Earnings
Suspense File and cited many instances of employers and industries that
continually submit erroneous wage reports.
a. Has your office initiated any investigations based on these
findings?
SSA/OIG's Offices of Investigation and Audit reviewed the instances
of employers and industries that submit erroneous wage reports. It is
our view that under the current statutory scheme, the IRS was best
equipped to address this situation and issue penalties. Therefore, we
have met with IRS auditors and shared this information, while
encouraging them to review IRS enforcement actions related to erroneous
wage reports. In addition, it is our understanding that SSA has also
shared specific problem employer information with the IRS.
b. Will your office utilize ``data mining'' techniques to identity
employers that consistently make questionable mistakes in large numbers
of wage reports?
Yes. SSA/OIG's September 1999 audit report, Patterns of Reporting
Errors and Irregularities by 100 Employers with the Most Suspended Wage
Items (A-03-98-31009), identified those employers with the most
suspended wage items from Tax Years (TY) 1993-1996. In the report, we
concluded that a relatively small number of employers account for a
disproportionate share of the suspended items and dollars in the ESF,
which is the repository for wage items that fail to match name and SSN
to SSA records. The types of reporting errors and irregularities by the
Top 100 employers for the 4-year period included large numbers of:
unassigned SSNs, e.g., one employer had over 6,500 unassigned SSNs;
zero SSNs, e.g., one employer had 663 SSNs in which all 9 digits were
`0'; consecutively numbered SSNs in which the first 6 digits were
identical; and duplicate mailing addresses for 3 or more employees.
In this report, we stated that many of the wage reporting problems
warranted follow-up action by SSA. Therefore, we recommended that SSA:
Ldevelop and implement a corrective action plan for
the 100 employers and continue its efforts to contact those
employers responsible for large numbers of suspended wage
items;
Lestablish preventive controls to detect wage
reporting errors and irregularities;
Lidentify those employers who continually submit
annual wage reports with large numbers and/or percentages of
unassigned, identical, and/or consecutively numbered SSNs; and
Lrun address standardization software as soon as
practical after employers submit their annual wage reports to
identify employers who report the same address for many
employees.
In addition, OA has recently started an audit to revisit the issues
highlighted in the 1999 report. Our review will assess SSA's
implementation of the recommendations made in the top 100 employers'
report as well as other actions or initiatives related to employers
with large numbers of suspended earnings. In addition, later this
fiscal year we plan to initiate another ``data mining'' audit to
identify the top 100 employers with reporting irregularities during Tax
Years 1997 through 2000. We also understand that the Internal Revenue
Service will be reviewing employer reporting for this same 4-year
period to identify non-compliant employers and determine what
corrective actions are necessary--to include penalties.
c. Are there legal or policy barriers to making the names of such
``scoff law'' employers public?
Wage and earnings information provided by employers that is placed
in SSA's Earnings Suspense File is taxpayer return information and its
disclosure is subject to 26 U.S.C. Sec. 6103, which controls the
disclosure of Internal Revenue Service data.
7. In your testimony, you ask for civil monetary penalty authority
to impose penalties against those who misuse SSNs. Can you provide more
details as to what authorities you are specifically looking for?
SSA/OIG is seeking authority to impose civil monetary penalties for
those criminal provisions of section 208 of the Social Security Act (42
U.S.C. 408). This would include those who:
LUse a SSN obtained by false information;
LFalsely represent a SSN to be theirs;
LKnowingly alter a SSN, or intend to alter it;
LKnowingly buy or sell a card that is or purports to
be a card issued by the Commissioner of Social Security;
LCounterfeit a Social Security card, or possess a
counterfeit Social Security card with intent to buy or sell it;
LDisclose, use or compel the disclosure of, or
knowingly purchase the SSN of any person in violation of any
law of the United States; and
LFurnishes false information to the Commissioner in
connection with the establishment and maintenance of the
records provided for in section 205(c)(2) of the Social
Security Act.
In addition, SSA/OIG is requesting civil monetary penalty authority
for (1) the circumstance of an individual offering, for a fee, to
assist in acquiring for another individual, an additional SSN or a
number that purports to be a SSN; and, (2) violations of certain
provisions of H.R. 2036.
These proposals are designed to supplement the current criminal
penalties in section 208 of the Social Security Act as well as the
criminal provisions in H.R. 2036.
Based on our OA audit reports regarding SSA's Earnings Suspense
File, we would also request authority to impose civil monetary
penalties on employers who knowingly submit incorrect SSNs.
Since the submission of these proposals, another circumstance has
arisen that we feel merits inclusion for both criminal and civil
penalties. SSA/OIG Special Agents have encountered instances of
individuals selling or otherwise allowing another person to use their
identity for fraudulent purposes. As discussed in more detail in the
last part to this question, we believe this should be prohibited.
Do such authorities lie with other agencies now?
The SSN is required by Federal law for the administration of
several Federal programs, including Medicaid, Temporary Assistance for
Needy Families and food stamps. It is our understanding that each of
these programs provides for criminal and civil penalties for improperly
receiving benefits. We would defer to the appropriate oversight agency
for a complete list of applicable statutes.
In addition, from our reading of the Internal Revenue Code, it
appears the IRS may impose a civil monetary penalty against an employer
that files an incorrect W-2.
How would you coordinate?
In those instances where the SSN misuse occurred in the program or
operation of another agency, we anticipate that we would defer to that
agency. We would conduct a joint investigation with that agency should
we be requested or if the circumstances warranted. This would also
apply to the imposition of civil monetary penalties.
SSN misuse that ends up in SSA's Earnings Suspense File has a
direct impact on the programs and operations of SSA. We believe that we
should be able to impose civil monetary penalties in these cases. We
recognize the IRS has a civil penalty for employers providing incorrect
information. We believe that coordination, through a Memorandum of
Understanding as to who would initially proceed in these types of
cases, could be entered into. However, we would defer to the direction
of Congress as to which agency should have the lead.
Don't available resources limit your ability to pursue SSN misuse
today?
Available resources do limit the number of SSN misuse cases SSA/OIG
Special Agents can investigate and the number of audits that can be
performed on SSN misuse. However, from a civil monetary penalty
standpoint, currently, the biggest limitation to pursuing SSN misuse is
the lack of statutory ability to impose a civil monetary penalty, not
necessarily resources. Imposition of a civil monetary penalty under
section 1129 of the Social Security Act is by the Office of the Chief
Counsel to the Inspector General.
What additional resources would you need?
SSA/OIG is acutely aware of the problem of SSN misuse and related
crimes, such as identity theft, where the SSN is a key component. We
believe we have a duty to the American public to safeguard the
integrity of SSN. Additionally, we, as SSA's investigative arm, have a
duty to detect, investigate, and seek prosecution of crimes involving
SSN misuse. Equally important is the responsibility for finding methods
of preventing these crimes from occurring, through process and systems
enhancements.
To address this issue, we propose establishing a core SSN Misuse
Response Team. This integrated model combines the talents of our
auditors, investigators, and attorneys. This team will focus its
efforts on identifying patterns and trends to better target our audit
work, refer cases for investigation, and liaison with other relevant
public and private sector entities. Using the combined skills of its
Members, the team will manage incoming allegations, and using
established protocols, evaluate the investigative merit of each
allegation and determine whether it should be referred to an SSA/OIG
Field Division. This team will also work with the SSA/OIG Office of
Audit to conduct official audits based on leads developed as a result
of the team's analysis and investigations.
Additional audit resources would enable SSA/OIG to target more
reviews at determining how SSA might prevent SSN misuse fraud. Reducing
crimes involving SSN misuse would help SSA meet the expectations of the
American public and improve the public's confidence in SSA's ability to
ensure the privacy of sensitive and personal information.
The team would also act as liaison on projects and initiatives with
task forces involving SSN misuse, credit bureaus, motor vehicle
administrations, the Federal Trade Commission, credit card companies,
and other entities. This is a comprehensive approach, yet focused
enough to allow us to more effectively address this issue and provide
assistance to SSA, Congress, the public, and other law enforcement.
To staff this initiative we would request the following personnel
over the next 5 years. Twenty-two staff for Fiscal Years (FY) 2004,
2205 and 2006. Twenty-four staff for FYs 2007 and 2008. This would be
utilized by the hiring of 88 investigative staff, 14 forensic auditors,
10 attorneys, and 2 computer specialists.
From a civil monetary penalty standpoint, we anticipate that the
recommended legislation would, if enacted, generate a substantial new
civil monetary penalty workload. Significant attorney resources will be
required to process and evaluate such cases.
Are there provisions you would change or add in H.R. 2036?
SSA/OIG would recommend the following additions to H.R. 2036 that
we believe will enhance our ability to combat SSN misuse.
LCurrent legislation requires that an individual needs
to be in possession of five or more false identification
documents before being subject to prosecution. We recommend
that legislation be amended to eliminate the specific number of
documents an individual needs to have in his possession before
being charged.
LCurrent legislation does not prohibit an individual
from selling his/her own identity documents. We recommend that
a legislative enhancement be introduced to prohibit the sale of
one's own identifiers or identification documents to another.
In addition to a criminal penalty, there should also be a
corresponding civil monetary penalty.
LThe ability of SSA or the OIG to verify the SSN of a
felony subject for Federal, State and local law enforcement
officials, similar to the current process whereby SSA verifies
the SSN of individuals for employers.
LEnhance penalties for violations of section 208 of
the Social Security Act, 42 U.S.C. Sec. 408. Potential
structured enhancement of the punishment could be:
LIf the SSN is used to facilitate an act of
terrorism--up to 25 years.
LIf the SSN is used to facilitate drug
trafficking or in connection with a crime of violence--
up to 20 years.
LAfter a prior offense under section 208, a
conviction could result in up to 10 years in prison,
double the current sentence.
LLeave the rest of the violations at the
current punishment--up to 5 years. This would apply to
those individuals who improperly receive benefits from
SSA using a false SSN.
LAmend 18 U.S.C. Sec. 641 to provide for the
aggregation of individual Social Security payments improperly
made to individuals.
LLaw Enforcement Authority for SSA/OIG Special Agents,
codifying the current Memorandum of Understanding between the
Department of Justice and the SSA/OIG, with the additional
ability for the Inspector General to cross-designate State and
local law enforcement officials on a case by case basis.
LAuthority to impose civil monetary penalties on
employers who knowingly submit false SSN information on the
submitted wage and earnings statements.
LEnhanced sentencing guidelines for SSA employees
convicted of improperly providing SSA information or SSNs.
LAuthority to disclose SSA information to law
enforcement to assist in an investigation involving a serious
crime.
8. In light of the widespread use of fraudulent Social Security
documents, the fact they assisted the 9/11 terrorists in committing the
attacks, and the exponential increase of 40% in identity theft reported
to the SSA, should Congress consider giving the SSA/OIG statutory law
enforcement authority?
Yes, Congress should consider giving SSA/OIG statutory law
enforcement. Due to its uniqueness and prevalence in society, the SSN
has become our de facto national identifier, used as a key means of
identification in both the public and private sectors. Today
approximately 300 million people have SSNs. Since the program began in
1936, SSA has issued approximately 390 million SSNs. Since it is so
heavily relied upon as an identifier, it is a valuable commodity for
criminals. It can be obtained in many ways: presenting false
documentation to SSA; stealing another person's SSN; purchasing an SSN
on the black market; and, simply making one up. Congress recognized the
importance of the SSN in enacting the Identity Theft and Assumption
Deterrence Act 1998, P.L. 105-318, by specifically listing the SSN as a
``means of identification.''
From organized crime to illegal aliens, there is an ever-increasing
market for SSNs. More and more, the SSN is being used for
identification purposes. Based on our experience, the SSN is a prime
``breeder document,'' used to obtain other documents including credit
cards, driver's licenses, and so forth. This can be the first step to
committing crimes involving financial transactions, banking, false
identities, and benefit programs. This could also allow the individual
to improperly obtain benefits, items of value, conceal bad debt, avoid
arrest, and if the individual is an alien, to work. Private businesses,
including credit-reporting agencies, cite the value of the SSN in
tracking individuals.
Because of its use as a breeder document, ensuring the integrity of
the SSN has taken on added significance since September 11, 2001. SSA/
OIG Special Agents have been active participants in the Department of
Justice's Anti-Terrorism Task Forces throughout the country, providing
valuable investigative assistance. We have played a key role in 37
airport operations around the country, targeting airport employees who
misrepresent their SSN's to gain access to secure areas. To date, these
operations have resulted in 741 arrests and numerous deportations. A
number of other Homeland Security operations are pending.
With the importance of the SSN in identifying and eliminating
potential threats to our Nation's airports, nuclear power plants and
other critical sites, SSA/OIG has become a vital participant in our
Nation's Homeland Security efforts. With SSA/OIG's role in identity
theft and SSN misuse, as well as its interrelationship to Homeland
Security efforts, it is imperative that SSA/OIG be afforded full
statutory law enforcement authority.
How would your office use these new powers to combat the widespread
use of counterfeit Social Security cards and false or stolen SS
numbers?
Statutory law enforcement authority would reduce SSA/OIG's
administrative burden and provide the most effective use of our
resources. This authority would allow the Inspector General to cross-
designate State and local law enforcement agents to assist OIG Special
Agents in the investigation of Social Security cases, including SSN
misuse. This would provide greater opportunity for additional
undercover operations, identity theft task force involvement and
expanded Homeland Security operations.
9. Are there additional law enforcement tools that you need in
order to address document trafficking, such as increased penalties or
increased information sharing?
We would recommend the enactment of the legislation listed in the
last part of question 7, where we responded as to what additions we
would make to H.R. 2036.
10a. Are operations similar to ``Operation Tarmac'' (i.e.,
conducting ID checks at airports) being considered at other entry
points such as our seaports?
Please refer to our answers to question 1.
b. What degree is a full background check being conducted?
Since each agency conducts security background checks to the level
they deem appropriate, this office does not know whether a full
background check is being utilized. However, we are available to assist
each agency in matching SSA records under the auspices of the DOJ or
otherwise as allowed by law.
c. Can you provide any particular details regarding recent arrests
or investigations relative to entry points into our country,
particularly our seaports?
There have been no arrests at seaports. However, to date there have
been 741 criminal arrests by SSA/OIG personnel at 37 airports. Other
Federal, State and local law enforcement agencies participating in
airport operations effected many more arrests, as well as INS
administrative detentions.
What suggestions do you have relative to the issues we are
discussing today, particularly preventing SSN fraud, to help secure our
seaports?
It is our belief that the same focus and methodology used in
airport operations throughout the country can also be employed at other
points of entry, including seaports.
11. What are your views regarding SSA ``deactivating'' SSNs of
certain individuals?
a. Is it possible?
b. Would it work?
Although ``deactivating'' SSNs is possible, it may be difficult to
share this information with those who encounter these SSNs throughout
the economy. SSA could place an indicator on the record of an
individual with a deactivated record. For example, SSA already places
indicators on an individual's records when they have died or were
issued an SSN for nonwork purposes. In addition, SSA has already
established a special indicator when the Agency believes an SSN was
issued based on fraudulent documents. Nonetheless, we have seen
instances where this information is not being shared with the users of
this information.
As discussed above, EVS allows employers to verifyemployees' names
and SSNs before they submit wage reports to SSA. However, very few
employers actually utilize this service. For this reason, we have
recommended that certain employers be mandated to use this service. In
addition, EVS does not disclose pertinent information that could assist
employers in detecting potential SSN problems. For example, although
SSA knows an SSN belongs to a deceased individual or knows the Agency
issued the number based on fraudulent documents, EVS does not provide
such information to employers. As a result, employers have no way of
knowing that an employee is not entitled to use the SSN.
SSA also shares the SSNs of deceased individuals in a publicly
available Death Master File. Other indicators, such as deactivated
SSNs, could also be shared with the public in a similar way. However,
this information is sold for a fee, which could limit the number of
interested users, and we do not know the full extent of its usage
throughout the economy. We have also found that the Death Master File
has disclosed SSN information when the SSN owner was improperly listed
as deceased. As a result, SSA would need to ensure the integrity of any
data shared in any similar file.
To ensure SSN integrity, we believe SSA has the responsibility to
be the sole source for verifying SSN information and alerting external
entities when they have information that indicates an individual may be
improperly using an SSN. This responsibility supports the need for SSA
to cross verify its data with other Federal, State and local
authorities. However, SSA is not appropriately sharing current
indicators with the public, so a new special indicator to deactivate an
SSN would have to overcome these existing shortcomings. We believe SSA
could improve public notification by modifying and expanding EVS and
its other SSN verification services, including the online SSN
Verification System pilot, the Employer 800-Number, and local field
offices.
12. As discussed in the hearing, have you confirmed whether there
are universities promoting the fact that they will help foreign
students obtain SSNs?
No. Although we have not conducted an audit for the sole purpose of
verifying this situation, previous audit work has identified situations
where SSN applicants have claimed to be students authorized to work,
but INS later confirmed that these individuals were not students and
not authorized to work. In addition, we received an inquiry regarding a
Web site instructing foreign students to go to a certain SSA field
office in New York in order to be enumerated. We advised the SSA
Regional Commissioner of this inquiry. In general, the schemes alluded
to on the subject Web site were known to SSA. In addition, in OA's 2000
audit report on the The Social Security Administration's Procedures for
Verifying Evidentiary Documents Submitted with Original Social Security
Number Applications, we described a large case in California in which
several students of one University used false documents to obtain SSNs.
The case was investigated by our Office of Investigations and it was
determined that store-front ethnic language schools were involved, not
legitimate universities. It was further determined that an SSA employee
was involved in the improper issuance of SSNs in this case, which were
then sold by a middleman. The employee in this case resigned during the
investigation and the middleman has been indicted. Further judicial
action is still pending in this case. Currently, we have no ongoing
audit work in this area. However, we are willing to work with DOJ OIG
as well as SSA and INS to determine if there is sufficient information
available to conduct additional audit work in this area.
An identical letter has also been sent to George W. Gekas,
Chairman, Subcommittee on Immigration, Border Security and Claims. We
are also including a copy of this response on an IBM compatible 3.5-
inch diskette in Microsoft Word format per your directions. If you have
any questions regarding these answers, or need additional information,
please contact H. Douglass Cunningham of my staff at 202-358-6319.
Sincerely,
James G. Huse, Jr.
Inspector General
Electronic Privacy Information Center
Washington, DC 20009
October 25, 2002
The Honorable E. Clay Shaw
Chairman
Subcommittee on Social Security
U.S. House of Representatives
B-316 Rayburn House Office Building
Washington, DC 20515
The Honorable George W. Gekas
Chairman
Subcommittee on Immigration, Border Security, and Claims
U.S. House of Representatives
Dear Chairmen Shaw and Gekas:
Thank you for soliciting additional information from the Electronic
Privacy Information Center (EPIC) following the September 19, 2002
Joint Hearing on Preserving the Integrity of Social Security Numbers
and Preventing Their Misuse by Terrorists. I am honored to have been
called upon to assist the Committee on these issues.
In order the complete the hearing record, I have reprinted the
questions posed below along with answers.
L1. What limitations on sale, purchase, and display of SSNs do
you think Congress should consider? What exceptions, if any, do
you think are necessary to ensure the public can still conduct
business in a reasonably efficient way, but without sacrificing
their privacy and protecting their identity?
Individuals would be best protected from identity theft if serious
limitations were placed on both governmental and commercial use of the
SSN. It is critical that we craft legislation that encourages these
entities to use alternative identifiers. Some entities already have
created alternative identifiers that are not based on the SSN for
customer identification.\1\
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\1\ Robert Ellis Smith, Alternatives to Using Social Security
Numbers in Large Organizations, Privacy Journal, at http://
www.epic.org/privacy/ssn/alternatives__ssn.html.
---------------------------------------------------------------------------
Exceptions may be made for situations where other Federal laws
require the disclosure of the SSN, for instance, for the reporting of
taxable income. However, there should not be blanket exemptions to
protections for personal information.
If a substantial interest exists in creating an exemption for a
particular use of the SSN, statutory protections for the collection and
use of the SSN should be established. Under section 7 of the Privacy
Act, entities that collect the SSN must give notice to the individual
stating whether collection of the information is mandatory or
voluntary, the statutory authority for the collection of the SSN, and
the uses for which it will be employed.\2\ A similar set of protections
should be created for entities that are allowed to collect and use
SSNs. This set of protections should include the ability of individuals
to gain access to all records keyed by the SSN, an obligation on the
data collector to securely store the SSN, limits on the use and
disclosure of the SSN, and a cause of action for the individual if any
of these provisions are violated.
---------------------------------------------------------------------------
\2\ 5 U.S.C. Sec. 552a(7)(b).
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Additionally, we recommend that where possible, exemptions for
continued sale, purchase, or display of the SSN should sunset. We
believe that the guiding principle of SSN protection should be one that
encourages use of alternative identifiers. Sunset provisions will allow
business to be conducted in a reasonably efficient way, and motivate
data holders to migrate to more privacy-friendly practices.
Congress should also explore technical measures to ensure secure
storage and transmission of the SSN. When the SSN must be collected and
used, it should be stored in an encrypted format. In doing so, the data
collector can still use the encrypted result for matching without
exposing the full SSN to employees or others.
L2. You mentioned the pervasiveness of use of SSNs in
conducting business and the need to curb use of the SSNs. To
what extent would you carryover the same concerns to use of
derivatives of SSNs?
The problem with the use of ``derivative'' or partial SSNs is that
the individual pieces may be obtained and the complete SSN then
reconstructed.
Derivative use of the SSN, when done properly, presents less risk
than using the entire identifier. It is important that derivative users
only employ the last four digits of the SSN. Proper derivative use will
reduce risk of identity theft.
I hope these answers adequately address your concerns. If I can be
of further help, please do not hesitate to contact me.
Sincerely,
Chris Hoofnagle
Legislative Counsel
[Submissions for the record follow:]
Statement of the Hon. Hal Daub, Chairman, Social Security Advisory
Board, and Former Member of Congress
Chairman Shaw, Chairman Gekas, Ranking Member Matsui, Ranking
Member Jackson Lee, and Members of the Subcommittees. I welcome the
opportunity today to share with you, for the record, the views of the
Social Security Advisory Board on the importance of protecting the
integrity of Social Security numbers.
Since its inception, the Advisory Board has actively examined both
the authorized and unauthorized uses of Social Security numbers,
weaknesses in SSA's enumeration processes and systems, and SSA's role
in deterring identity-related crimes, illegal immigration and other
security issues related to Social Security numbers. In addition, we
have been keeping abreast of developments in the Congress, public
sentiments, and SSA's progress in responding to the ever-changing needs
of the system.
The Board has grown increasingly concerned about rapidly growing
incidences of Social Security number misuse, other identity-related
crimes, fraud, and acts of terrorism that are often facilitated by the
misappropriation or misuse of Social Security numbers. According to
SSA's Inspector General, the vast majority of identity crimes--most of
which are financial in nature--involve the misuse of an individual's
Social Security number. But despite the seriousness with which these
concerns were being debated both inside and outside of government
circles before September 11th, 2001, it was not until the recent
terrorist attacks against the United States that we have seen such
widespread awareness of the vulnerabilities and the weaknesses inherent
in the current systems. This awareness is accompanied by an equally
strong commitment to resolve unanswered questions about the appropriate
roles each agency must fill in protecting the integrity of individual
identity systems and safeguarding our citizens and our nation against
crime and acts of terrorism.
As I indicated earlier, these debates are not new. But in light of
the new urgency they have taken on since September 11th, 2001, we find
ourselves at a pivotal time in our nation's history. Our civic leaders,
our business leaders, our social and religious organizations, and our
citizens need to join forces, share information, and come to agreement
on three very important questions regarding the use of Social Security
numbers as a key to validating identity. What role, if any, should the
Social Security number play in terms of identity validation for
purposes both inside and outside the scope of Social Security programs?
What procedures and systems are needed at all levels of our society to
prevent the continued misuse of identity information to facilitate acts
of terror, violence, mayhem, and abuse? And what safeguards are needed
to achieve our security and integrity goals, without unduly
compromising individual privacy and freedom?
On many occasions over recent years, the Board has heard SSA
Inspector General Jim Huse urge the agency, the Congress, the business
community, and the public to come to grips with the reality that the
Social Security number has become a de facto national identifier. Many
times, we have heard Inspector General Huse say that it is too late to
``put this runaway horse back in the barn''. But perhaps we should not
be looking to put the horse back in the barn. Perhaps, instead, we
should be thinking about building a stronger fence to keep the horse
from escaping the farm as well.
Slowing the Runaway Horse
The Federal Bureau of Investigation (FBI) recently recognized
identity fraud as the fastest growing white-collar crime in America,
making it a significant public policy issue. And, according to other
recent reports from SSA's Inspector General and the FBI, improperly
obtained Social Security numbers present a significant vehicle for
would-be terrorists to infiltrate themselves into our society--making
Social Security number abuse a national security concern as well.
Likewise, the Board has heard from SSA officials and the agency's
Inspector General that improper attainment or theft of Social Security
numbers, including counterfeit Social Security cards, plays a major
role in unauthorized work and the growing inaccuracies in wage
reporting that have resulted in huge increases in SSA's earnings
suspense file.
In preparation for its reports on improving service to the public
and on SSA's responsibilities to safeguard the responsible collection
and expenditure of the public's funds, the Board has met with SSA
executives, managers and staff all over the nation. We have met with
managers and staff in both headquarters and in the agency's field
structure, including more than a thousand SSA field office employees
who work on the front lines each day, delivering important services to
the American people. We have met with representatives and staff from
SSA's Office of Inspector General, the agency's Enumeration Task Force,
Regional Security and Integrity Centers in both New York City and
Denver, and with the new Enumeration Center established in Denver to
begin developing specialized expertise on these issues within the
service delivery structure. We have held public hearings all over the
nation and have spoken to victims of identity theft, migrant worker
groups, employers, and even the Consul General of Mexico, in our
attempt to grasp the vast dimensions of these problems.
Throughout our work, we have heard one message overwhelmingly--SSA,
alone, cannot do all that is necessary to protect our society from
identity-related crimes and the other crimes that they enable. SSA must
also rely on the expertise, efficiency and effectiveness of the
Immigration and Naturalization Service (INS), the Department of State,
the Internal Revenue Service (IRS), and law enforcement, as they carry
out their own important responsibilities. We have heard, loud and
clear, that it is imperative for these other agencies to do their part
by delivering prompt and effective identity validation and effective
enforcement of statutory work requirements--including the use of
appropriate penalties and prosecution in cases where individuals,
groups or employers are found to be abusing the system or perpetrating
criminal acts.
Building Stronger Fences
The importance of the Social Security number and the Social
Security card to the government and to any individual who wants to work
or transact some other kind of business in the United States cannot be
overstated. Employers are required to ask for an individual's Social
Security number before hiring, and the number is the identifier used in
all claims for Social Security or SSI benefits, as well as for many
other Federal and State programs, such as Medicare, Medicaid, and
public assistance benefits. The IRS uses the SSN as an identifier for
individual taxpayers, for identifying taxpayer dependents, and for
tracking income and payroll tax contributions. Many States use it in
their individual driver's license systems. Many businesses and
organizations in the private sector, including banks and credit card
companies, also depend on the Social Security number as an identifier
for maintaining their records. The law specifically authorizes many of
these uses. Additional uses have developed over time. While these
additional uses may not be specifically authorized by statute, the law
does not prohibit them either.
In recent testimony before the House Committee on Ways and Means,
officials from the General Accounting Office (GAO) reported that many
federal agencies are not taking the necessary precautions to safeguard
personal information, including the Social Security number, from
improper display and disclosure. GAO officials have also urged agencies
to look at alternatives to using Social Security numbers as identifiers
wherever this is a possibility. It is imperative that government
agencies, at all levels of government--federal, state, and local--take
the necessary steps to protect the privacy and integrity of individual
identifying information. What is lacking here--according to GAO and
other observers--is a uniform system of safeguards and policies about
how an individual's personal information can be used, displayed or
disclosed. Some agencies, businesses, organizations and even State
governments have responded to these concerns responsibly--but far too
many have failed to understand the importance of keeping identity
information safe and ensuring the integrity of the data they maintain
and disclose.
To illustrate this point, I would like to tell you about a recent
interaction that the Board had with the Selective Service System. As
Chairman of the Advisory Board, I contacted the Director of Selective
Service to voice my concerns about the manner in which his agency
captures personal information from the young men who are required by
law to register. Registration forms are distributed in U.S. Postal
Service offices throughout the nation. They are double-sided, tear-away
``postcards'' that registrants must fill out and mail back to an agency
processing center. The form collects such personal identifiers as the
young man's name, address, date-of-birth, Social Security number and
signature. While I fully understand the need for the system to collect
and maintain personal identifying information on the young men who
register, the open format for supplying this information does not
adequately protect its privacy. The sum total of personal data elements
that are reported on this form, if misappropriated, could easily be
used by unscrupulous individuals to facilitate crime, immigration
fraud, and terrorism. The Office of Management and Budget approved this
form for use in September 2001.
In response to the issues that I raised, the Board was told that,
while the Selective Service System prefers to have men register using
electronic methods, they are also given the option to register by mail.
Mail-back postcards are used instead of a more secure option because it
minimizes postage costs. For those young men who are concerned about
the privacy of their information, the throw-away part of the form
contains a suggestion that they place the registration card in an
envelope before they mail it back. To me, this approach seems pennywise
and pound foolish--to save a few cents on postage, are we truly willing
to expect and trust that the average eighteen-year-old will recognize
the importance of keeping his data secure? While the Selective Service
System has agreed to move their ``privacy concern'' instruction to a
more prominent location on the registration card itself, the Board
believes that this remains an insufficient effort to protect the
privacy, integrity and security of the vital information contained on
this document. We believe that more responsible measures are needed to
address this situation, and countless similar situations in other
agencies and organizations.
For many years, Committees and Members of Congress have emphasized
the importance of maintaining the integrity of the Social Security
number and the Social Security card. Hearings have been held and bills
have been introduced. In 1996, the Congress passed legislation
requiring SSA to study the feasibility of issuing a secure Social
Security card. The agency issued a report in 1997, but no action was
taken. During the last session of Congress, the Chairman and Ranking
Minority Member of the House Social Security Subcommittee, along with
other members of Congress, introduced a bill to limit the display of
the Social Security number by public and private entities, including on
motor vehicle licenses and registration. It provided for making refusal
to do business without receipt of an SSN an unfair or deceptive act or
practice, and provided new criminal penalties for misuse of SSNs. A
similar bill was reintroduced during the current session of Congress to
even wider support. This bill establishes important parameters and
safeguards that apply to both government agencies and the private
sector. We believe that it is a step in the right direction.
Strengthening SSA to Meet the Challenge
While SSA cannot do the job alone, and while we applaud the
progress made by the agency since September 11th, 2001, further
improvements in SSA's enumeration processes and systems are needed.
As the Board has documented elsewhere, many of those individuals
who present themselves daily at one of SSA's over-crowded field office
waiting rooms around the country have come to apply for a new or--more
often--a replacement Social Security card. In fact, handling
applications for new and replacement cards is the largest category of
work that field offices perform. In fiscal year 2001, the agency issued
18.1 million cards, a 16 percent increase since 1997. Currently, about
32 percent of all Social Security number-related requests are for new
numbers and about 68 percent are for replacement cards for people with
existing numbers.
SSA's performance standards for issuing cards reflect a concern for
both speed of issuance and quality. With regard to speed, the agency's
statistics show that in fiscal year 2001, 96.8 percent of Social
Security number applicants were advised of their assigned number within
24 hours of initial processing. Agency statistics for 2000 show that
99.8 percent of numbers were issued accurately. Nonetheless, SSA's
Office of the Inspector General has expressed a high level of concern
about the integrity of the agency's enumeration process and the
validity of the agency's performance measurement system. It points out
that given the importance of the Social Security number, many
unscrupulous individuals have a strong motive for fraudulently
acquiring a number and using it for illegal purposes. Problems that the
OIG has identified include using an illegally obtained number to
receive government services or benefits, obtain employment, or enter
the country, and using another individual's number to steal their
identity and commit crimes, usually financial crimes, in that person's
name.
Among other concerns, the OIG has criticized the agency's
procedures for validating identity documents that are used by
individuals to illegally obtain cards. In 1999, PriceWaterhouseCoopers
conducted an independent study that also found that SSA's front-end
controls for enumeration were deficient. In one recent review the OIG
conducted, it found that significant numbers of cards had been issued
based on invalid or inappropriate evidentiary documents presented as
evidence of age, identity, citizenship, or legal alien status. These
included INS forms that were never issued, and forms that INS had
issued to individuals other than the Social Security number applicants,
or had issued with a different alien classification. SSA had also
assigned many numbers to applicants whose U.S. birth certificates were
counterfeit.
The OIG has also concluded that SSA employees in the field do not
have adequate training or the tools they need to determine the validity
of evidentiary documents. Some within SSA have observed, however, that
SSA employees are not and should not be expected to become expects on
the latest counterfeiting technologies, capable of identifying the
highly sophisticated false documents that are now commonly available.
The Board also has heard repeated complaints about the integrity of the
enumeration process from SSA managers and employees. They believe that
many of the documents they are seeing are not valid, but as one field
office employee noted, the policy is that ``Unless you have a specific
reason to suspect the validity of a document, you should go ahead and
process.'' A field office manager told the Board that false identity
documents are easily gotten. For example, a false driver's license
``can be bought down the street,'' and there is no cross check with the
Department of Motor Vehicles. Employees in one office the Board visited
observed that every office follows its own processing procedures. Some
are stricter than others, and the result is that people shop around for
the office that is most likely to issue a card. One SSA executive told
the Board that in his area the selling of Social Security numbers is
one of the agency's biggest stewardship problems. There are gangs who
routinely approach SSA employees who might be vulnerable. These gangs
are sophisticated in finding out about employees' personal situations
and they use this information as leverage to coerce or entice employees
to steal numbers or provide them with sufficient personal information
from SSA's databases, information that can then be used to establish
fraudulent identities. Another problem that concerns many employees is
that, without a photo ID or some form of biometric identification,
neither of which is required, there is no way they can be sure that
individuals who come into the office are who they say they are. This is
an issue that goes beyond the issuance of a number and includes
individuals who claim benefits as well.
Employees in field offices have told the Board that interviews with
individuals who are applying for Social Security numbers--and who want
them right away--are the most contentious that they must face. There is
also a concern within the agency that more careful checking of
documentation or developing a more secure card would require additional
resources, which the agency does not currently have.
In March of 2002, the Board issued its report on the agency's
responsibility to ensure program integrity, outlining many of the same
issues addressed here today. In that report, we recommended that SSA
work more aggressively with the INS and with the Department of State to
resolve any outstanding loopholes or gaps in data sharing and in the
identity verification process. In addition, we have recommended that
SSA work more aggressively to encourage the IRS to exercise its
statutory authority and begin sanctioning chronic abusers of work
authorization requirements. We applaud the progress that has been made
by SSA since that time. The agency has taken giant steps forward in
closing many of the loopholes that we have discussed in our stewardship
report and elsewhere. But, as outlined above, and as is apparent from
the testimony of others here today, further efforts are needed.
SSA does not and should not work in a vacuum. The agency depends
upon the support of the Administration and the Congress to provide the
resources necessary for the agency to do its job and uphold its
responsibilities. As we have learned from recent events in our country,
it is imperative that those critical functions of the agency--including
the protection of the Social Security number from misuse and abuse--be
fully staffed, fully funded and provided the same level of serious
consideration as other agencies that have a responsibility for
protecting our security and national well-being. The Board intends to
continue monitoring these critical stewardship and security issues. We
look forward to working with the Congress and the Administration on
these very important matters.
Statement of Witold Skwierczynski, National Council of SSA Field
Operations Locals, American Federation of Government Employees, AFL-
CIO, Baltimore, Maryland
Chairman Shaw, Chairman George W. Gekas, Ranking Member Matsui,
Ranking Member Jackson Lee and members of the Subcommittees, I thank
you for the opportunity to present this statement regarding Social
Security's ability to preserve the integrity of Social Security numbers
and preventing their misuse by terrorists and identity thieves.
As a representative of the AFGE Social Security General Committee
and President of the National Council of SSA Field Operations Locals, I
speak on behalf of approximately 50,000 Social Security Administration
(SSA) employees in over 1400 facilities. These employees work in Field
Offices, Offices of Hearings & Appeals, Program Service Centers,
Teleservice Centers, Regional Offices of Quality Assurance, and other
facilities throughout the country where retirement and disability
benefit applications and appeal requests are received, processed, and
reviewed.
AFGE is committed to serve, as we always have in the past, as not
only the employees' advocate, but also as a watchdog for clients,
taxpayers, and their elected representatives.
Let me begin by stating we agree with Chairman Gekas' comments that
the privacy of the Social Security numbers of every American is under
attack and that the Social Security Administration can do more to
tighten up its procedures for issuing Social Security Cards to prevent
fraud.
Accuracy on the part of the SSA employees processing requests for
Social Security numbers is greater than those of the agency charged
with safeguarding immigration records. In SSA, we process 6 million
Social Security Number requests annually. According to SSA's OIG, less
than 1.6% of Social Security Number requests have been issued with
false INS documents. That figure was based on FY2000 statistics.
However, since FY2000, SSA has implemented new systems enhancements and
policies that require all INS documents of foreign-born applicants to
be verified by INS before the issuance of a Social Security number. The
Union believes that these measures have further safeguarded the privacy
and integrity of the SSN records.
Unfortunately, SSA has also implemented initiatives that we believe
are harmful to the integrity of all SSA records leaving every American
vulnerable to attack by terrorists, international criminals, and an
increasing number of identity thieves.
Employer Access
In May 2002, the Union became aware that the Agency implemented a
program that allowed employers to gain access to SSN records of their
newly hired employees via the Internet. This program has been approved
by OMB for 630 major employers and may be soon expanding. According to
approved procedures, SSA business partners and companies are nominated
by SSA's Senior Financial Executive under the Deputy Commissioner
Finance Assessment and Management, then approved by SSA's Commissioner.
The Union believes that employer access to SSN records will result
in misuse, fraud and abuse of individual privacy. On the issue of
privacy, if the employer can obtain this information about an
individual, anyone with an EIN may gain access to personal information.
The gatekeeper of SSN records thus becomes the employer and its
employees authorized access to ``verify'' Social Security records.
SSA has notified the Union that audits were not conducted by any
private or governmental entity, i.e. SSA, OIG, or GAO, of the initial
``Employer Access'' pilot, prior to implementing expansion. SSA went
forward with full implementation without assurances that:
LInformation sought on individuals were actual
employees hired by their companies,
LEmployee verifications were conducted by approved
employers only,
LThe public's privacy was not compromised, and to
determine if the integrity of SSA programs had been compromised
by inappropriate or unauthorized use of this program,
LEmployers accessed SSN records only for new hires
rather than access to discriminate and/or violate individual
privacy.
LInformation obtained through this program was not
relied upon to justify adverse action against a worker, which
would violate State or Federal law.
LSigned statements were obtained, acknowledging there
are criminal penalties for making a knowing and willful request
for access to records concerning another individual under false
pretences. Such abuses are considered criminal and punishable
by law and carry penalties.
Additionally, the Union has learned that details needed to
determine an individual's identity are not being required by SSA for
these employers to obtain information about SSN records. This would
include the date of birth, place of birth, mother's maiden name.
Therefore, SSN records of someone with a similar or same name may be
provided to the employer, making it easier for someone to use another
person's SSN. Therefore, the employer would further compromise the
integrity of SSN records.
SSA has developed an alert system to determine if employers may be
verifying an excess of SSN records. If an employer requests
verification on more than 200 percent of the number of W-2s processed
in the preceding tax year, an alert will be issued. The Union strongly
believes that this ``alert'' system is a facade to provide concerned
parties with a false sense of security of individual privacy. This
``system'' provides a means for employers to abuse their privilege and
allow the abuse to go undetected and unexposed. For example, a
corporation with 100,000 employees would be able to access 200,000 SSN
records of individuals for family, friends and colleagues without
detection. Although SSA's own reports indicate that one employer has
already exceeded its number of employees by more than 500%, SSA has
failed to conduct an audit.
Furthermore, SSA has not developed or communicated a written policy
to hold companies legally liable for misuse of employer access of SSN
records.
It is the Union's understanding that SSA plans to expand other
services and/or records to employers in the future. OMB must give
approval to SSA to expand the number of employers who can gain access
to SSN records. We strongly believe that Congress should urge the OMB
to rescind this program to insure integrity of SSN records and
individual privacy.
INS Involvement--Enumeration Centers and Enumeration at Entry
In January 2002, SSA signed an agreement with the Immigration and
Naturalization Service (INS) to implement the Enumeration at Entry
project. This allows INS, during the initial phase, to electronically
forward to SSA enumeration data from certain aliens lawfully admitted
for permanent residence. SSA will then electronically assign an SSN and
issue a Social Security card to the alien.
As members of the Judiciary Committee are painfully aware, the INS
has a lengthy history of being severely mismanaged. Its workers are
faced with tremendous backlogs approaching 2 million applications. In
January 2002, the GAO made Congress aware that immigration benefit
fraud at the INS is a significant problem that threatens the integrity
of the legal immigration system. INS officials believe that the problem
is pervasive and serious and they also believe that some aliens are
using the benefit application process to enable them to carry out
illegal activities, such as crimes of violence, narcotics trafficking,
and terrorism.
Until the INS and Congress can successfully address these problems,
how can SSA consider allowing the INS to provide SSA with accurate,
legal information to ``electronically'' assign a Social Security number
when the integrity of INS records cannot be maintained?
SSA now intends to implement an Enumeration Center as a pilot in
the Brooklyn, NY area. This Enumeration Center will be staffed by SSA
field office employees, SSA's OIG and INS employees. SSA intends to
rotate field office employees in/out of the Enumeration Center. All
requests for Social Security cards will be handled at the Enumeration
Center, rather than an SSA field office. This means that if someone
walks into a SSA field office to apply for a SSN, the SSA employee who
normally would help the applicant will have to refer him or her to the
Enumeration Center for assistance. This would include referring clients
who have other business at an SSA field office.
AFGE opposes Enumeration Centers. SSA's field offices have always
been full-service facilities. The taxpayer deserves full-service and
one stop shopping. To refer SSN applicants to an Enumeration Center
that may be miles away, will create barriers and greatly inconvenience
folks who rely on public transportation or have physical disabilities.
Foreign-born applicants should not have to be subjected to the
intimidation of SSA-OIG and INS workers when applying for a Social
Security card.
The security issues raised by SSA are unfounded. SSA employees are
highly trained. Systems enhancements and new policies have virtually
eliminated the unknowing acceptance of fraudulent INS documents.
To prevent highly qualified SSA employees from providing the
services they were trained to do, at the convenience of the public, is
a disservice. This Congress is already aware of the human capital
crisis at SSA, particularly in its field offices. Detailing employees
to enumeration centers is needless and not a good use of our precious
resources.
Integrity of SSA Internet Services
Two months after SSA gave employers access to SSA records via the
``Employer Access'' program, SSA discovered weaknesses in the Internet
firewalls, which compromises SSN records to hackers.
Rather than inform the public or Congress of this possible breach
of privacy and possibility of identity theft, SSA posted a message that
misled the public to believe that routine maintenance was the cause for
SSA Internet access to be down for 3 days.
This was not a surprise to AFGE. Computer specialists had
previously advised SSA that its database would be difficult, if not
impossible, to protect from hackers. In spite of warnings and protests,
SSA decided to move forward with its ``E-Gov'' goals. AFGE informed
Congress of its objections to SSA's plans to expand online services.
The American public trusts SSA to guard and protect the very source of
their livelihood, their Social Security numbers. AFGE strongly believes
that the protection all SSA records against identity theft, fraud and
misuse should be guaranteed and never compromised. Now, when identity
theft poses its greatest threat to our nation in the way of terrorism
and ciminal acts, SSA's records need to be more secure than ever.
Instead, SSA is taking actions that we strongly believe will ultimately
be harmful to the integrity of all SSA records.
We urge your Committees to consider the following:
LAt a minimum, request GAO to audit SSA Employer
Access initiative to insure the proper access of SSA records.
LUrge SSA to cease and desist giving access of SSA
records to third party entities (governmental and private).
LRequest GAO to assess and/or audit the SSA Internet
firewall protections of all SSA records.
LUrge SSA to rescind it plans to create SSA/INS
Enumeration Centers and direct SSA to seek Congressional
approval for the creation of such a flawed bureaucracy, which
will only serve to undermine SSA's public service and the
integrity of its records.
I thank you for your time and your consideration of our concerns.
American Immigration Lawyers Association
Washington, DC 20004
The Honorable E. Clay Shaw, Jr.
Chairman, House Social Security Subcommittee
B-316 Rayburn House Office Building
Washington, DC 20515-6353
The Honorable George Gekas
Chairman, House Immigration, Border Control and Claims Subcommittee
B-370B Rayburn House Office Building
Washington, DC 20515-6353
The American Immigration Lawyers Association (AILA) thanks the
committees for the opportunity to submit our comments on the September
19, 2002 joint hearing on Preserving the Integrity of the Social
Security Number and Preventing Misuse by Terrorists and Identity
Thieves. AILA supports taking constructive steps to ensure that
identifying documents, such as the social security card, are not
subject to fraud and misuse. AILA urges the committees to consider how
positive reforms to our immigration laws can help achieve this goal.
The testimony seemed to indicate that a large number of the
employees who were the subject of the 800,000 no-match letters the
Social Security Administration (SSA) sent to employers this year are
undocumented workers. This, if true, underscores that there are
millions of undocumented workers in the United States who are here to
fill ``essential worker'' positions, those unskilled and semi-skilled
jobs vital to all sectors of our economy. These essential workers fill
jobs that U.S. workers are unwilling to take, despite the general
downturn in the economy.
Reports from the Bureau of Labor Statistics reinforce the need for
essential workers and the fact that this need is rising. During the
labor force expansion that took place from 1996-2000, foreign labor
filled the lesser skilled positions native-born workers left. As a
result, over 55% of the foreign-born work force is concentrated in
service and labor occupations. Projections for the next ten years
indicate that the need for workers in these occupations will continue
to rise as new jobs are created: the service-producing sector alone is
expected to create over 12 million new positions. 57 percent of all job
openings will be for essential worker positions and will only require
modest or on the job training. In order to keep our economy strong, the
U.S. needs these essential workers to fill these positions.
This nation has long benefited from the large number of
undocumented worker who fill unskilled and semi skilled positions
essential to our economy. It is long past due that we change our
immigration laws to provide legalization for the hard-working,
taxpaying workers in this country and create a legal means for workers
we will need in the future.
That these workers are here illegally is a symptom of an
immigration system that is out of touch with the needs of our economy.
Simply put, there is no way for workers currently here to legalize
their status and there is no visa category through which semi-skilled
and unskilled workers can legally enter the United States in order to
perform full-time, year-round work. These workers do not want to be
undocumented. Many are paying taxes and social security, the same as
legal workers. However, the lack of any legal means to regularize the
status of those who are here and the absence of any temporary
immigration program through which people can legally enter and leave
the country is not good for our communities, our economy, or our
security.
In fact, both a legalization program and an essential worker
temporary visa program will help us to enhance our security. A
legalization program that rewards work would bring hardworking, well
meaning individuals out of the shadows and would allow us to properly
identify and document them. We would know who they are and why they are
here. A temporary program that designates legal channels for entry
would allow us to focus our resources at the border on those who mean
to do us harm, not those who fill our labor needs, and reduce the
number of tragic deaths associated with border crossings. Both these
initiatives would further enhance our security by permanently reducing
the demand for counterfeit documents and other related acts associated
with unauthorized work. These positive changes would allow free up our
agencies' time and resources and allow them to concentrate their
efforts on achieving security goals that actually enhance our security.
The legalization of these workers also would provide a second
benefit to the SSA through the reduction of the Earnings Suspense Fund
(ESF). When the SSA announced its no-match letter program for this
year, reduction of this file was touted as one of the goals. A
legalization program will help reduce the ESF, and the agency will be
able to reduce administrative costs associated with maintaining such a
large fund.
AILA strongly opposes initiatives that would prohibit foreign
nationals who legalize their status from receiving credit for the
social security contributions they made while they were in an
undocumented status. America needed the contributions these workers
made in the labor force when they were undocumented. We should
recognize their contribution by allowing them to access their social
security benefits once they are legalized.
In this time of heightened security, we must foster an environment
that that will encourage individuals to emerge from the shadows and
participate as productive members of our society in order to separate
them from those that are here to do us harm. Positive immigration
reform in conjunction with constructive reforms to protect the
integrity of the social security numbers and prevent identity theft
will greatly improve our nation's efforts to provide effective
security.
Sincerely,
Statement of ERISA Industry Committee (ERIC), National Association of
State Retirement Administrators (NASRA), National Council on Teacher
Retirement (NCTR), National Rural Electric Cooperative Association
(NRECA), Profit Sharing/401(k) Council of America (PSCA)
The undersigned organizations urge you to carefully consider the
unintended consequences of legislation being currently pending before
the House Ways and Means, Energy and Commerce, and Financial Services
committees. Without amendment, the Social Security Number Privacy and
Identity Theft Prevention Act of 2001 (H.R.2036) could unintentionally
hinder the delivery of benefits from, and the efficient administration
of, public and private employee benefit plans.
We strongly support the bill's purpose of ensuring the integrity of
the social security number (SSN). We are extremely concerned about the
proliferation of identity theft and other financial crimes that exploit
individual SSNs, and believe strong legislation should be enacted to
combat such nefarious acts. As currently drafted, however, H.R.2036
could make it more difficult to deliver comprehensive health and
retirement benefits to public and private employees alike.
In general, public and private employee benefit plans use SSNs in
plan administration because of the SSNs utility as a common identifier
for a highly mobile workforce, and because of tax reporting
requirements. Plan administrators take seriously the responsibility
that the use of SSNs requires, and they use the utmost caution and
security when SSNs are used in plan administration and communications.
Public and private sector defined benefit and defined contribution
pension and savings plans, like 401(k), 403(b), and 457 plans, use SSNs
to identify plan participants, account for employee contributions,
implement the employee's investment directions, track ``rollovers''
from other plans, and allow employees to view their account activity or
benefit accrual online (typically in conjunction with a secure
``PIN''). H.R.2036's broad prohibitions could impede, for example, an
individual's ability to stay current on the accumulation of benefits
for his or her retirement.
SSNs are also used as the primary identifier in many medical and
health benefit and prescription drug plans to coordinate communications
between the doctor, the medical service provider, and the plan.
H.R.2036's broad prohibitions could, for example, put at risk the
delivery of appropriate medications to the individual.
The application of H.R.2036's broad prohibitions could:
LUnintentionally restrict access to employee benefit
plans. Section 202 of H.R.2036 makes it a violation of the
Federal Trade Commission Act for ``any person'' to refuse to
``do business'' with an individual because the individual
refuses to give his or her social security number to the
person. While the commonly understood definition of
``business'' would not include employee benefit plan
administration, we are concerned the broad prohibition
unintentionally would restrict plan operation. We recommend
making it clear that section 202 applies only to commercial
transactions, and not in the context of employment of an
individual, including the provision of compensation or
benefits.
LUnnecessarily limit the legitimate and beneficial use
of SSNs. Section 201 prohibits the ``sale,'' ``purchase,'' or
``display to the general public'' of an individual's social
security number. While the intention of that prohibition is
clear, the definitions of ``sale,'' purchase,'' and ``display
to the general public'' are not. Those ambiguous definitions
risk making legitimate and beneficial uses of social security
numbers a violation of Federal criminal law.
L For example, many benefit plan sponsors require
participants to submit their social security number to
the plan in order to be enrolled in and receive
benefits from the plan. While such a transaction would
not meet the commonly understood definition of
``sale,'' the definition of ``sale'' in section 201
encompasses an exchange of ``anything of value'' for a
social security number.
L Expressly excluded from the definition is the
application of ``any type of Government benefits or
program'' (which would cover government assistance
programs, not necessarily the employment benefits
governments offer their employees). The limited
exclusion from the definition of ``sale'' for the
application of social security benefits creates a risk
that a court will read the exchange-for-value
formulation to encompass everything not expressly
excluded, including employee benefits. We recommend
that the bill's exclusions be modified to encompass the
administration and provision of employee benefit plans.
L Section 201 also prohibits the intentional placing
of a social security number, or derivative thereof,
``in a viewable manner on an Internet site that is
available to the general public or in any other manner
intended to provide access to such number or derivative
to the general public.'' This definition, too, may
sweep in routine benefit plan administration. For
example, individual social security numbers may appear
on correspondence between the plan, the plan
administrator, the individual, and an outside third
party, like a medical care provider. We are unclear if
such ``displays'' are to the ``general public.'' We
recommend the bill be amended to include a more precise
definition of ``general public'' to ensure that secured
and private displays of social security numbers typical
in benefit plan administration are not construed to be
to the ``general public.''
L Section 201 provides an exception to the prohibition
if ``voluntary and affirmative written consent'' of
each affected individual is obtained. Our plans may
cover tens of thousands of individuals. Thus, obtaining
affirmative written consent would be wholly
impracticable and extremely costly. Moreover, if an
individual not consenting to the use of his or her
social security number is dropped from the benefit
plan, the plan sponsor would be exposed to a
significant risk of litigation, enforcement actions,
civil penalties, excise tax penalties, and plan
disqualification for violation of the federal laws that
govern pension and other benefit plans. Thus, we
recommend that relief for employee benefit plans be
provided by narrowing the bill's definition of ``sale''
and ``general public'' as discussed above.
LUnwisely subject public and private employee benefit
plans to regulations promulgated by a federal agency with no
expertise in employee benefit plans. Section 201 also gives
authority to the U.S. Attorney General to promulgate
regulations to ensure, among other things, that the
prohibitions contained in section 201 are ``no broader than
necessary'' to accomplish its purpose. If the bill is not
amended, as we have recommended, to exclude routine benefit
plan administration from the definitions of ``sale'' and
``purchase,'' we strongly recommend that the rulemaking
authority granted to the Attorney General be done in
consultation with a federal agency familiar with the workings
of employer-sponsored benefit plans with the clear direction
that regulations accommodate legitimate uses of social security
numbers in employee benefit plans.
Please do not hesitate to contact Janice Gregory (202-789-1400) at
ERIC, Jeannine Markoe Raymond (202-624-1417) at the NASRA, Cynthia
Moore (703-243-1667) at the NCTR, Chris Stephen at the NRECA (703-907-
6026) or Edward Ferrigno at PSCA (202-626-3634) to discuss this matter
in more detail.
Federation for American Immigration Reform
Washington, DC 20011
September 18, 2002
The Honorable E. Clay Shaw, Jr.
Chairman, House Social Security Subcommittee
B-316 Rayburn House Office Building
Washington, DC 20515-6353
The Honorable George Gekas
Chairman, House Immigration, Border Control and Claims Subcommittee
B-370B Rayburn House Office Building
Washington, DC 20515-6217
In connection with the hearing that you jointly are holding on
September 19, 2002 on Protecting Integrity of Social Security Numbers,
I would appreciate your consideration of the views of the Federation
for American Immigration Reform (FAIR).
Shortly after the tragic terrorist attacks last year FAIR issued a
blueprint outlining several urgently needed measures to protect
homeland security. Recently, on the anniversary of the attacks, we
issued a report card on the progress towards adopting these earlier
recommended measures. In that report card, we singled out the
significance of the actions taken by the Social Security Administration
(SSA) toward improving our national security.
In particular, two actions merit the recognition and strong support
of Congress and the American public. First, the decision by SSA to stop
issuing social security cards to aliens in order to satisfy the
requirements of some state departments of motor vehicles for Social
Security Numbers (SSNs). The prior practice meant that the SSA was
issuing SSNs to aliens who were illegally in the country to facilitate
their applications for state-issued driver's licenses. The tragic
effects of that policy were revealed when it became clear that all 19
of the 9/11 terrorists had state-issued driver's licenses, some of them
from multiple states. Under the circumstances, we strongly urge each of
the subcommittees to underscore your support for sustaining the current
practice of SSA in this regard.
Second, the SSA has finally begun to insist on the need to
reestablish the integrity of the SSN as an identifier for payroll
purposes. It is a well-documented fact that counterfeit document
operations have proliferated in the period since adoption in 1986 of
the Immigration Reform and Control Act (IRCA) prohibition against
hiring illegal aliens. One of the most frequently counterfeited
documents has been the Social Security card. This abundance of
fraudulent documentation has made it difficult for employers--even the
vast majority who have no intention of hiring illegal aliens--to
discern the authenticity of the work eligibility documents presented by
prospective employees.
The SSA's failure in the past to compare the SSNs on payroll
documents with the SSNs they have issued has actually encouraged growth
in the numbers of employers willing to hire illegal aliens. Beginning
with agriculture and meatpacking industries and spreading throughout
the hospitality industry, employers have been so motivated by the
spread of illegal alien hiring by their competitors and the by the lack
of enforcement against illegal employment that many have looked the
other way and become fully dependent on cheap illegal employees. As a
consequence, illegal immigration has been further encouraged, and
qualified American and legal resident workers have been displaced as
once prevailing wages have been dramatically depressed.
While the SSA has offered a free online service to employers to
verify the work eligibility of potential employees, there has been no
real incentive to use the service. That may change now as a result of
the SSA's recent actions systematically to notify employers of
mismatches between SSNs listed on payroll documents and the SSNs
issued.
Complaints that this program of advising employers of no-matches
may cost legal workers their jobs in unfounded, because the
notification process specifically advises employers that they should
allow the employee to reconcile with the SSA any possible data error
that has led to a false no-match notification before a no-match
notification leads to the termination of employment.
Once again, we applaud the Administration and the SSA for taking
these steps. Our concern, however, is that if they could be
accomplished as policy changes, they similarly could be discontinued by
a new policy decision. We urge you to assure that this program of
issuing no-match letters to employers becomes a permanent requirement.
There remain, however, two outstanding actions that would help to
buttress the new SSA program. The first of these would apply the law
sanctioning employers who continue to ignore the SSA alerts that
employees do not have valid SSNs. The Internal Revenue Service (IRS)
should be required to begin immediately fining businesses that
flagrantly continue to ignore the SSA notifications.
Secondly, the SSA has long maintained a policy of non-cooperation
with the INS in identifying workplaces with potential illegal alien
employees. This has changed somewhat in the Basic Pilot employment
verification system mandated by the Illegal Immigrant Reform and
Immigrant Responsibility Act of 1996. In that program, the SSA was
required to verify SSN data and forward employment data on foreign-born
workers to the INS for verification of work eligibility status.
Although that program is still ongoing, its trial period has been
completed and successfully evaluated by an outside contractor.
Until such time as Congress enacts the Basic Pilot program as a
permanent fixture in the nation's efforts to regain control over its
borders, the SSA should require that no-match notifications to
employers be retained by the employer for potential audit by the INS at
the time that it may investigate whether employers are in compliance
with the requirements of the IRCA prohibition against hiring illegal
alien workers.
The nation must never again return to the luxury of ignorance about
the threat of international terrorism, and it can never relax in a hope
that all foreigners will respect our sovereign right to have our
nation's immigration policy respected. Instead, we must take the
necessary steps to deter both threatening terrorists and illegal
immigration by gaining control over our borders and denying safe haven
to those who enter or stay in the United States illegally. Assuring the
integrity of the SSN system, because it is the universal identifier for
may purposes in our society, is critical to achievement of this
objective.
We trust the members of the House Social Security Subcommittee and
the House Immigration, Border Control and Claims Subcommittee will
agree that the recent advances in restoring integrity to the SSN system
must be locked in place so that they are not subject to erosion as a
result of pressures from whoever has the attention of any given
Administration at the moment.
Sincerely,
Dan Stein
Executive Director
National Council of La Raza, and National Immigration Law Center
Washington, DC 20036
October 3, 2002
The Honorable E. Clay Shaw, Jr.
Chairman, House Social Security Subcommittee
B-316 Rayburn House Office Building
Washington, DC 20515-6353
The Honorable George Gekas
Chairman, House Immigration, Border Security and Claims Subcommittee
B-370B Rayburn House Office Building
Washington, DC 20515-6353
RE: LPreserving the Integrity of Social Security Numbers and Preventing
Their Misuse by Terrorists, Hearing held before the U.S. House of
Representatives Subcommittee on Social Security and Subcommittee on
Immigration, Border Security, and Claims, September 19, 2002
Dear Chairmen and Members of the U.S. House of Representatives
Subcommittee on Social Security and Subcommittee on Immigration, Border
Security, and Claims:
The National Council of La Raza and the National Immigration Law
Center appreciate the opportunity to submit comments on the issue of
the Social Security Administration's no-match letters.
Sent by the Social Security Administration (SSA) to certain
employers, no-match letters have had a devastating impact on immigrant
worker communities throughout the country. For the last several years,
advocates have been expressing deep concern about the continued use of
these no-match letters by employers to discourage immigrant workers
from asserting their workplace rights. Advocates have also been working
hard to educate employers who, due to the confusion caused by these
letters, feel pressured to take some action against employees listed in
the no-match letters. The recent hearing before the Subcommittee on
Social Security and the Subcommittee on Immigration, Border Security,
and Claims of the U.S. House of Representatives highlighted many of our
concerns regarding the no-match letters. The hearing also clearly
demonstrated the need for a balanced and thoughtful approach to
immigration policy that recognizes the contributions that immigrant
workers make to the U.S. economy as well as our nation's economic and
security needs.
In an effort to update its database, the SSA sends no-match letters
to employers when the names or Social Security Numbers listed on an
employer's W-2 forms do not agree with SSA records. Attached to each
no-match letter is a list of employees for whom the SSA database could
not find a match. The no-match letter is intended to be an educational
correspondence that informs companies that their employees' wages are
not being properly credited to their Social Security accounts. The SSA
aims to correct its records so that employees' earnings are accurately
tracked and can be used to calculate benefit levels when applications
for retirement or disability benefits are made with SSA. Correcting the
SSA database is certainly a commendable goal. However, the
effectiveness of these no-match letters is unproven, and the resulting
consequences on immigrant worker communities have been devastating.
The SSA's use of the no-match letters has increased dramatically
over the past year. While fewer than 100,000 letters were sent in 2000,
110,00 were issued in 2001 and 870,000 were reportedly sent to
employers in 2002. However, despite this increase in letters, the
Earnings Suspense Fund (ESF) has not decreased. Rather than identify a
more effective means to decrease the suspense file, the SSA has
increased substantially the use of the ineffective no-match letters.
During Mr. Lockhart's testimony, the Social Security Administration
itself admitted that it must review the effectiveness of this policy.
However, the system's ineffectiveness is not its gravest
consequence. The impact of the no-match letters on the immigrant
community has been profound and widespread. The failure of the no-match
letters to safeguard workers effectively against unfair and illegal
practices on the part of employers has had devastating effects on the
workers and their families.
As the SSA admits, there are many reasons for computer no-matches,
and the no-match letters themselves do not prove any wrongdoing by
either employer or employee. For example, a large proportion of the
names on the no-match letters are Latino, Asian, or other names
frequently misspelled by employers resulting in computer no-matches.
These honest data-entry mistakes disproportionately affect immigrant
workers. However, employer misuse of the no-match letters has caused
great harm to workers nationwide. While the letter explicitly warns
employers not to take adverse action against workers listed on the
letter, layoffs, suspensions, firings, retaliations, and discrimination
against these workers are widespread and well-documented. Some
employers have simply fired all workers on the list; others have
incorrectly reverified the work authorization of workers on the list.
In many cases, only Latino or other ``immigrant'' workers, or workers
involved in union organizing campaigns, have been fired or harassed
(See Aaron Nathans, UW and Janitors Settle; Tentative Deal: $24,000 for
Latinos, Capital Times, Dec. 8, 2001 at A1). And since a
disproportionate number of names on the no-match lists are ``foreign-
sounding'' names, many employers fear that they will face sanctions if
they hire additional workers who look or sound ``foreign'' resulting in
increased citizenship or national origin discrimination in the hiring
process.
Low-wage immigrant workers are the most likely to be affected by
all of these illegal practices. In fact, our communities have reported
widespread abuse of the SSA no-match letters resulting in greatly
increased anxiety within the immigrant community. Many legal permanent
residents and even U.S. citizens have been affected, and the
undocumented worker community has been pushed even further underground.
Because many immigrants live in mixed-status families and close-knit
communities, when one worker is fired entire families including U.S.
citizen children suffer.
Thus the SSA's no-match letter policy has not resulted in reducing
the suspense file, has not eliminated computer no-matches, and has not
diminished unfair hiring practices. In fact, the consequences have been
quite the contrary. Particularly in this time of heightened security,
we must foster an environment that that will encourage individuals to
emerge from the shadows and participate as productive members of our
society in order to separate them from those who are here to do us
harm. Rather than pour the SSA's resources and energies into an
ineffective and harmful policy, we must be prepared to step back and
look at the larger picture.
The testimony of Mr. Matthew James Reindl highlighted the advantage
that unscrupulous employers who hire undocumented workers have over
law-abiding employers. For years, immigrant advocates have argued that
unlawful hiring practices harm both immigrant workers and U.S. workers.
The recent Supreme Court decision in the Hoffman Plastic Compounds Inc.
vs. NLRB, ____ U.S. __, 122 S. Ct. 1275 (2002),--further exacerbates
that advantage and gives added incentive to employers to hire
unauthorized workers. In that decision the Court found that
undocumented workers who are illegally fired are not eligible for
certain backpay remedies under the NLRA. This decision means that
employers can continue to hire unauthorized workers and subject them to
exploitative conditions and even fire them for union organizing
activities--all of which are illegal regardless of a worker's
immigration status--with no out-of-pocket costs. The Social Security
Administration's no-match policy will not punish these employers nor
resolve the underlying problems associated with the hiring of
undocumented labor. Instead, it provides added incentives for employers
to take unlawful action against the workers whom they have knowingly
hired with no legal ramifications. The answer to the problem raised by
Mr. Reindl is to enact legislation reversing Hoffman, thus leveling the
playing field by removing the incentive to hire undocumented workers to
whom they will never owe backpay.
The problems highlighted during the hearing clearly demonstrate the
need for comprehensive immigration reform. The existence of the SSA
suspense file shows that immigrant workers, regardless of their
immigration status, are paying Social Security taxes and are not
receiving the benefits of those taxes. The evidence presented also
demonstrates that immigrant workers are essential to the U.S. economy
and that U.S. employers have knowingly and unknowingly hired many
undocumented workers needed to fill jobs in key sectors of the economy.
These hardworking, taxpaying immigrants should be rewarded for their
contributions by getting the opportunity to legalize their immigration
status and obtain permanent residence in the U.S. Only in this way can
these workers come out from the shadows, be known to U.S. authorities,
properly pay all of their taxes, and be compensated appropriately. Such
a legalization program would also greatly reduce document fraud by
virtually eliminating the market for falsified Social Security Numbers
and other identifying documents, and the Social Security Administration
could continue its primary mission of administering the Social Security
program.
We urge you to reflect upon the ineffectiveness of the no-match
letter policy and work towards effective and comprehensive solutions to
the problems associated with unauthorized labor in the U.S. We look
forward to working with you in the future.
Sincerely,
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