Legislators seek to restrict use of Social Security numbers

In an effort to curb the growing problem of identity theft, legislators

have introduced a bill in the U.S. Senate that would set restrictions on

government and business use of Social Security numbers. A similar bill is

due shortly in the House.

The measures are ringing alarms for businesses, which rely heavily on

Social Security numbers to identify their customers. The numbers are one

of the key tools that criminals need to steal identity. But they are also

the glue that makes it possible for businesses to, for instance, quickly

approve a customer's credit at the time of sale. Social Security numbers

are ingrained in business automation processes, especially in credit approval.

If Congress restricts the transfer or sale of Social Security numbers,

"point-of-sale issuing of credit would be extremely difficult if not impossible,"

said Norm Magnuson, a vice president of public affairs at the trade group

Associated Credit Bureaus Inc. in Washington, D.C. "There is no question

that Social Security numbers are abused, [but] you have to remember what

would happen if you went to the other extreme."

Last week, U.S. House Social Security Subcommittee Chairman Clay Shaw

(R-Fla.) said he planned to introduce legislation protecting Social Security

numbers. The bill would set a variety of restrictions on government and

businesses, such as prohibiting the sale of Social Security numbers to third

parties.

Clay said identity theft is the nation's fastest-growing crime, affecting

an estimated 500,000 to 700,000 people per year.

Clay's bill follows legislation sought by Vice President Al Gore and

introduced by Senate Democrats last month that would also impose business

and government restrictions on the use of Social Security numbers.

Bill Bradway, an analyst at Meridien Research in Newton, Mass., said

Social Security numbers are important linking devices in any credit transaction.

When Social Security numbers were first introduced, Bradway said, the

government never intended for them to be required to conduct business, but

"incremental business practices have evolved to the point where the Social

Security number is a common piece of data to many business models."