The Federal Trade Commission today told the Subcommittee on Commerce, Trade, and Consumer Protection of the House Committee on Energy and Commerce that in the effort to reconcile the beneficial uses of Social Security Numbers with the threats to consumer privacy, “The challenge is to find the proper balance between the need to keep SSNs out of the hands of identity thieves, while giving businesses and government entities sufficient means to attribute information to the correct person.”
In testimony for the FTC, Commissioner Jon Leibowitz said, “With 300 million American consumers, many of whom share the same name, the unique nine-digit SSN is a key identification tool for businesses, government, and others.” Leibowitz said that credit reporting agencies use SSNs to ensure that credit data ends up in the right files, and businesses use the reports to determine whether to extend credit, insurance, or employment to consumers. “Without the ability to use SSNs as a personal identifier and fraud prevention tool, the granting of credit and the provision of other financial services would become riskier and more expensive and inconvenient for consumers,” he said. Restricting the disclosure of SSNs also could impact public health initiatives, criminal law enforcement, and anti-fraud and anti-terrorism efforts.
The FTC has pursued aggressive law enforcement against companies that failed to provide reasonable and appropriate security for sensitive customer data. It also has challenged organizations that have made deceptive claims about privacy procedures and security. “Since 2001, the Commission has brought 13 cases challenging businesses that have failed to take reasonable steps to protect sensitive consumer information in their files.” In a settlement with ChoicePoint, a data broker that allowed identity thieves to gain access to files of 160,000 consumers, the company paid $10 million in civil penalties and $5 million in consumer redress for identity theft victims, the testimony notes.
The testimony notes that there are other things that government, industry and consumers can do reduce identity theft.
“First,” the testimony states, “both government and industry need to consider what information they collect and maintain from or about consumers and whether they need to do so. Entities that possess sensitive consumer information should continue to enhance their procedures to protect it. The Commission will continue its law enforcement and outreach efforts to encourage and, when necessary, require better protections.”
“Second, industry should continue the development of improved fraud prevention methods to stop identity thieves from misusing the consumer information they have managed to obtain. In this regard, the FACT Act should prove instrumental by requiring the bank regulatory agencies, the National Credit Union Administration, and the FTC to develop jointly regulations and guidelines for financial institutions and creditors to identify possible risks of identity theft.”
“Third, the Commission will continue and strengthen its efforts to empower consumers by providing them with the knowledge and tools to protect themselves from identity fraud and to deal with the consequences when it does occur.”
The Commission vote to approve the testimony was 5-0.
Copies of the testimony are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to thousands of civil and criminal law enforcement agencies in the U.S. and abroad.
(FTC File No.P03 4302)