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Testimony:

Before the Subcommittee on Social Security, Committee on Ways and Means 
House of Representatives:

United States General Accounting Office:

GAO:

For Release on Delivery Expected at 1:00 p.m. EST:

Thursday, July 10, 2003:

Social Security Numbers:

Ensuring the Integrity of the SSN:

Statement of Barbara D. Bovbjerg, Director, Education, Workforce, and 
Income Security Issues:

GAO-03-941T:

GAO Highlights:

Highlights of GAO-03-941T, a report to the Subcommittee on Social 
Security, Committee on Ways and Means, House of Representatives 

Why GAO Did This Study:

In 1936, the Social Security Administration (SSA) established the 
Social Security Number (SSN) to track workers earnings for social 
security benefit purposes. However, the SSN is also used for a myriad 
of non- SSN purposes. Today, the SSN is used, in part, as a 
verification tool for services such as child support collection, law 
enforcement enhancements, and issuing credit to individuals. Although 
these uses of SSNs are beneficial to the public, SSNs are also a key 
piece of information in creating false identities. Moreover, the 
aggregation of personal information, such as SSNs, in large corporate 
databases, as well as the public display of SSNs in various public 
records, has provided criminals the opportunity to commit identity 
crimes. SSA, the originator of the SSN, is responsible for ensuring 
SSN integrity and verifying the authenticity of identification 
documents used to obtain SSNs.

Although Congress has passed a number of laws to protect an 
individuals privacy, the continued use and reliance on SSNs by 
private and public sector entities and the potential for misuse 
underscores the importance of identifying areas that can be 
strengthened. Accordingly, this testimony focuses on describing (1) 
public and private sector use and display of SSNs, and (2) SSAs role 
in preventing the proliferation of false identities.

What GAO Found:

Public and some private sector entities rely extensively on SSNs. We 
reported last year that federal, state and county government agencies 
rely on the SSN to manage records, verify eligibility of benefit 
applicants, and collect outstanding debt. SSNs are also displayed on a 
number of public record documents that are routinely made available to 
the public. To improve customer service, some state and local 
government entities are considering placing more public records on the 
Internet. In addition, some private sector entities have come to rely 
on the SSN as an identifier, using it and other information to 
accumulate information about individuals. This is particularly true of 
entities that amass public and private data, including SSNs, for 
resale. Certain laws have helped to restrict the use of SSN and other 
information by these private sector entities to specific purposes. 
However, as a result of the increased use and availability of SSN 
information and other data, more and more personal information is 
being centralized into various corporate and public databases. Because 
SSNs are often the identifier of choice among individuals seeking to 
create false identities, to the extent that personal information is 
aggregated in public and private sector databases it becomes 
vulnerable to misuse. 

As the agency responsible for issuing SSNs and maintaining the 
earnings records for millions of SSN holders, SSA plays a unique role 
in helping to prevent the proliferation of false identities. Following 
the events of September 11, SSA formed a task force to address 
weaknesses in the enumeration process and developed major new 
initiatives to prevent the inappropriate assignment of SSNs to non-
citizens, who represent the bulk of new SSNs issued by SSAs 1,300 
field offices. SSA now requires field staff to verify the identity 
information and immigration status of all non-citizen applicants with 
the Department of Homeland Security (DHS), prior to issuing an SSN. 
However, other areas remain vulnerable and could be targeted by those 
seeking fraudulent SSNs. These include SSAs process for assigning 
social security numbers for children under age one and issuing 
replacement social security cards. SSA also provides a service to 
states to verify the SSNs of driver license applicants. Fewer than 
half the states have used SSAs service and the extent to which they 
regularly use it varies. Factors such as cost, problems with system 
reliability, and state priorities and policies affect states use SSAs 
service. We also identified a weakness in SSAs verification service 
that exposes some states to fraud by those using the SSNs of deceased 
persons. 

www.gao.gov/cgi-bin/getrpt?GAO-03-941T.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Barbara Bovbjerg at 
(202) 512-7215 or bovbjergb@gao.gov.

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss ways to better protect Social 
Security Numbers (SSNs) to help prevent the proliferation of false 
identities whether for financial misuse or for assuming an individual's 
identity. Although the Social Security Administration (SSA) originally 
created SSNs as a means to track worker's earnings and eligibility for 
Social Security benefits, over time the SSN has come to be used for a 
myriad of purposes. As you know, SSNs are a key piece of information in 
creating false identities. Allegations of SSN misuse include, for 
example, incidents where a criminal uses the SSN of another individual 
for the purpose of fraudulently obtaining credit, acquiring goods, 
violating immigration laws, or fleeing the criminal justice system.

Although Congress has passed a number of laws to protect the security 
of personal information, the continued use of and reliance on SSNs by 
private and public sector entities and the potential for misuse 
underscores the importance of identifying areas that can be further 
strengthened. Accordingly, you asked us to talk about the uses of SSNs 
and ways that the integrity of the SSN may be preserved. My remarks 
today will focus on describing (1) public and private sector use and 
display of SSNs, and (2) SSA's role in preventing the proliferation of 
false identities. My testimony is based on a report we did for this 
subcommittee on government uses of the SSN,[Footnote 1] ongoing work 
that focuses on private sector SSN uses, and work we are completing on 
SSA's enumeration process and the agency's verification of SSNs for 
state driver licensing.

In summary, public and some private sector entities rely extensively on 
SSNs. We reported last year that federal, state and county government 
agencies rely extensively on the SSN to manage records, verify 
eligibility of benefit applicants, collect outstanding debt, and 
conduct research and program evaluations. SSNs are also displayed on a 
number of public record documents that are routinely made available to 
the public. To improve customer service, some state and local 
government entities are considering placing more public records on the 
Internet. In addition, some private sector entities have come to rely 
on the SSN as an identifier, using it and other information to 
accumulate information about individuals. This is particularly true of 
entities that amass public and private data, including SSNs, for 
resale. Certain laws have helped to restrict the use of SSN and other 
information by these private sector entities to specific purposes. 
However, as a result of the increased use and availability of SSN 
information and other data, more and more personal information is being 
centralized into various corporate and public databases. Because SSNs 
are often the identifier of choice among individuals seeking to create 
false identities, to the extent that personal information is aggregated 
in public and private sector databases it becomes vulnerable to misuse.

As the agency responsible for issuing SSNs and maintaining the earnings 
records and other personal information for millions of SSN holders, SSA 
plays a unique role in helping to prevent the proliferation of false 
identities. Following the events of September 11, 2001, SSA formed a 
task force to address weaknesses in the enumeration process and 
developed major new initiatives to prevent the inappropriate assignment 
of SSNs to non-citizens, who represent the bulk of new SSNs issued by 
SSA's 1,300 field offices. For example, SSA now requires field staff to 
independently verify the identity information and immigration status of 
all non-citizen applicants with the Department of Homeland Security 
(DHS), prior to issuing an SSN. However, many SSA field staff are 
relying exclusively on the DHS verification system, while neglecting 
other standard practices for visually inspecting documents. SSA's 
automated system for assigning SSNs also does not prevent the issuance 
of an SSN if staff by-pass required verification steps. Other areas 
remain vulnerable and could be targeted by those seeking fraudulent 
SSNs. These include SSA's process for assigning social security numbers 
for children under age one and issuing replacement social security 
cards. In addition to its enumeration process, SSA provides a service 
to states to verify the SSNs of individuals seeking driver's licenses. 
We found that fewer than half the states have used SSA's service and 
the extent to which they regularly use the service varies widely across 
states. Factors such as cost, problems with system reliability, and 
state priorities and policies determine whether or not states use SSA's 
service. We also identified a weakness in SSA's verification service 
that exposes some states to fraud by those who would use the SSN of a 
deceased individual.

Background:

The Social Security Act of 1935 authorized the Social Security 
Administration to establish a recordkeeping system to help manage the 
Social Security program, and resulted in the creation of the SSN. 
Through a process known as "enumeration," unique numbers are created 
for every person as a work and retirement benefit record for the Social 
Security program. Today, SSNs are generally issued to most U.S. 
citizens and are also available to, non-citizens lawfully admitted to 
the U.S. with permission to work. Lawfully admitted non-citizens may 
also qualify for a SSN for nonwork purposes when a federal, state, or 
local law requires an SSN to obtain a particular welfare benefit or 
service. SSA is required to verify information from such applicants 
regarding their age, identity, foreign citizenship, and immigration 
status. Most of the agency's enumeration workload involves U.S. 
citizens who generally receive SSNs via SSA's birth registration 
process handled by hospitals. However, individuals seeking SSNs can 
also apply in-person at any of SSA's field locations, through the mail, 
or via the Internet.

The uniqueness and broad applicability of the SSN have made it the 
identifier of choice for government agencies and private businesses, 
both for compliance with federal requirements and for the agencies' and 
businesses' own purposes. In addition, the boom in computer technology 
over the past decades has prompted private businesses and government 
agencies to rely on SSNs as a way to accumulate and identify 
information for their databases. As such, SSNs are often the identifier 
of choice among individuals seeking to create false identities. Law 
enforcement officials and others consider the proliferation of false 
identities to be one of the fastest growing crimes today. In 2002, the 
Federal Trade Commission received 380,103 consumer fraud and identity 
theft complaints, up from 139,007 in 2000.[Footnote 2] In 2002, 
consumers also reported losses from fraud of more than $343 million. In 
addition, identity crime accounts for over 80 percent of social 
security number misuse allegations according to the SSA.

Public and Private Sector Uses and Display of SSNs:

As we reported to you last year, federal, state, and county government 
agencies use SSNs.[Footnote 3] When these entities administer programs 
that deliver services and benefits to the public, they rely extensively 
on the SSNs of those receiving the benefits and services. Because SSNs 
are unique identifiers and do not change, the numbers provide a 
convenient and efficient means of managing records. They are also 
particularly useful for data sharing and data matching because agencies 
can use them to check or compare their information quickly and 
accurately with that from other agencies. In so doing, these agencies 
can better ensure that they pay benefits or provide services only to 
eligible individuals and can more readily recover delinquent debts 
individuals may owe. In addition to using SSNs to deliver services or 
benefits, agencies also use or share SSNs to conduct statistical 
research and program evaluations. Moreover, most of the government 
departments or agencies we surveyed use SSNs to varying extents to 
perform some of their responsibilities as employers, such as paying 
their employees and providing health and other insurance benefits.

Many of the government agencies we surveyed in our work last year 
reported maintaining public records that contain SSNs. This is 
particularly true at the state and county level where certain offices 
such as state professional licensing agencies and county recorders' 
offices have traditionally been repositories for public records that 
may contain SSNs. These records chronicle the various life events and 
other activities of individuals as they interact with the government, 
such as birth certificates, professional licenses, and property title 
transfers. Generally, state law governs whether and under what 
circumstances these records are made available to the public, and they 
vary from state to state. They may be made available for a number of 
reasons, including the presumption that citizens need key information 
to ensure that government is accountable to the people. Certain records 
maintained by federal, state, and county courts are also routinely made 
available to the public. In principle, these records are open to aid in 
preserving the integrity of the judicial process and to enhance public 
trust and confidence in the judicial process. At the federal level, 
access to documents generally has its grounding in common law and 
constitutional principles. In some cases, public access is also 
required by statute, as is the case for papers filed in a bankruptcy 
proceeding. As with federal courts, requirements regarding access to 
state and local court records may have a state common law or 
constitutional basis or may be based on state laws.

Although public records have traditionally been housed in government 
offices and court buildings, to improve customer service, some state 
and local government entities are considering placing more public 
records on the Internet. Because such actions would create new 
opportunities for gathering SSNs from public records on a broad scale, 
we are beginning work for this subcommittee to examine the extent to 
which SSNs in public records are already accessible via the Internet.

In our current work, we found that some private sector entities also 
rely extensively on the SSN. Businesses often request an individual's 
SSN in exchange for goods or services. For example, some businesses use 
the SSN as a key identifier to assess credit risk, track patient care 
among multiple providers, locate bankruptcy assets, and provide 
background checks on new employees. In some cases, businesses require 
individuals to submit their SSNs to comply with federal laws such as 
the tax code. Currently, there is no law that prohibits businesses from 
requiring a person's SSN as a condition of providing goods and 
services. If an individual refuses to give his or her SSN to a company 
or organization, they can be refused goods and services unless the SSN 
is provided.

To build on previous work we did to determine certain private sector 
entities use of SSNs, we have focused our initial private sector work 
on information resellers and consumer reporting agencies 
(CRAs).[Footnote 4] Some of these entities have come to rely on the SSN 
as an identifier to accumulate information about individuals, which 
helps them determine the identity of an individual for purposes such as 
employment screening, credit information, and criminal histories. This 
is particularly true of entities, known as information resellers, who 
amass personal information, including SSNs. Information resellers often 
compile information from various public and private sources.[Footnote 
5] These entities provide their products and services to a variety of 
customers, although the larger ones generally limit their services to 
customers that establish accounts with them, such as entities like law 
firms and financial institutions. Other information resellers often 
make their information available through the Internet to persons paying 
a fee to access it.

CRAs are also large private sector users of SSNs. These entities often 
rely on SSNs, as well as individuals' names and addresses to build and 
maintain credit histories. Businesses routinely report consumers' 
financial transactions, such as charges, loans, and credit repayments 
to CRAs. CRAs use SSNs to determine consumers' identities and ensure 
that incoming consumer account data is matched correctly with 
information already on file.

Certain laws such as the Fair Credit Reporting Act, the Gramm-Leach-
Bliley Act, and the Driver's Privacy Protection Act have helped to 
limit the use of personal information, including SSNs, by information 
resellers and CRAs. These laws limit the disclosure of information by 
these entities to specific circumstances. In our discussion with some 
of the larger information resellers and CRAs, we were told that they 
have take specific actions to adhere to these laws, such as 
establishing contracts with their clients specifying that the 
information they obtain will be used only for accepted purposes under 
the law.

The extensive public and private sector uses of SSNs and availability 
of public records and other information, especially via the Internet, 
has allowed individuals' personal information to be aggregated into 
multiple databases or centralized locations. In the course of our work, 
we have identified numerous examples where public and private databases 
have been compromised and personal data, including SSNs, has been 
stolen. In some instances, the display of SSNs in public records and 
easily accessible websites provided the opportunity for identity 
thieves. In other instances, databases not readily available to 
outsiders have had their security breached by employees with access to 
key information. For example, in our current work, we identified a case 
where two individuals obtained the names and SSNs of 325 high-ranking 
United States military officers from a public Website, then used those 
names and identities to apply for instant credit at a leading computer 
company. Although criminals have not accessed all public and private 
databases, such cases illustrate that these databases are vulnerable to 
criminal misuse.

SSA Has a Role in Preventing SSNs from Being Used to Create False 
Identities but Some Areas Remain Vulnerable:

Because SSA is the issuer and custodian of SSN data, SSA has a unique 
role in helping to prevent the proliferation of false identities. 
Following the events of September 11, 2001, SSA began taking steps to 
increase management attention on enumeration and formed a task force to 
address weaknesses in the enumeration process. As a result of this 
effort, SSA has developed major new initiatives to prevent the 
inappropriate assignment of SSNs to non-citizens. However, our 
preliminary findings to date identified that some key weaknesses 
remain. Vulnerabilities include SSA's process for issuing replacement 
Social Security cards and assigning SSNs to children under age one. SSA 
is also increasingly called upon by states to verify the identity of 
individuals seeking driver licenses. We found that fewer than half the 
states have used SSA's service and the extent to which they regularly 
use the service varies widely. Factors such as costs, problems with 
system reliability, and state priorities have affected states use of 
SSA's verification service. We also identified a key weakness in the 
service that exposes some states to inadvertently issuing licenses to 
individuals using the SSNs of deceased individuals. We plan to issue 
reports on these issues in September that will likely contain 
recommendations to improve SSA's enumeration process and its SSN 
verification service.

SSA's Enumeration Process Helps Prevent the Proliferation of False 
Identities, but Additional Actions are Needed to Safeguard the Issuance 
of SSNs:

SSA has increased document verifications and developed new initiatives 
to prevent the inappropriate assignment of Social Security numbers 
(SSNs) to non-citizens who represent the bulk of all initial SSNs 
issued by SSA's 1,300 field offices. However, in some key areas, 
weaknesses remain. SSA has increased document verifications by 
requiring independent verification of the documents and immigration 
status of all non-citizen applicants with the issuing agency--namely 
the Department Homeland Security (DHS) and Department of State (State 
Department) prior to issuing the SSN. However, in our audit work, we 
found that many field offices are relying heavily on DHS's verification 
service, while neglecting standard, in-house practices for visually 
inspecting and verifying identity documents. We also found that while 
SSA has made improvements to its automated system for assigning SSNs, 
the system is not designed to prevent the issuance of an SSN if field 
staff by-pass essential verification steps. SSA also has begun 
requiring foreign students to show proof of their full-time enrollment, 
but does not require field staff to verify with the school the 
students' enrollment or their authorization to work. Consequently, SSNs 
for non-citizen students may still be improperly issued.

SSA has also undertaken other new initiatives to shift the burden of 
processing non-citizen applications from its field offices. SSA 
recently piloted a specialized center in Brooklyn, New York, which 
focuses exclusively on enumeration and utilizes the expertise of DHS 
document examiners and SSA's OIG investigators. However, the future of 
this pilot project and DHS' participation has not yet been determined. 
Meanwhile, in late 2002, SSA began a phased implementation of a long-
term process to issue SSNs to non-citizens at the point of entry into 
the United States, called "Enumeration at Entry" (EAE). EAE offers the 
advantage of using State Department and DHS expertise to authenticate 
information provided by applicants for subsequent transmission to SSA 
who then issues the SSN. Currently, EAE is limited to immigrants age 18 
and older who have the option of applying for an SSN at one of the 127 
State posts worldwide that issue immigrant visas. SSA has experienced 
problems with obtaining clean records from both the State Department 
and DHS, but plans to continue expanding the program over time to 
include other non-citizen groups, such as students and temporary 
visitors. The agency also intends to evaluate the initial phase of EAE 
in conjunction with the State Department and DHS. However, this 
evaluation has not yet been planned or scheduled.

While SSA has embarked on these new initiatives, it has not tightened 
controls in two key areas of its enumeration process that could be 
exploited by individuals seeking fraudulent SSNs. One area is the 
assignment of SSNs to children under age one. Prior work by SSA's 
Inspector General identified the assignment of SSNs to children as an 
area prone to fraud because SSA did not independently verify the 
authenticity of various state birth certificates. Despite the training 
and guidance provided to field office employees, the OIG found that the 
quality of many counterfeit documents was often too good to detect 
simply by visual inspection. Last year, SSA revised its policies to 
require that field staff obtain independent third party verification of 
the birth records for U.S.-born individuals age one and older from the 
state or local bureau of vital statistics prior to issuing an SSN card. 
[Footnote 6] However, SSA left in place its policy for children under 
age one and continues to require only a visual inspection of documents, 
such as birth records.

SSA's policies relating to enumerating children under age one expose 
the agency to fraud. During our fieldwork, we found an example of a 
non-citizen who submitted a counterfeit birth certificate in support of 
an SSN application for a fictitious U.S. born child under age one. In 
this case, the SSA field office employee identified the counterfeit 
state birth certificate by comparing it with an authentic one. However, 
SSA staff acknowledged that if a counterfeit out-of-state birth 
certificate had been used, SSA would likely have issued the SSN because 
of staff unfamiliarity with the specific features of the numerous state 
birth certificates. Further, we were able to prove the ease with which 
individuals can obtain SSNs by exploiting SSA's current processes. 
Working in an undercover capacity our investigators were able to obtain 
two SSNs. By posing as parents of newborns, they obtained the first SSN 
by applying in-person at a SSA field office using a counterfeit birth 
certificate and baptismal certificate. Using similar documents, a 
second SSN was obtained by our investigators who submitted all material 
via the mail. In both cases, SSA staff verified our counterfeit 
documents as being valid. SSA officials told us that they are re-
evaluating their policy for enumerating children under age one. 
However, they noted that parents often need an SSN for their child soon 
after birth for various reasons such as for income tax purposes. They 
acknowledge that a challenge facing the agency is to strike a better 
balance between serving the needs of the public and ensuring SSN 
integrity.

In addition to the assignment of SSNs to children under the age of one, 
SSA's policy for replacing Social Security cards also increases the 
potential for misuse of SSNs. SSA does not limit the number of 
replacement cards individuals can receive. Of the 18 million cards 
issued by SSA in FY2002, 12.4 million, or 69 percent, were replacement 
cards. More than 1 million of these cards were issued to non-citizens. 
In several of the field offices we visited, replacement cards 
represented 70 percent of the total enumeration workload. While SSA 
requires non-citizens applying for a replacement card to provide the 
same identity and immigration information as if they were applying for 
an original SSN, SSA's evidence requirements for citizens are much less 
stringent. Citizens applying for a replacement card need not prove 
their citizenship; they may use as proof of identity such documents as 
a driver's license, passport, employee identification card, school 
identification card, church membership or confirmation record, life 
insurance policy, or health insurance card. The ability to obtain 
numerous replacement SSN cards with less documentation creates a 
condition for requestors to obtain SSNs for a wide range of illicit 
uses including selling them to non-citizens. These cards can be sold to 
individuals seeking to hide or create a new identity, perhaps for the 
purpose of some illicit activity. SSA told us the agency is considering 
limiting the number of replacement cards with certain exceptions such 
as for name changes, administrative errors, and hardships. However, 
they cautioned that while support exists for this change within the 
agency, some advocacy groups oppose such a limit.

Field staff we interviewed told us that despite their reservations 
regarding individuals seeking excessive numbers of replacement cards, 
they were required under SSA policy to issue the cards. Many of the 
field office staff and managers we spoke to acknowledged that the 
current policy weakens the integrity of SSA's enumeration process.

SSA's Verification of Driver Licenses Applicants Helps Prevent 
Fraudulent Documents, but Vulnerabilities Still Exist:

The events of September 11th, 2001 focused attention on the importance 
of identifying people who use false identity information or documents, 
particularly in the driver licensing process. Driver licenses are a 
widely accepted form of identification that individuals frequently use 
to obtain services or benefits from federal and state agencies, open a 
bank account, request credit, board an airplane, and carry on other 
important activities of daily living. For this reason, driver licensing 
agencies are points at which individuals may attempt to fraudulently 
obtain a license using a false name, social security number (SSN), or 
other documents such as birth certificates to secure this key 
credential.

Given that most states collect SSNs during the licensing process, SSA 
is uniquely positioned to help states verify the identity information 
provided by applicants. To this end, SSA has a verification service in 
place that allows state driver licensing agencies to verify the SSN, 
name, and date of birth of customers with SSA's master file of SSN 
owners. States can transmit requests for SSN verification in two ways. 
One is by sending multiple requests together, called the "batch" 
method, to which SSA reports it generally responds within 48 hours. The 
other way is to send an individual request on-line, to which SSA 
responds immediately.

Twenty-five states have used the batch or on-line method to verify SSNs 
with SSA and the extent to which they use the service on a regular 
basis varies. About three-fourths of the states that rely on SSA's 
verification service used the on-line method or a combination of the 
on-line and batch method, while the remaining states used the batch 
method exclusively. Over the last several years, batch states estimated 
submitting over 84 million batch requests to SSA compared to 13 million 
requests submitted by on-line users. States' use of SSA's on-line 
service has increased steadily over the last several years. However, 
the extent of use has varied significantly, with 5 states submitting 
over 70 percent of all on-line verification requests and one state 
submitting about one-third of the total.

Various factors, such as costs, problems with system reliability, and 
state priorities affect states' decisions regarding use of SSA's 
verification service. In addition to the per-transaction fees that SSA 
charges, states may incur additional costs to set up and use SSA's 
service, including the cost for computer programming, equipment, 
staffing, training, and so forth. Moreover, states' decisions about 
whether to use SSA's service, or the extent to which to use it, are 
also driven by internal policies, priorities, and other concerns. For 
example, some of the states we visited have policies requiring their 
driving licensing agencies to verify all customers' SSNs. Other states 
may limit their use of the on-line method to certain targeted 
populations, such as where fraud is suspected or for initial licenses, 
but not for renewals of in-state licenses. The non-verifying states we 
contacted expressed reluctance to use SSA's verification service based 
on performance problems they had heard were encountered by other 
states. Some states cited concerns about frequent outages and slowness 
of the on-line system. Other states mentioned that the extra time to 
verify and resolve SSN problems could increase customer waiting times 
because a driver license would not be issued until verification was 
complete.

Indeed, weaknesses in SSA's design and management of its SSN on-line 
verification services have limited its usefulness and contributed to 
capacity and performance problems. SSA used an available infrastructure 
to set up the system and encountered capacity problems that continued 
and worsened after the pilot phase. The capacity problems inherent in 
the design of the on-line system have affected state use of SSA's 
verification service. Officials in one state told us that they have 
been forced to scale back their use of the system because they were 
told by SSA that their volume of transactions were overloading the 
system. In addition, because of issues related to performance and 
reliability, no new states have used the service since the summer of 
2002. At the time of our review, 10 states had signed agreements with 
SSA and were waiting to use the on-line system and 17 states had 
received funds from Department of Transportation for the purpose of 
verifying SSNs with SSA. It is uncertain how many of the 17 states will 
ultimately opt to use SSA's on-line service. However, even if they 
signed agreements with SSA today, they may not be able to use the 
service until the backlog of waiting states is addressed. More 
recently, SSA has made some necessary improvements to increase system 
capacity and to refocus its attention to the day-to-day management of 
the service. However, at the time of our review, the agency still has 
not established goals for the level of service it will provide to 
driver licensing agencies.

In reviewing SSA's verification service, we identified a key weakness 
that expose some states to issuing licenses to applicants using the 
personal information of deceased individuals. Unlike the on-line 
service, SSA does not match batch requests against its nationwide death 
records. As a result, the batch method will not identify and prevent 
the issuance of a license in cases where an SSN name and date of birth 
of a deceased individual is being used. SSA officials told us that they 
initially developed the batch method several years ago and they did not 
design the system to match SSNs against its death files. However, in 
developing the on-line system for state driver licensing agencies, a 
death match was built into the new process. At the time of our review, 
SSA acknowledged that it had not explicitly informed states about the 
limitation of the batch service.

Our own analysis of one month of SSN transactions submitted to SSA by 
one state using the batch method identified at least 44 cases in which 
individuals used the SSN, name, and date of birth of persons listed as 
deceased in SSA's records to obtain a license or an identification 
card.[Footnote 7] We forwarded this information to state investigators 
who quickly confirmed that licenses and identification cards had been 
issued in 41 cases and were continuing to investigate the others. To 
further assess states' vulnerability in this area, our own 
investigators working in an undercover capacity were able to obtain 
licenses in two batch states using a counterfeit out-of-state license 
and other fraudulent documents and the SSNs of deceased persons. In 
both states, driver licensing employees accepted the documents we 
submitted as valid. Our investigators completed the transaction in one 
state and left with a new valid license.[Footnote 8] In the second 
state, the new permanent license arrived by mail within weeks. The ease 
in which they were able to obtain these licenses confirmed the 
vulnerability of states currently using the batch method as a means of 
SSN verification. Moreover, states that have used the batch method in 
prior years to clean up their records and verify the SSNs of millions 
of driver license holders, may have also unwittingly left themselves 
open to identity theft and fraud.

Conclusions:

The use of SSNs by both public and sector entities is likely to 
continue given that it is used as the key identifier by most of these 
entities and there is currently no other widely accepted alternative. 
To help control such use, certain laws have helped to safeguard such 
personal information, including SSNs, by limiting disclosure of such 
information to specific purposes. To the extent that personal 
information is aggregated in public and private sector databases, it 
becomes vulnerable to misuse. In addition, to the extent that public 
record information becomes more available in an electronic format, it 
becomes more vulnerable to misuse. The ease of access the Internet 
affords could encourage individuals to engage in information gathering 
from public records on a broader scale than they could before when they 
had to visit a physical location and request or search for information 
on a case-by-case basis.

SSA has made substantial progress in protecting the integrity of the 
SSN by requiring that the immigration and work status of every non-
citizen applicant be verified before an SSN is issued. However, without 
further system improvements and assurance that field offices will 
comply fully with the new policies and procedures this effort may be 
less effective than it could be. Further, as SSA closes off many 
avenues of unauthorized access to SSNs, perpetrators of fraud will 
likely shift their strategies to less protected areas. In particular, 
SSA's policies for enumerating children and providing unlimited numbers 
of replacement cards may well invite such activity, unless they too are 
modified.

State driver license agencies face a daunting task in ensuring that the 
identity information of those to whom they issues licenses is verified. 
States effectiveness verifying individual's identities is often 
dependent on several factors, including the receipt of timely and 
accurate identity information from SSA. Unfortunately, design and 
management weaknesses associated with SSA's verification service have 
limited its effectiveness. States that are unable to take full 
advantage of the service and others that are waiting for the 
opportunity to use it remain vulnerable to identity crimes. In 
addition, states that continue to rely primarily or partly on SSA's 
batch verification service still risk issuing licenses to individuals 
using the SSNs and other identity information of deceased individuals. 
This remains a critical flaw in SSA's service and states' efforts to 
strengthen the integrity of the driver license.

GAO is preparing to publish reports covering the work I have summarized 
within the next several months, which will include recommendations 
aimed at ensuring the integrity of the SSN. We look forward to 
continuing to work with this Subcommittee on these important issues. I 
would be happy to respond to any questions you or other members of the 
Subcommittee may have.

Contacts and Acknowledgments For further information regarding this 
testimony, please contact Barbara D. Bovbjerg, Director, or Dan 
Bertoni, Assistant Director, Education, Workforce, and Income Security 
at (202) 512-7215. Individuals making key contributions to this 
testimony include Mindy Bowman, Alicia Cackley, Tamara Cross, Patrick 
DiBattista, Melissa Hinton, Jason Holsclaw, George Scott, Jacquelyn 
Stewart, and Tony Wysocki.

FOOTNOTES

[1] U.S. General Accounting Office, Social Security Numbers: Government 
Benefits from SSN Use but Could Provide Better Safeguards, GAO-02-352 
(Washington D.C.: May 31, 2002).

[2] Identity theft records broken out of consumer fraud totaled per 
year: 31,117(2000), 86,198(2001), and 161,819(2002).

[3] U.S. General Accounting Office, Social Security Numbers: Government 
Benefits from SSN Use but Could Provide Better Safeguards, GAO-02-352 
(Washington D.C.: May 2002).

[4] U.S. General Accounting Office, Social Security: Government and 
Commercial Use of the Social Security Number is Widespread, GAO/
HEHS-99-28 (Washington, D.C.: Feb. 16, 1999.)

[5] The information compiled may include public records of bankruptcy, 
tax liens, civil judgments, criminal histories, deaths, real estate 
ownership, driving histories, voter registration, and professional 
licenses. Private data sources include information from telephone 
directories and copyrighted publications. 

[6] Most U.S.-born individuals receive a SSN through a process SSA 
refers to as Enumeration-at-Birth (EAB). Under EAE parents can apply 
for a SSN for their newborn child at the hospital as part of the birth 
registration process. Under this process hospitals send birth 
registration information to a state or local bureau of vital statistics 
where it is put into a database. SSA accepts the data captured during 
the birth registration process as evidence of age, identity, and 
citizenship, and assigns the child an SSN without further parental 
involvement. The appropriate bureau of vital statistics forwards SSA 
the required information, usually by electronic means. Once SSA 
receives the required information, it performs edits, assigns the SSN 
and issues the card. 

[7] SSA's death records may contain inaccuracies because SSA records 
all reports of death but only verifies those involving benefit 
payments.

[8] This state does not use SSA's batch verification process for 
initial licenses, but only for license renewals. Therefore, the use of 
the deceased person's SSN will not be caught by the system when the 
state ultimately verifies it using the batch method.