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[House Report 109-708]
[From the U.S. Government Publishing Office]

109th Congress                                            Rept. 109-708
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================

 
             SOCIAL SECURITY NUMBER PROTECTION ACT OF 2006

                                _______
                                

               September 29, 2006.--Ordered to be printed

                                _______
                                

    Mr. Barton of Texas, from the Committee on Energy and Commerce, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 1078]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 1078) to strengthen the authority of the Federal 
Government to protect individuals from certain acts and 
practices in the sale and purchase of Social Security numbers 
and Social Security account numbers, and for other purposes, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................     4
Background and Need for Legislation..............................     4
Hearings.........................................................     7
Committee Consideration..........................................     7
Committee Votes..................................................     7
Committee Oversight Findings.....................................     7
Statement of General Performance Goals and Objectives............     7
New Budget Authority, Entitlement Authority, and Tax Expenditures     7
Committee Cost Estimate..........................................     8
Congressional Budget Office Estimate.............................     8
Federal Mandates Statement.......................................    10
Advisory Committee Statement.....................................    10
Constitutional Authority Statement...............................    10
Applicability to Legislative Branch..............................    10
Section-by-Section Analysis of the Legislation...................    10
Changes in Existing Law Made by the Bill, as Reported............    13

                               AMENDMENT

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Social Security Number Protection Act 
of 2006''.

SEC. 2. DEFINITIONS.

  In this Act:
          (1) Commission.--The term ``Commission'' means the Federal 
        Trade Commission.
          (2) Person.--The term ``person'' means any individual, 
        partnership, corporation, trust, estate, cooperative, 
        association, or any other entity.
          (3) Sale.--The term ``sale'' means obtaining, directly or 
        indirectly, anything of value in exchange for a Social Security 
        number or Social Security account number. Such term does not 
        include the submission of such numbers as part of the process 
        for applying for any type of Government benefit or programs 
        (such as grant or loan applications or welfare or other public 
        assistance programs). Such term also does not include transfers 
        of such numbers as part of a data matching program under the 
        Computer Matching and Privacy Protection Act.
          (4) Purchase.--The term ``purchase'' means providing directly 
        or indirectly, anything of value in exchange for a Social 
        Security number or Social Security account number. Such term 
        does not include the submission of such numbers as part of the 
        process for applying for any type of Government benefit or 
        programs (such as grant or loan applications or welfare or 
        other public assistance programs). Such term also does not 
        include transfers of such numbers as part of a data matching 
        program under the Computer Matching and Privacy Protection Act.
          (5) Social security number.--The term ``Social Security 
        number'' means the social security account number assigned to 
        an individual under section 205(c)(2)(B) of the Social Security 
        Act (42 U.S.C. 405(c)(2)(B)).
          (6) State.--The term ``State'' means any State of the United 
        States, the District of Columbia, Puerto Rico, the Northern 
        Mariana Islands, the United States Virgin Islands, Guam, 
        American Samoa, and any territory or possession of the United 
        States.

SEC. 3. REGULATION OF THE SALE AND PURCHASE OF SOCIAL SECURITY NUMBERS.

  (a) Prohibition.--It shall be unlawful for any person to sell or 
purchase a Social Security number in a manner that violates a 
regulation promulgated by the Commission under subsection (b) of this 
section.
  (b) Regulations.--
          (1) Restrictions authorized.--The Commission, after 
        consultation with the Commissioner of Social Security, the 
        Attorney General, and other agencies as the Commission deems 
        appropriate, shall promulgate regulations restricting the sale 
        and purchase of Social Security numbers and any unfair or 
        deceptive acts or practices in connection with the sale and 
        purchase of Social Security numbers.
          (2) Limitations on restrictions.--In promulgating such 
        regulations, the Commission shall impose restrictions and 
        conditions on the sale and purchase of Social Security numbers 
        that are no broader than necessary--
                  (A) to provide reasonable assurance that Social 
                Security numbers will not be used to commit or 
                facilitate fraud, deception, or crime; and
                  (B) to prevent an undue risk of bodily, emotional, or 
                financial harm to individuals.
        For purposes of subparagraph (B), the Commission shall consider 
        the nature, likelihood, and severity of the anticipated harm; 
        the nature, likelihood, and extent of any benefits that could 
        be realized from the sale or purchase of the numbers; and any 
        other relevant factors.
          (3) Exceptions.--The regulations promulgated pursuant to 
        paragraph (1) shall include exceptions which permit the sale 
        and purchase of Social Security numbers--
                  (A) to the extent necessary for law enforcement or 
                national security purposes;
                  (B) to the extent necessary for public health 
                purposes;
                  (C) to the extent necessary in emergency situations 
                to protect the health or safety of 1 or more 
                individuals;
                  (D) to the extent necessary for research conducted 
                for the purpose of advancing public knowledge, on the 
                condition that the researcher provides adequate 
                assurances that--
                          (i) the Social Security numbers will not be 
                        used to harass, target, or publicly reveal 
                        information concerning any identifiable 
                        individuals;
                          (ii) information about identifiable 
                        individuals obtained from the research will not 
                        be used to make decisions that directly affect 
                        the rights, benefits, or privileges of specific 
                        individuals; and
                          (iii) the researcher has in place appropriate 
                        safeguards to protect the privacy and 
                        confidentiality of any information about 
                        identifiable individuals;
                  (E) to the extent consistent with an individual's 
                voluntary and affirmative written consent to the sale 
                or purchase of a Social Security number that has been 
                assigned to that individual;
                  (F) to the extent necessary for legitimate consumer 
                credit verification, if the Social Security numbers 
                used for such verification are redacted in accordance 
                with uniform redaction standards established by the 
                Commission in such regulations; and
                  (G) under other appropriate circumstances as the 
                Commission may determine and as are consistent with the 
                principles in paragraph (2).
  (c) Rulemaking.--
          (1) Deadline for action.--Not later than 1 year after the 
        date of enactment of this Act, the Commission shall promulgate 
        the regulations under subsection (b) of this section, in 
        accordance with section 553 of title 5, United States Code.
          (2) Effective dates.--Subsection (a) and the regulations 
        promulgated under subsection (b) shall take effect 30 days 
        after the date on which the final regulations issued under this 
        section are published in the Federal Register.
  (d) Enforcement.--Any violation of a regulation promulgated under 
subsection (b) of this section shall be treated as a violation of a 
regulation under section 18(a)(1)(B) of the Federal Trade Commission 
Act (15 U.S.C. 57a(a)(1)(B)) regarding unfair or deceptive acts or 
practices.
  (e) Administration and Enforcement.--
          (1) The commission.--The Commission shall prevent any person 
        from violating this section, and any regulation promulgated 
        thereunder, in the same manner, by the same means, and with the 
        same jurisdiction, powers, and duties as though all applicable 
        terms and provisions of the Federal Trade Commission Act (15 
        U.S.C. 41 et seq.) were incorporated into and made a part of 
        this Act. Any person who violates such regulation shall be 
        subject to the penalties and entitled to the privileges and 
        immunities provided in the Federal Trade Commission Act (15 
        U.S.C. 41 et seq.) as though all applicable terms and 
        provisions of the Federal Trade Commission Act (15 U.S.C. 41 et 
        seq.) were incorporated into and made a part of this Act. 
        Nothing contained in this Act shall be construed to limit the 
        authority of the Commission under any other provision of law.
          (2) Actions by states.--
                  (A) Civil actions.--In any case in which the attorney 
                general of a State has reason to believe that an 
                interest of the residents of that State has been or is 
                threatened or adversely affected by an act or practice 
                that violates any regulation of the Commission 
                promulgated under subsection (b), the State, as parens 
                patriae, may bring a civil action on behalf of the 
                residents of the State in a district court of the 
                United States of appropriate jurisdiction, to--
                          (i) enjoin that act or practice;
                          (ii) enforce compliance with the regulation;
                          (iii) obtain civil penalties in an amount of 
                        $11,000 per violation not to exceed a total of 
                        $5,000,000; or
                          (iv) obtain such other legal and equitable 
                        relief as the district court may consider to be 
                        appropriate.
                Before filing an action under this subsection, the 
                attorney general of the State involved shall provide to 
                the Commission and to the Attorney General a written 
                notice of that action and a copy of the complaint for 
                that action. If the State attorney general determines 
                that it is not feasible to provide the notice described 
                in this subparagraph before the filing of the action, 
                the State attorney general shall provide the written 
                notice and the copy of the complaint to the Commission 
                and to the Attorney General as soon after the filing of 
                the complaint as practicable.
                  (B) Commission and attorney general authority.--On 
                receiving notice under subparagraph (A), the Commission 
                and the Attorney General each shall have the right--
                          (i) to move to stay the action, pending the 
                        final disposition of a pending Federal matter 
                        as described in subparagraph (C);
                          (ii) to intervene in an action under clause 
                        (i);
                          (iii) upon so intervening, to be heard on all 
                        matters arising therein; and
                          (iv) to file petitions for appeal.
                  (C) Pending criminal proceedings.--If the Attorney 
                General has instituted a criminal proceeding or the 
                Commission has instituted a civil action for a 
                violation of this Act or any regulations thereunder, no 
                State may, during the pendency of such proceeding or 
                action, bring an action under this section against any 
                defendant named in the criminal proceeding or civil 
                action for any violation of this section that is 
                alleged in that proceeding or action.
                  (D) Rule of construction.--For purposes of bringing 
                any civil action under subparagraph (A), nothing in 
                this Act shall be construed to prevent an attorney 
                general of a State from exercising the powers conferred 
                on the attorney general by the laws of that State to 
                conduct investigations, administer oaths and 
                affirmations, or compel the attendance of witnesses or 
                the production of documentary and other evidence.
                  (E) Venue; service of process.--Any action brought 
                under this section may be brought in any district court 
                of the United States that meets applicable requirements 
                relating to venue under section 1391 of title 28, 
                United States Code. In an action brought under this 
                section, process may be served in any district in which 
                the defendant is an inhabitant or may be found.

SEC. 4. EFFECT ON OTHER LAWS.

  This Act supersedes any provision of a statute, regulation, or rule 
of a State or political subdivision of a State that expressly restricts 
or prohibits the sale or purchase of Social Security numbers in a 
manner consistent with the regulations promulgated under section 3(b).

                          PURPOSE AND SUMMARY

    The purpose of H.R. 1078 is to prohibit the purchase and 
sale of citizens' Social Security numbers in interstate 
commerce in violation of rules to be promulgated by the Federal 
Trade Commission (FTC). H.R. 1078 requires the FTC to 
promulgate rules within one year, after consultation with the 
Attorney General and Commissioner of Social Security, 
restricting the sale and purchase of Social Security numbers. 
The regulations should be broad enough to prevent Social 
Security numbers from being used to commit fraud, deception, or 
crime, and prevent risk of bodily, emotional, or financial harm 
to individuals. However, H.R. 1078 requires certain exemptions 
from the prohibition for legitimate purposes including 
emergencies, public health, and law enforcement.

                  BACKGROUND AND NEED FOR LEGISLATION

    For centuries, commercial activity has involved the 
exchange by businesses, consumers, and governmental entities of 
information about consumer transactions. In recent times, 
information exchanges have taken on greater importance. 
Technological advances brought increased efficiencies to 
collecting, processing, and sharing data and solidified 
``information'' as a principle commodity of the U.S. economy. 
As consumer transactions account for more than two-thirds of 
the U.S. gross domestic product at this time, information 
sharing is of particular importance to the U.S. economy. The 
exchange of information among businesses is linked to broad 
economic benefits, including the widespread availability and 
low cost of consumer credit, based in part upon real time 
authentication and verification. However, notwithstanding the 
benefits of information sharing, consumers, businesses, and 
governmental entities have begun to focus on the privacy 
implications of information practices. The same technological 
advances in information networks that benefit consumers are 
increasingly used for purposes that can harm consumers when 
information is accessible to unauthorized parties.
    Adopting fair information practices became more common 
among businesses in the mid 1990's. The common elements of fair 
information practices are: notice, choice, access, security, 
and enforcement. There is wide variance in the extent to which 
businesses adhere to these information practices. Even among 
the entities that have embraced these fair information 
practices, there is disagreement about the right mix of self-
regulation, legislation, and technology in protecting privacy.
    Historically, Congress has taken a sectoral approach to 
privacy and has mandated discrete protections for certain 
personal information used for commercial purposes, upon a 
showing that a particular use harmed or threatened to harm the 
American consumer. This industry by industry approach differs 
from the comprehensive approach attempted by other nations, 
such as the European Union's Data Protection Directive. 
Together those sector specific statutes encompass a significant 
portion of U.S. commercial activity, though they are 
significantly different in the protections afforded to 
consumers. The following is a small sample of Federal statutes 
addressing the issue of information privacy: the Children's 
Online Privacy Protection Act, the Cable Communications Policy 
Act, the Telecommunications Act of 1996, the Telephone Consumer 
Protection Act, the Electronic Communications Privacy Act, the 
Health Insurance Portability Protection Act, the Fair Credit 
Reporting Act, the Gramm-Leach-Bliley Act, the Family 
Educational Rights and Privacy Act, the Video Privacy 
Protection Act, the Driver's Privacy Protection Act, and 
wiretap statutes.
    The need to address privacy concerns has grown 
exponentially with the prevalence of e-commerce and the 
digitization of personal information that can be stored, 
transferred, and theoretically accessed by limitless parties 
depending on the data safeguards or protections. Integral to 
all personal information sharing is the role of a universal 
personal identifier that links an individual to many other 
financial and personally identifiable accounts. Specifically, 
Social Security numbers have become the default identifier for 
the overwhelming majority of U.S. citizens.
    Originally created by the Federal government to administer 
the Social Security program, the numbers were intended only to 
track employee contributions to the system and administer 
benefits but were prohibited from any other use. Congress later 
authorized the use of Social Security numbers as taxpayer 
identification numbers for the IRS. However, over time, the 
numbers have become default identification and verification for 
many other purposes. The Federal Government requires virtually 
every individual in the United States to obtain and maintain a 
Social Security number in order to pay taxes, to qualify for 
Social Security benefits, or to seek employment. An unintended 
consequence of these requirements is that Social Security 
numbers have become tools that can be used to facilitate crime, 
fraud, and invasions of the privacy of the individuals to whom 
the numbers are assigned. Because the Federal government 
created and maintains this system, and because the Federal 
government does not permit persons to exempt themselves from 
those requirements, the Committee finds it is appropriate for 
the government to take steps to stem the abuse of this system.
    The Committee notes that Congress attempted to limit the 
use of Social Security numbers with the passage of the Privacy 
Act of 1974. However, this law applied only to government 
agencies and did not restrict the private sector. As a result 
of the lack of restrictions, Social Security numbers have 
become synonymous with an individual's identity as the number 
is tied directly to nearly all financial accounts, as well as 
patient records of health care providers and other business 
entities. While there are clear benefits associated with the 
ability to authenticate and verify an individual--including the 
provision of instantaneous credit, combating fraudulent 
transactions, and accurately identifying or locating 
individuals whose name has changed and is otherwise unable to 
be located--the Social Security number has become the 
singularly most important means of identifying and 
authenticating an individual.
    The Committee finds that the inappropriate sale or purchase 
of Social Security numbers is a significant factor in a growing 
range of illegal activities, including fraud, identity theft, 
and, in some cases, stalking and other violent crimes. It is 
the identifying information associated with a Social Security 
number that presents the largest potential threats to 
individuals. Because an individual's information is linked to 
the Social Security number, access to the Social Security 
number opens the individual's identity and related information 
to the possibility of the information being available to 
unauthorized parties or for unauthorized purposes. The 
Committee found that this can facilitate the commission of 
criminal activities and also can result in serious invasions of 
individual privacy.
    It is the unauthorized access to and use of an individual's 
Social Security number as a result of a commercial transaction 
to purchase or sell the numbers which the Committee seeks to 
stop. For example, identity theft crimes have risen 
substantially over the past decade in part because Social 
Security numbers and other information necessary to perpetrate 
the crime is often easily available for purchase by potential 
criminals. The Committee's related investigation into the 
practice of pretexting--fraudulently impersonating someone else 
to acquire detailed information (usually over the phone) about 
another person--demonstrated that access to an individual's 
personal information is often only limited to the provision of 
a Social Security number. Once a Social Security number is 
obtained, access to detailed personal information associated 
with the Social Security number is readily accessible. With 
this information in hand, a criminal can commit identity theft 
in numerous ways, including opening new accounts in the name of 
the individual attached to the Social Security number.
    Although account fraud is one of the most common crimes 
perpetrated by criminals, the Committee is aware of other harm, 
including violent crimes, that can occur when Social Security 
numbers are easily available for purchase. The Committee is 
concerned the range of harms and crimes that can be perpetrated 
will only increase if prohibitions are not enacted to restrict 
the proliferation of the commercial availability of 
individuals' Social Security numbers. No one should seek to 
profit from the sale of Social Security numbers in 
circumstances that create a substantial risk of physical, 
emotional, or financial harms to the individuals to whom those 
numbers are assigned. Consequently, there is a need for 
enactment of legislation that will offer individuals assigned 
such numbers necessary protections from the sale and purchase 
of Social Security numbers in circumstances that might 
facilitate unlawful conduct or that might otherwise likely 
result in unfair or deceptive practices.

                                HEARINGS

    On Thursday, May 11, 2006, the Subcommittee on Commerce, 
Trade, and Consumer Protection held a hearing entitled, 
``Social Security Numbers in Commerce: Reconciling Beneficial 
Uses with Threats to Privacy'' which examined H.R. 1078 and 
other legislative proposals to increase privacy protections for 
Social Security Numbers. Testimony was received from The 
Honorable Jon Leibowitz, Commissioner, Federal Trade 
Commission; Mr. Oliver I. Ireland, Partner, Morrison & 
Foerster, testifying on behalf of the Financial Services 
Industry Association; Ms. Susan McDonald, President, Pension 
Benefit Information; Ms. Lauren Steinfeld, Former Associate 
Chief Counsel, Office of Management and the Budget, Mr. H. 
Randy Lively Jr., President and CEO, American Financial 
Services Association; and Mr. Marc Rotenberg, Executive 
Director, Electronic Privacy Information Center.

                        COMMITTEE CONSIDERATION

    On Wednesday, July 26, 2006, the Committee on Energy and 
Commerce met in open markup session and ordered H.R. 1078 
favorably reported to the House, amended, by a voice vote, a 
quorum being present.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 1078 reported. A motion by Mr. Barton to order H.R. 1078 
reported to the House, amended, was agreed to by a voice vote.

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held oversight 
or legislative hearings on this legislation.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    The purpose of the legislation is to reduce harm to 
individuals that results from unauthorized access to and use of 
their Social Security number.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
1078, the Social Security Number Protection Act of 2006, would 
result in no new or increased budget authority, entitlement 
authority, or tax expenditures or revenues.

                        COMMITTEE COST ESTIMATE

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 17, 2006.
Hon. Joe Barton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1078, the Social 
Security Number Protection Act of 2006.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                          Donald B. Marron,
                                                   Acting Director.
    Enclosure.

H.R. 1078--Social Security Number Protection Act of 2006

    Summary: H.R. 1078 would prohibit the sale or purchase of 
Social Security numbers (SSNs) and would require the Federal 
Trade Commission (FTC) to develop and enforce regulations 
restricting their sale or purchase. CBO estimates that 
promulgating the regulation and its enforcement would not have 
a significant effect on FTC spending.
    Enacting the bill could increase federal revenues from 
civil penalties assessed for violations of the new regulation, 
but CBO estimates that any such increases would not be 
significant in any year. Enacting the bill would not affect 
direct spending.
    H.R. 1078 contains intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA), but CBO estimates that 
any costs to state, local, or tribal governments would be small 
and would not exceed the threshold established in that act ($64 
million, adjusted annually for inflation).
    H.R. 1078 also would impose a private-sector mandate as 
defined in UMRA. It would prohibit any person from selling or 
purchasing an SSN in violation of regulations that the FTC 
would be required to issue under this act. Because of the lack 
of industry data on the sale and purchase of Social Security 
numbers, CBO has no basis to estimate the costs to the private 
sector for prohibiting those transactions. Thus, CBO cannot 
estimate the cost of the mandate or whether the cost would 
exceed the annual threshold established by UMRA for private-
sector mandates ($128 million in 2006, adjusted annually for 
inflation).
    Estimated cost to the Federal government: Based on 
information from the FTC, CBO estimates that the cost to 
develop and enforce regulations concerning the sale or purchase 
of Social Security numbers would be less than $500,000 a year. 
Such costs would be subject to the availability of appropriated 
funds. The costs of this legislation fall within budget 
function 370 (commerce and housing credit).
    Enacting the bill could increase federal revenues from 
civil penalties assessed for violations of the new regulation. 
CBO estimates, however, that any additional revenues that would 
result from enacting the bill would not be significant because 
of the relatively small number of cases likely to be involved.
    Estimated impact on state, local, and tribal governments: 
H.R. 1078 contains intergovernmental mandates as defined in 
UMRA. Provisions in section 3 would require State Attorneys 
General to notify the FTC of any action taken under the bill, 
allow the FTC to intervene in those actions, and limit the 
actions that Attorneys General may take in certain 
circumstances. Also, provisions regarding the sale or purchase 
of Social Security numbers in section 4 would preempt state 
laws in more than 30 states. These provisions constitute 
intergovernmental mandates as defined in UMRA. CBO estimates 
that the aggregate costs, if any, to state, local, and tribal 
governments of complying with the mandates in the bill would be 
small and would not exceed the threshold established in UMRA 
($64 million in 2006, adjusted annually for inflation).
    CBO assumes that the bill would grant no new authority to 
the FTC to regulate the activities of state and local 
governments. Under current law, the courts have ruled that the 
FTC does not have jurisdiction over those governments or over 
public universities. The provisions of the bill regarding the 
sales and purchase of SSNs, therefore, would not apply to such 
entities.
    Estimated impact on the private sector: H.R. 1078 would 
impose a private-sector mandate as defined in UMRA. It would 
prohibit any individual, partnership, corporation, trust, 
estate, cooperative, association, or any other entity from 
selling or purchasing an SSN in violation of regulations that 
the FTC would be required to issue under this act. The FTC 
would be required to ensure that the restrictions and 
conditions on the sale or purchase of SSNs are no broader than 
necessary to provide reasonable assurance that SSNs will not be 
used to commit or facilitate fraud, deception, or crime, and to 
prevent an undue risk of bodily, emotional, or financial harm 
to individuals.
    Certain exceptions also would apply to the prohibition with 
respect to the sale or purchase of SSNs. Those exceptions could 
be based on law enforcement or national security needs, public 
health, certain emergency situations, for certain research 
projects, for consumer credit reporting, or other circumstances 
that the FTC may determine.
    Because of the lack of industry data on the sale and 
purchase of Social Security numbers, CBO has no basis to 
estimate the costs to the private sector for prohibiting those 
transactions. Thus, CBO cannot estimate the cost of the mandate 
or whether the cost would exceed the annual threshold 
established by UMRA for private-sector mandates ($128 million 
in 2006, adjusted annually for inflation).
    Estimate prepared by: Federal Costs: Susan Willie; Impact 
on State, Local, and Tribal Governments: Sarah Puro; Impact on 
the Private Sector: Tyler Kruzich.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    Section 1 defines this Act as the ``Social Security 
Protection Act of 2006.''

Section 2. Definitions

    Section 2 defines terms to be used in this Act: including, 
``Commission,'' ``person,'' ``sale,'' ``purchase,'' ``Social 
Security number,'' ``Social Security account number,'' and 
``State.''
    The terms ``sale'' and ``purchase'' are broadly defined to 
include, respectively, obtaining or providing, directly or 
indirectly, anything of value in exchange for a Social Security 
number or a Social Security account number. Both of the latter 
terms, ``sale'' and ``purchase,'' are specifically defined to 
exclude two sets of circumstances: (1) the submission of such 
numbers as part of the process for applying for any type of 
government benefit or program (e.g., grant or loan applications 
or welfare or other public assistance programs); and (2) the 
transfer of such numbers as part of a data matching program 
under the Computer Matching and Privacy Protection Act of 1988. 
The term ``State'' is defined broadly to include both States of 
the United States and other political subdivisions of the 
United States, such as its territories and possessions.

Section 3. Regulation of the sale and purchase of Social Security 
        numbers

    Section 3 provides for the prohibition of the sale or 
purchase of Social Security numbers in violation of regulations 
promulgated by the Federal Trade Commission. The FTC shall 
promulgate regulations within one year of enactment restricting 
the sale and purchase and defining unfair and deceptive acts 
related to the sale and purchase of Social Security numbers. 
The FTC regulations shall also include exceptions for certain 
enumerated purposes consistent with the intent of the 
legislation.
    Subsection 3(a) would establish the general prohibition of 
the sale and purchase of a Social Security number or Social 
Security account number in a manner that violates a regulation 
promulgated by the Federal Trade Commission (Commission) under 
subsection (b). Subsection 3(b)(1) would direct the Commission, 
after consultation with the Commissioner of Social Security, 
the Department of Justice, and other agencies as the Commission 
deems appropriate, to promulgate substantive regulations 
restricting the sale and purchase of those numbers and any 
unfair and deceptive acts and practices in connection with the 
sale and purchase of those numbers. Subsection 3(b)(2) would 
require the Commission to impose restrictions and conditions on 
the sale and purchase of Social Security numbers and Social 
Security account numbers that are no broader than necessary (A) 
to provide reasonable assurance that such numbers will not be 
used to commit or facilitate fraud, deception, or crime; and 
(B) to prevent an undue risk of bodily, emotional, or financial 
harm to individuals (taking into account any benefits that 
might be realized from the sale or purchase of the numbers and 
any other relevant factors). Subsection 3(b)(2) would authorize 
the Commission to address, for example, the potential use of 
Social Security numbers by stalkers and by those seeking to 
commit fraud or identity theft; and the harms that would result 
from reuse or onward transfer by those who have lawfully 
received the Social Security number. For purposes of 
subparagraph (B) only, the Commission is directed to consider 
the nature, likelihood, and severity of the harm; the nature, 
likelihood, and extent of any benefits that might be realized 
from the sale or purchase of the numbers; and any other 
relevant factors. Subparagraph (B) is not intended, however, to 
create any new requirement for the Commission to conduct formal 
studies or develop statistical or quantitative analyses of the 
factors set forth in that subsection.
    Subsection 3(b)(3) would require the Commission to 
establish in those regulations exceptions for seven categories 
of situations in which the sale and purchase of Social Security 
numbers and Social Security account numbers would be permitted: 
(1) to the extent necessary for law enforcement or national 
security purposes; (2) to the extent necessary for public 
health purposes; (3) to the extent necessary in emergency 
situations to protect the health and safety of one or more 
individuals; (4) to the extent necessary for research 
(including, but not limited to, scientific, epidemiological, 
and social scientific research) conducted for the purpose of 
advancing public knowledge, on the condition that for such 
research the researcher provides adequate assurances that (i) 
the Social Security numbers or Social Security account numbers 
will not be used to harass, target, or publicly reveal 
information concerning any identifiable individual(s); (ii) 
information about identifiable individuals obtained from the 
research will not be used to make decisions that directly 
affect the rights, benefits, or privileges of specific 
individuals; and (iii) the researcher has in place appropriate 
safeguards to protect the privacy and confidentiality of any 
information about identifiable individuals; (5) to the extent 
consistent with an individual's voluntary and affirmative 
written consent to the sale or purchase of a particular Social 
Security number or Social Security account number that has been 
assigned to that individual; (6) to the extent necessary for 
legitimate consumer credit verification, if the Social Security 
numbers used for such verification are redacted in accordance 
with uniform redaction standards issued by the Commission in 
such regulations, and (7) under other appropriate circumstances 
as the Commission may determine and as are consistent with the 
findings in Section 2 and the principles in subsection 3(b)(2). 
Under any of these seven exceptions, when Federal departments 
and agencies have Social Security numbers and Social Security 
account numbers in systems of records, the legal protections of 
the Privacy Act, 5 U.S.C. Sec. 552a, will apply.
    The Committee intends that the Commission's regulations 
will address, among other things, growing concerns about the 
ability of companies to demand that consumers provide them with 
a full Social Security number as a condition of doing business. 
The Committee intends that the Commission, in crafting uniform 
redaction standards pursuant to 3(b)(3)(F), shall protect 
against the threat that a persons' full Social Security number 
could be uncovered. For example, such standards shall protect 
against the threat that a person's full Social Security number 
could be identified by combining the redacted number with other 
data which might otherwise reasonably be available about the 
individual and which could facilitate replication of the full 
number, such as the individual's date of birth or place of 
birth.
    Subsection 3(c)(1) would direct the Commission to 
promulgate the regulations under subsection 3(b) not later than 
one year after the date of enactment of the bill. Subsection 
3(a), and regulations promulgated under subsection 3(b), shall 
take effect thirty days after the date on which the final 
regulations issued under subsection 3(b) are published in the 
Federal Register. Subsection 3(d) would direct that any 
violation of a regulation promulgated under subsection 3(b) 
shall be treated as a violation of a regulation under section 
18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 
Sec. 57a(a)(1)(B)) regarding unfair or deceptive acts or 
practices.
    Subsection 3(e)(1) would set forth the Commission's 
authority to prevent violations of section 4 and the 
regulations promulgated thereunder, and provide that violators 
of such rules shall be subject to the penalties, and entitled 
to the privileges and immunities provided in the Federal Trade 
Commission Act as though all applicable terms and provisions of 
that Act were incorporated into and made a part of this bill. 
Subsection 3(e)(2) would authorize any State attorney general 
to bring a parens patriae action in a United States district 
court, in any case in which that attorney general has reason to 
believe that an interest of the residents of that State has 
been or is threatened or adversely affected by an act or 
practice that violates any regulation under subsection 3(b) of 
the Act. The relief that the State attorney general may seek 
would include injunctive relief, enforcement of compliance with 
the regulation, obtaining damages, restitution, and other 
compensation on behalf of the State's residents (including 
civil penalties up to $11,000 per violation, not to exceed a 
maximum of $5,000,000) and any other legal or equitable relief 
as the district court may consider to be appropriate. This 
subsection also contains provisions for notice to the 
Commission and the Department of Justice when such actions are 
brought; litigation-related rights that the Commission and the 
Department each would have in such actions; a provision 
precluding States from filing such parens patriae actions if 
the Department has instituted a prosecution for criminal 
violations or the Commission has instituted civil litigation 
for civil violations of the Act; a provision clarifying the 
ability of a State attorney general to use investigatory powers 
under the laws of that State; and procedural provisions for 
venue and service of process.

Section 4. Effect on other laws

    Section 4 preempts State laws that expressly restrict the 
sale or purchase of Social Security numbers that are consistent 
with the Act.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.

                                  
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