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When you should, shouldn't give out your Social Security number

Some legitimately need it, to others, learn to say 'no'

By Karen J. Bannan

Your Social Security number is one of the keys to your financial health. It's a unique identifier lenders use to assess your creditworthiness. It's also exactly what a would-be thief needs to apply for a credit card, mortgage, car loan or job in your name. When you should, shouldn't give out your social security number

If you're like most Americans, it's also something you give out all too frequently.

"As with so many procedures in the business world, your Social Security number is something that many companies ask for, so no one really questions it," says James Van Dyke, president of Javelin Strategy & Research, a research firm that tracks financial services topics. "But giving out your Social Security number is definitely a practice consumers should think twice about."   

Case in point: A recent Javelin Strategy & Research report -- the 2009 ID Fraud Survey -- found that, among identity theft victims, 38 percent said the perpetrator had obtained their Social Security number and used it in the crime. "It's certainly logical to say that you could eliminate 38 percent of your risk of identity theft by limiting access to your Social Security number," says Van Dyke.

'Your Social Security number, please'
Still, saying it and doing it are two different things. Many of the forms you encounter during the day -- at doctor's offices, at the dentist, at your child's school -- ask for Social Security numbers. Retailers may ask for it, too, when accepting a check for payment or before issuing check cashing privileges. Potential employers also need it, and they may even want a copy of the actual card, says Linda Foley, founder of the San Diego-based Identity Theft Resource Center (ITRC). You'll also be asked for it at your local Department of Motor Vehicles, car dealerships, pawnshops, drugstores -- even at the airport, should you lose your luggage, she says. In fact, you may be surprised at how far-reaching this practice is, says Foley.  

"A few years ago, we were putting some of my mother's things into storage, and they wanted her Social Security number to use as a pass code," she says. "It's that prevalent." (See chart: "Who can, can't require your Social Security number")

Just because someone asks for it doesn't mean you have to comply, says Michael J. Arata, the author of "Identity Theft For Dummies," especially since there are only a handful of organizations that actually have a valid need for it. For instance, anytime you're applying for credit -- for a new credit card, a loan, new telephone or cellular service -- the creditor will need your Social Security number to run a credit check. You'll also need to provide it if you are applying for federal or local government benefits such as Social Security, Medicare or Medicaid, unemployment insurance or disability. Another example: If you or your children receive services or aid at the state or local level, such as free or reduced fee lunch or financial aid. The local motor vehicle department, thanks to the USA PATRIOT Act, has the legal right to ask for Social Security numbers, too. In addition, when you complete a cash transaction totaling more than $10,000 you'll be required to provide your number so that transaction can be reported to the Internal Revenue Service, says ITRC's Foley.

YOUR SOCIAL SECURITY NUMBER DECODED

The nine digits of your Social Security number are unique to you, right? Not exactly, according to the Social Security Administration.  In fact, many other people may share two groupings exactly. Here's what each section means:  

123-45-6789

Area number (shown in blue): Prior to 1972, Social Security cards were issued from local offices. The numbers reflected the locations of those offices. Even after the cards were centrally issued, the SSA kept up the habit of tying area number to geography until June 2011, when it moved to randomize the area number. The change is intended to lengthen the supply of numbers by making all numbers available to all areas, and to make it tougher for identity thieves to guess your number.

Group number (shown in black): This number is a relic of paper filing systems. As the SSA says, "This was done back in 1936 because in that era there were no computers and all the records were stored in filing cabinets. The early program administrators needed some way to organize the filing cabinets into sub-groups, to make them more manageable, and this is the scheme they came up with." Contrary to urban legend, group numbers do not indicate racial group.

Serial Numbers (shown in red): These numbers -- 0001 through 9999 -- have nothing to do with geography or date requested. They are assigned based on availability.

Medical professionals have their own impetus, says the ITRC's Foley. "The reason a doctor or a dentist asks for your Social Security number is that, should you die while under his or her care, they are required to put your Social Security number on the death certificate," says Foley.

Even so, fulfilling noncredit-related requests -- even medical-related requests -- is purely optional, says L. Jean Camp, an associate professor at Indiana University and the author of "Economics of Identity Theft." "The problem is that you have the right to say that you're not going to give out your Social Security number, but a business owner has the right to say he's not going to do business with you," says Camp. "Most companies aren't being malicious. They're just being cautious by giving themselves a way to track you down if you don't pay a bill."

Gracefully saying 'no'
One of the best ways to get out of giving your Social Security number to someone is to simply overlook it on your paperwork, says Arata. You may get by without a confrontation. If you're questioned, however, ITRC's Foley suggests being proactive. "The most basic thing you can do is ask the person or organization why they need it. One of the most powerful things you can say is, 'Is there a law or requirement that I must provide it to you, and can you tell me what it is?' You can also ask the person requesting your Social what will happen if you don't disclose it," she says.

Often, as in the case of a school or a charitable organization, they simply want it to use your number as a unique identifier. In that case, says Javelin Strategy & Research's Van Dyke, you'll need to start negotiating again. "Say, 'In order for me to become your customer, I really need you to find an alternative recordkeeping method because I know giving out my Social Security number places me at great risk.' When you say it like that you may get better results," he says.

Even doctor or dentist offices should be willing to forgo your Social Security number -- especially if you have health insurance. And if they won't? Ask to give your information directly to the doctor and have him or her input it into the system for you, says Van Dyke. ITRC's Foley says most medical offices may also feel comfortable without it as long as they have an emergency contact on file -- someone who knows your Social Security number and could provide it in the event of death.

And what of the worst case scenario -- when you absolutely can't get out of it, but you still don't feel comfortable? You can always make up a number, says Camp, but if you do, make sure you write it down and don't inadvertently steal someone else's identity. "If you go this route as a last resort, make sure you put zeros in for the two middle numbers," she says. "There are no Social Security numbers that have double zeros in that section."

WHO CAN, CAN'T REQUIRE YOUR SOCIAL SECURITY NUMBER
Mandatory Optional
Credit applications Doctor and dentist intake forms
Cash transactions over $10,000 Supermarkets
When applying for certain federal benefits Drugstores
Military paperwork Preschools
The Department of Motor Vehicles Airlines

See related: 10 things you must know about identity theft

Updated: August 25, 2011



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