Who Really Needs Your Social Security Number?

Your Social Security number is a highly requested number. Nearly every business, from government agencies to banks to employers, request your Social Security number for one reason or another.

Because so much can be done with those nine digits, it’s important to keep them safe from would-be identity thieves. You wouldn’t have to go to such lengths to protect your Social Security number if it wasn’t so widely used by both government agencies and private businesses. But do these people really need it?

History of Social Security Numbers

When the Social Security Act was passed in 1935, Social Security numbers were developed to help the government keep records of those citizens eligible for benefits.

Government requirement of SSNs increased over the years. In 1962, the Internal Revenue Service began using them as taxpayer identification numbers. Then, in 1964, the Treasury Department started requiring consumers who purchased Series H bonds to provide their Social Security numbers. The Department of Defense began using SSNs to identify Armed Forces personnel in 1969. In 1970, a new federal law required several types of financial institutions to obtain customers’ Social Security numbers. The law also required financial institutions to report transactions over $10,000 to the IRS. Those are just a few early instances of how usage of Social Security numbers proliferated. The usage continued to expand over the years.

In the mid-70s, some progress was made to protect our privacy. The 1974 Privacy Act was passed prohibiting state or local government agencies from withholding benefits because a person would not provide their Social Security number. The Act also required government agencies at all levels to notify individuals whether their Social Security number was mandatory or voluntary.

Businesses Using Social Security Numbers

Since there is only one Social Security number per individual, it’s easier for businesses to use the number as a unique identifier. But, in most cases, you aren’t required to give your Social Security number to private businesses unless the IRS needs to know about the transaction. Outside of government requirements, you don’t have to provide your Social Security number. However, private businesses may deny goods or services if you don’t provide the number.

If you don’t want to give out your SSN, you may be able to convince a manager to extend services to you, but you may have to provide extra proof of your identity or income or both. You may even have to pay a higher cost for credit and loans that are extended without use of your Social Security number. The credit bureaus - Equifax, Experian, and TransUnion - aren’t able to provide your credit report without your Social Security number because they don’t have another way of discerning your credit file from others they have on record.

Social Security Number Safety

Even if you continue providing your Social Security number to businesses, you should still do what you can to keep the number safe from identity thieves.

• Don’t carry your Social Security card with you.
• Only give out your SSN to trusted businesses.
• Don’t enter your SSN into unsecured websites.
• Don’t respond to emails asking for your SSN, even if they look legitimate.

If you believe your Social Security number has been compromised and someone is using it to gain employment or government benefits in your name, contact the Social Security Administration. If someone has been opening credit or loan accounts in your name, contact the Federal Trade Commission. You can also place fraud alerts on your credit reports to let businesses know your Social Security number has been compromised.