The Secret Life of Your Social Security Number

Someone may have used your Social Security number to obtain credit -- with every intention of keeping up on the payments. Even weirder, you may never find out.

Janet Lee, a 54-year-old homemaker living in Weber County, Utah, owns one house. Imagine her shock when she was told last May that her Social Security number had been used to buy two other houses in Ohio and one in Texas that carried a second mortgage, to boot. Combined, the four mortgages totaled more than $500,000.

Then there were the nine car loans totaling more than $200,000. And 10 additional credit lines from various department stores and wireless service providers.

An investigation by the Social Security Administration in Utah, first reported by the Salt Lake City Tribune last month in connection with a mortgage fraud scam, revealed that an illegal immigrant was using Lee’s Social Security number as a means to enjoy his slice of the American dream. And like most folks in this country, he was using credit to do it.

There are an estimated nine million illegal aliens living in the U.S., according to Census Bureau statistics. In order to work and obtain credit, they need Social Security numbers — something they cannot obtain legitimately because of their illegal immigrant status. But a fake number isn’t hard to get. “There’s a very good black market that has fostered this,” says Richard Hamp, Utah Assistant Attorney General. “You can buy a Social Security card on the street for $20.”

Fake cards are produced and sold by organized crime groups, which generate Social Security numbers and sell them to illegal immigrants with their own names on the card. Right now, for example, Utah authorities are investigating a company that offers commercial and mortgage loans, health insurance and debt consolidation, which is distributing advertising that reads “If you don’t have a Social Security number, you also qualify.” According to Ron Ingleby, resident agent in charge of Utah, Montana and Wyoming for the Social Security Administration’s Office of Inspector General, the company allegedly supplies the immigrants with the numbers they need.

The numbers, however, often belong to real people.

The result can be a bizarre form of identity theft. Traditional theft typically involves a person stealing someone’s name and identification and then racking up huge debts under that name. But with Social Security-number (SSN)-only theft, oftentimes abusers have no intent of stealing anybody’s good credit. They simply want the number so they can work and establish their own lines of credit — in their own name. In essence, two separate identities are created from one Social Security number.

Even in Lee’s case, where there were a suspiciously large number of loans, the perpetrator had kept current on most of his payments, although Lee says he’s under criminal investigation for other activities. (To protect Lee’s privacy, we are not using her real name.)

How widespread is this type of identity theft? While there are no official statistics, Ingleby estimates that there are thousands of cases of SSN-only theft in Utah alone. “There are many, many more throughout the country,” he says. “They get the counterfeit cards and start working, and when no one bothers with them, they start obtaining credit.”

Unfortunately, stopping perpetrators is difficult. Lee estimates she spent hundreds of hours filing reports with more than 50 government agencies, including all local police precincts where the immigrant had been obtaining credit, the Social Security Administration and the Internal Revenue Service.

The biggest challenge, says Lee, has been working to clean up her credit. Why? Because of the way credit is reported by the credit bureaus, lenders can see when there are two identities attached to one Social Security number. But individuals can’t. When Lee pulled her own credit reports from the three credit bureaus (Experian, TransUnion and Equifax), everything looked fine. None of the illegal loans were listed there. “You could have someone using your Social Security number and not know it,” she says.

But a lender would. In Lee’s case, a mortgage broker noticed the dual identities when the thief applied for yet another loan, and notified Lee of the problem.

Here’s why this happens. When consumers pull their credit reports, credit bureaus collect all relevant account information by using an exact match of their name, Social Security number and address, explains Evan Hendricks, author of the book “Credit Scores and Credit Reports,” which provides an in-depth look at the credit-reporting system. But when a creditor requests a consumer’s credit report, the bureaus use a looser matching algorithm that allows for some discrepancies in the consumer’s address, spelling of their name and even their Social Security number, says Hendricks. The idea is that while the credit bureaus should be careful not to send to a consumer a report that contains credit information that belongs to somebody else with a similar name or address, internally they should also allow for changes in name, address or even typos in Social Security numbers when a creditor requests a consumer’s information.

As a result, “the report that you get will not be the same report that the lender would get if the lender pulled your credit report on the exact same day at the exact same time,” says David Szwak, a consumer credit attorney and partner at Bodenheimer Jones Szwak & Winchell in Shreveport, La.

Don Girard, a spokesman for Experian, confirms that separate credit files can exist based on the same Social Security number. But he maintains that the two credit files remain totally unrelated if the Social Security number is associated with two different names. “We don’t link your file to the thief’s file via Social Security number,” he says. “The Social Security number is not enough to identify a person within the Experian system — it requires a name and an address.” (A TransUnion spokesman said the bureau is currently investigating this issue. Equifax did not provide a relevant comment.)

Hendricks disagrees. “I’ve seen many times when the multiple file is put on to the first person’s credit report and disclosed to the credit grantors when consumers apply for credit,” he says. “The credit bureaus seem to be in denial.” In other words, even though the files are separate, it is very likely that creditors get access to both if either the victim or the perpetrator applies for a loan. And over time, information from the two files may get mixed.

John Braithwaite, 81 years old, is a case in point. In 2000, the Salt Lake City resident was informed by his credit union that a perpetrator had tried to obtain an $18,000 car loan using Braithwaite’s SSN. The loan was denied, but when Braithwaite got a copy of the credit report used by the credit union, he was shocked to see that it contained his Social Security number and birth date, along with the perpetrator’s name and Braithwaite’s own name listed as a nickname. The perpetrator had already managed to obtain one car loan, a number of credit cards and a driver’s license. All accounts on the report were current. But that hasn’t been much relief for Braithwaite and his wife. “It was an awful shock,” he says. “It wrecked my health, it really did.”

Just how victims of this type of fraud will be affected depends on how intricately the two files are linked, and how the perpetrator has handled his or her loans. Lee’s only hurdle: She has been denied cell-phone service because the company said her SSN belongs to somebody else. For now, she says her credit is still perfect, although she very much wants the illegal file separated from hers.

Her efforts on this front have been fruitless. When she notified the credit bureaus that somebody else was using her Social Security number, they simply verified the information. The most disheartening letter, she says, was sent by TransUnion. The bureau notified her that they had investigated the information in the perpetrator’s file, adding that “The creditor(s) appearing on this file have verified the use of this Social Security number in connection with their accounts. Therefore, our office will continue to maintain this information under that identification.”

Lee has given up fighting it. “Life goes on. If I need credit, I’ll deal with it,” she says.

Congress is aware of the problem. In December 2003, it signed an amendment to the Fair Credit Reporting Act, known as the FACT Act, which among other provisions instructs the Federal Trade Commission to address the problem of credit-report inaccuracies. The FTC is holding a series of roundtables in which experts such as Hendricks make recommendations on how to study problems like multiple files. But it may be some time before consumers can see any results. “They’re just beginning the process,” Hendricks says.

In the meantime, anybody could have their Social Security number stolen and be unaware of the fraud until the guillotine drops. “The only way a consumer can find out is to be notified by investigators or a collections agency,” Hendricks says. “You can be the most diligent consumer and do everything you’re supposed to do, including monitoring your credit report, and you still [might not] find out. It’s pretty scary.”

This article originally appeared in SmartMoney.com on July 8, 2004.