United States Senator Dianne Feinstein

GAO: Fraudulent Use of Social Security
Numbers Climbs by 500%
March 7, 2002

Washington, DC - Identity theft crimes and the fraudulent use of Social Security numbers are soaring, according to a new General Accounting Office report requested by Senators Dianne Feinstein (D-Calif.), Jon Kyl (R-Ariz.) and Charles Grassley (R-Iowa).

The GAO, in a year-long study released today, found that complaints of identity theft to the Federal Trade Commission are up 33 percent and the Social Security Administration had a 500 percent increase in allegations of Social Security number fraud in the past several years.

"This report confirms that the number of identity theft cases has exploded while the federal government has failed to act," Senator Feinstein said. "I have introduced legislation (S. 1055) to impose limits on the misuse of personal information by requiring that a company get a person's prior consent before it sells or markets sensitive personal information such as health information, financial information, and driver's licenses. It would also prohibit the unauthorized sale or display of Social Security numbers to the public."

"The alarming rise in identity theft demonstrates the need for prompt action to protect consumers," Senator Kyl said. "Criminals often use personal information to assume the identity of law-abiding citizens and then take their money. It's high-tech theft that must be stopped."

"It seems we all know someone who's had his identity stolen," Senator Grassley said. "This crime is getting more common all the time. That's unacceptable. As the creator of Social Security numbers, the federal government has to be the protector of Social Security numbers. I don't understand why this problem continues after years of recognition on the Social Security Administration's part. I'll continue looking at how the agency is safeguarding Social Security numbers and will work with my colleagues on passing legislation to protect Social Security numbers and prevent identity theft."

According to a New York Times report this past weekend, a former Prudential Insurance Company employee has been charged with stealing the names and Social Security numbers of thousands of colleagues.

"This is believed to be one of the largest identity theft cases in our nation's history and points to the urgent need for action," Senator Feinstein said. "The perpetrator allegedly gained access to a database containing 60,000 names and then posted sensitive personal information of former colleagues on the Internet and sold stolen identities for as little as $50 each."

The GAO report concluded that combating identity theft will require a "multi-pronged approach" including "prevention efforts such as limiting access to personal information." Specifically, the GAO study found that reports of identity theft are increasing along a broad array of indicators:

Federal Trade Commission Data: Calls to the Federal Trade Commission Identity Theft Clearinghouse increased roughly 33 percent, from 2,000 per week to 3,000 per week between March 2001 and December 2001.

Consumer Reporting Agency Data: One of three national credit reporting agencies reported a 36 percent increase in identity theft alerts in over a 12 month period (19,347 to 29,593). Another credit estimated a 36% increase in its fraud alerts over the past two years (from 65,600 to 89,000)

Social Security number misuse: The Social Security Administration Office of Inspector General has registered a 500 percent increase in allegations of Social Security number fraud in the past several years - from 11,000 in 1998 to 65,000 in fiscal year 2001.

VISA and MasterCard fraud losses: The GAO found that fraud losses in the domestic operations of VISA and MasterCard rose from about 700 million in 1996 to about $1.0 billion in 2000, an increase of 45 percent.

The GAO report was commissioned by the Senate Judiciary Subcommittee on Terrorism, Technology and Government Information. Senator Feinstein serves as chairman of the committee and Senator Kyl is the ranking member. Senator Grassley is ranking member of the Finance Committee.