Are Banks Relying Too Heavily on Your SSN?
Your Social Security number is a goldmine for identity thieves, as it helps them get credit or loans in your name. However, according to Time Magazine, many banks still using SSNs as a major form of customer identification, putting their customers at risk.
A recent study by Javelin Strategy & Research reveals that 70 percent of the biggest credit card issuers in the U.S. use them in at least some cases as a way to verify a customer’s identity when he or she contacts the company. “It’s easy and they haven’t changed their systems,” says Phil Blanks, the study’s author and head security and risk analyst at Javelin. “My guess is they’d tell you they’ve done it this way for years.” Banks and lenders also collect your Social Security number when you fill out a credit card application (or open a bank account), so they already have the numbers on hand.
With data breaches like the recent one at Citi’s credit card unit that led to $2.7 million in fraudulent charges, it’s clear that these practices are risky. Even large, reputable financial institutions aren’t immune from the work of motivated hackers.
“Consumers should not presume that their bank is protecting their Social Security number adequately,” he says. “It may be available for hacking and some banks may be inappropriately using it as a password verification.”
Right now, it’s hard to avoid giving your Social Security number to financial institutions, as many require it. However, this may change in the near future. Earlier this year, the agency testified in front of a Congressional subcommittee about the problem and recommended legislation (not limited to the financial services industry) to limit over-reliance on Social Security numbers.
Read more: http://moneyland.time.com/2011/07/08/how-banks-are-aiding-and-abetting-identity-theft/#ixzz1RXXvhCIj
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