Rethinking Social Security Numbers: A Global Perspective on Identity Security

The Role of National Insurance Numbers in the UK

In the United Kingdom, a national insurance number is primarily used for tax purposes. This number, unlike the Social Security Number (SSN) in the United States, cannot cause personal harm if shared publicly. It is not used as a form of identity verification, making it less vulnerable to misuse.

To open a financial account in the UK, individuals must present a photo ID and proof of address, such as a utility bill or council tax bill. This additional layer of verification ensures that merely knowing someone's national insurance number does not grant access to their financial information or allow the opening of fraudulent accounts.

Public Nature of Tax IDs in Many Countries

In numerous countries, tax IDs are considered public information and are not used as secret passwords. This approach significantly reduces the risk of identity theft, as these numbers cannot be used to impersonate individuals or gain unauthorized access to financial resources.

For instance, in some countries, tax IDs can only be used to pay extra tax on behalf of someone, which would eventually be refunded to the rightful owner. This system ensures that even if a tax ID is known, it cannot be exploited for malicious purposes.

The US Reliance on SSNs for Identity Verification

The issue in the United States is not the SSN itself but the reliance of financial companies on it as a form of identity verification. This practice is unique to the US banking industry and is baffling to people from other countries. In the US, SSNs are treated as "magic passwords," which makes them a prime target for identity theft.

If SSNs were made public information, financial companies would be forced to adopt better security measures. This change could prevent companies from using SSNs as passwords, thereby reducing the risk of identity theft. Additionally, the ability to change an SSN if it is compromised would enhance security, similar to how banks issue new credit cards with different numbers when a card is compromised.

Global Practices and the Potential for US Reform

In other countries, knowing someone's tax ID does not enable fraudulent activities such as opening accounts or taking out loans. These countries have systems in place where tax IDs are only useful for tax-related purposes and not for financial transactions. This separation of functions makes identity theft more difficult.

The US government could address the SSN security issue by making SSNs public, thereby forcing companies to use regular passwords instead. This shift would encourage the use of multiple passwords for different services, further mitigating the risk of identity theft. Financial companies would then be unable to rely solely on SSNs for identity verification, prompting them to adopt more robust security measures.

The Inadequacy of Current Solutions

Currently, when a credit card is compromised, banks can issue a new card with a different number. However, the same cannot be done for SSNs, leaving individuals vulnerable to long-term identity theft. The practice of financial companies paying for monitoring services after an SSN leak is seen as an inadequate solution, as it does not address the root cause of the problem.

By adopting practices from other countries, where tax IDs are not used as passwords and are only relevant for tax purposes, the US could significantly reduce the risk of identity theft. This approach would involve a fundamental shift in how SSNs are perceived and used, ultimately enhancing the security of individuals' personal information.