The new law has some privacy experts worried the move sets the stage of using the Social Security number as part of a national ID card program.
For several years now, Americans have had an eerie feeling – for example, when their social Security numbers become insurance I.D. numbers – that they are starting to lose their privacy.
Privacy concerns were raised about the Social Security number when the retirement program was first rolled out in the 1930s – with assurances from the government that the Social Security number would only be used for that system.
Increasingly, private and public entities have been using the Social Security number for client/customer tracking.
But privacy concerns were answered by federal prohibitions that made the sharing of personal Social Security numbers illegal.
That was, until late last year, when Congress passed legislation allowing banks and finance companies to share your Social Security number.
Robert Feinberg, a Washington-based attorney who specializes in banking and privacy issues, says the measure actually goes beyond that.
"Not only your Social Security number," he says, "but any data they happen to have, even if customers 'opt out' to share with third parties."
And, he adds, there have also been cases in which banks have told customers they would not share data with third parties "but have gone ahead and done it anyway."
Some in Congress are worried that consumer privacy is being violated.
Sen. Richard C. Shelby, R-Ala., has introduced a bill aimed at minimizing that concern.
The "Social Security Privacy Act of 2001" would prohibit the sale and purchase of an individual’s Social Security number by a financial institution.
Social Security numbers would be designated "non-public personal information," subject to the privacy protections of the omnibus Gramm-Leach-Bliley act of last year.
Feinberg, who tracked this bill through Capitol Hill, quotes Shelby as saying during Senate debate that the privacy protections in that legislation were "a sham."
The senator wants to correct that situation by putting his bill on the books, thus giving privacy protections some teeth.
"I believe Congress has a duty to stop Social Security numbers from being bought and sold like some common commodity," said Sen. Shelby in discussing his current proposal.
"Social Security numbers are key to just about all personal information concerning an individual. While Congress waits to act, the easy access and extreme availability of our personal information has led to fraud, abuse, identity theft, and in more extreme cases, to stalking and death."
Feinberg tells NewsMax that "from a strictly business standpoint, it's something that affects everyone. If your insurance company knows you have a given condition, your bank could know it when they consider you for a loan. On the other hand, if you've just gotten a check from the bank, the securities affiliate might call you and ask you to invest."
This casual sharing of information seems to have been going on for some time.
Sen. Shelby adds he knows of no one in this country who thinks financial institutions should be making money by trafficking in Social Security numbers.
The longer we wait, he adds, the more likely the American people who overwhelmingly support this issue will "lose confidence in the U.S. Congress and our ability to lead."
The office of Senate Banking Committee Chairman Phil Gramm, R-Texas, tells NewsMax.com that Sen. Shelby has been promised a hearing this year on this and other privacy legislation he is promoting.
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