Chairman Shaw, Congressman Matsui, and members of the Subcommittee, thank you for allowing me to testify here today on this subject.  The Financial Services Subcommittee on Oversight and Investigations, which I chair, has investigated the issue of the timely release of death information by the Social Security Administration to the financial services industry and its links to identity theft.  I appreciate this opportunity to review the problems we have found and discuss potential solutions with your Subcommittee.

According to the Federal Trade Commission, identity theft was the top consumer complaint received last year, with the rate of complaints and inquiries increasing at an alarming rate with the widespread use of Internet technology.  Numerous examples of organized identity theft, with great cost to the victims, retailers, and lenders, can be found around the country.

In addition, the families of the recently deceased are especially vulnerable, because they are so engaged in the aftermath of the death that steps are not taken to properly protect the deceased’s Social Security number and monitor the deceased’s accounts.  Last year, two felons, James Jackson and Derek Cunningham, assumed the identities of numerous executives, living and deceased, and purchased over $730,000 in gems and watches using the credit they obtained using the stolen identities.  The victims included senior executives of some of America’s best-known corporations, such as Coca-Cola, Lehman Brothers, Hilton Hotels, and Wendy’s International.  The deceased chairman of Wendy’s had been dead for only 10 days when the Jackson gang stole his Social Security number and misused it.  Fortunately, the law caught up to them, and they are awaiting sentencing in New York City.

Staff of the Financial Services Committee met with officials of the Social Security Administration to begin a review of the process by which Social Security numbers of the deceased are transmitted to the financial services industry for permanent deactivation.  As you may know, SSA updates the Death Master File only on a monthly basis and sends it by magnetic tape through regular mail to another government agency each month for commercial distribution.  That agency makes copies of the original tape and, again, mails the copies out to subscribers.  The Financial Services Committee has concluded that this antiquated process creates a window of opportunity for tech-savvy criminals.  I know you agree that this process, which can take well over 30 days from the time of death, is completely outdated when we can securely and instantly update information through the Internet.

Most recently, however, we learned that this issue is now a matter of our national security and safety.  This Washington Post article from Saturday, September 29, states that Lofti Raissi, held by the British on suspicion that he trained 4 of the hijackers, had used the Social Security number of a New Jersey woman who has been dead for 10 years!  This takes the issue of timely release and use of Social Security information to a new level that requires immediate action.

The Chairman of the Financial Services Committee, Mike Oxley, and I agree: Whether someone has been dead for as little as 10 days or as long as 10 years, that Social Security number should never be available for illegal use, and the financial services industry should have the knowledge of the death and the ability to apply it.  We must stop crooks and terrorists from so easily using someone else’s Social Security number to obtain credit or verify a false identity.  That is why we asked the Social Security Administration to take a fresh look at the way they release Social Security numbers of the deceased and asked the General Accounting Office to quickly review the issue, including the industry’s use of death information.  We have to throw open the doors, cut the red tape, and tear down the barriers.

We must ensure at the very least that the industry can readily distinguish inactive Social Security numbers from active ones, starting with the transmission from SSA to the financial services industry almost immediately after death.  GAO briefed senior staff of your Subcommittee and mine last week on their initial progress in response to our letter.  They have already found areas for improvement, and we look forward to holding a joint Subcommittee hearing with you, Mr. Chairman, in the very near future to review this issue in more detail.  I speak for the Committee Chairman and all members of the Financial Services Committee in pledging to work with you towards a permanent solution to this problem.

I have a copy of the September 29, 2001 article from the Washington Post, the letters that we wrote to SSA and the GAO, the Committee’s press release of October 5, and the October 18 response of the Social Security Commissioner to this inquiry.  I ask unanimous consent that they be included in the record. 

Thank you again for this opportunity.