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The secret list of ID theft victims

Hundreds of thousands of Americans may be unknowingly lending their Social Security numbers to illegal immigrants. Government agencies and credit bureaus know this, but won't warn the victims. Special report by MSNBC's Bob Sullivan.

Linda Trevino, who lives in a Chicago suburb, applied for a job last year at a local Target department store, and was denied.  The reason? She already worked there -- or rather, her Social Security number already worked there. 

Follow-up investigation revealed the same Social Security number had been used to obtain work at 37 other employers, mostly by illegal immigrants trying to satisfy government requirements to get a job.

Trevino is hardly alone. research and government reports suggest hundreds of thousands of American citizens are in the same spot -- unknowingly lending their identity to illegal immigrants so they can work. And while several government agencies and private corporations sometimes know whose Social Security numbers are being ripped off, they won't notify the victims. That is, until they come after the victims for back taxes or unpaid loans owed by the imposter.

It's a thorny problem that cuts to the heart of America's undocumented worker issue. Immigration opponents say it's another reason to shut the borders tight; immigrant rights groups point out that identity theft is an inevitable outcome of unfair labor laws that push foreign visitors deeper into the shadows.

Either way, immigrant imposters with the least nefarious of intentions -- simply a desire to work -- often unknowingly victimize the rightful Social Security number holders. The problem is compounded by how often ripped-off numbers are used. James Lee, chief marketing officer for private data collection firm ChoicePoint, said the average victim of immigrant-based identity theft sees their Social Security number shared about 30 times.

"The numbers get passed around a family, and around neighborhoods," he said.

"People need to wake up to this problem," said Richard Hamp, an assistant attorney general for the state of Utah who has prosecuted several cases involving stolen IDs and illegal immigrants. "They are destroying people's credit, Social Security benefits, and everything else. This problem has been ignored by the federal government, and it's enormous."

But could Trevino, and all the other victims, be warned by the government? After all, several agencies and corporations found her when they wanted her money. Until then, not a single one had bothered to warn her that someone else was using her Social Security number.

Melody Millet's husband Steve was the victim of immigrant identity theft. None of the agencies involved are trying to tackle the problem because they all benefit from it, as does corporate America, she said. The IRS and Social Security collect extra taxes, lenders sell more loans and employers get inexpensive workers. Fixing the problem and telling all the victimized consumers would upset the delicate apple cart that is America's immigration policy, she said.

"The government is forcing people to share identities because they want to provide cheap labor to corporate America," Melody Millet said. 

An undocumented immigrant worker managed to use Steve Millet's Social Security number for more than 10 years before the incident was discovered. Millet said the imposter managed to obtain a dozen credit cards, buy a car, and even a house using the stolen number and his own name.  All the while, that imposter paid taxes, paid into Social Security, and took out loans using the stolen Social Security Number. All of those agencies had a record of the abused SSN; none bothered to tell Steve Millet.

"You can't find out except by accident," Melody Millet said. "They are not required to notify us. No one is required to notify you. The way it sits now, our lives were ruined. We will never have again a normal financial life."

$420 billion in accounting limbo
Quantifying the problem of immigrant imposters is a challenge; neither the IRS nor the Social Security Administration has tried. But there are some solid hints suggesting hundreds of thousands of people are currently at risk, right now lending their identity to an undocumented worker.

With every paycheck, U.S. workers pay FICA taxes, destined for Social Security funds. But each year, millions of payments are made to the agency with mismatched names and numbers. The Social Security Administration has no idea who deserves credit for the taxes paid by those wage earnings -- so no one gets it. The amount of uncredited Social Security wages is now an enormous $420 billion, an amount that sits in what's called the Earnings Suspense File, an accounting limbo.

During 2002, the year with the most recent figures available, 9 million people paid taxes with mismatched names and Social Security Numbers. Some were women who had failed to notify the agency that their name changed after marriage. Some were the result of typographical errors.

But most -- between 50 and 80 percent depending on whom you talk to -- represent illegal immigrants using a stolen or manufactured Social Security number at the workplace.

Earnings in limbo

The amount of money headed for the Earnings Suspense File began to skyrocket after 1986, when a new federal law required workers to produce Social Security cards to get employment.

In 2001, Social Security reports indicated 35 percent of the wages in the fund were earned by workers in California. In 2002, about 46 percent of the wages that ended up in the fund come from immigrant-heavy industries like agriculture, restaurants and other services, according to Social Security's Office of Inspector General. Both facts suggest to analysts that much of the fund is the result of payments made by undocumented immigrant workers.

What's unclear is how many of those millions of payments made by undocumented workers are made using someone else's Social Security numbers. Audits show that many are made with manufactured numbers, such as 000-00-0000. But people familiar with the data say the list would point to hundreds of thousands of identity theft victims. 

Still, James Huse Jr., former inspector general of the Social Security Administration, said it is unlikely the agency will ever inform potential victims.

“(The list) would be a terrific source of leads for the identity remediation effort, but there are so many other compelling workloads in front of (SSA) I don't know what can they do with that today," he said. "Also, the politics of immigration get involved in this.”

A spokesman for the Social Security Administration said the agency simply couldn't disclose the information to consumers because doing so would run afoul of federal law.

"That information is considered to be tax return information, and it's governed under the Internal Revenue code," said Social Security's Mark Lassiter.  "There are strict limitations on disclosure.  Can someone see if anyone else has reported earnings under their Social Security number? The answer would be no."

The IRS also receives payments from mismatched names and numbers, and has access to the same no-match list created by Social Security. But according to IRS spokesman Anthony Burke, the agency doesn't check for number-name mismatches until it processes tax returns.  And it does not have a mechanism for informing the rightful Social Security number holder that someone else has filed a return using that number.

When tax returns are filed with wrong Social Security numbers -- some 500,000 were filed last year -- the agency simply notifies the filer in writing. The rightful number holder isn't told, because there is no way to know why the wrong number was used, Burke said. 

Credit reports don't help
How can a consumer unravel the secret life of their Social Security number? In fact, since neither the government nor private industry is speaking out, there is no way. Asking the Social Security Administration or IRS won't help.

Most consumers only discover the situation when their imposters take the next step up the economic ladder, securing credit using the stolen number. And even then, the victims may not be told unless the imposter misses a loan payment or otherwise sends creditors hunting for their money. That's because thanks to a quirk in the credit system, credit obtained by imposters using their real name but a stolen Social Security number doesn't appear on the victim's credit report.

This so-called "SSN-only" identity theft poses a unique set of problems for consumers and the nation's credit bureaus. If credit is granted by a lender, an entry is made in credit bureau files -- but not disclosed to the consumer who properly owns that number. Even when a consumer gets a copy of her credit report, such fraudulent accounts don't appear on the report. Instead, the bureaus create what are sometimes called "subfiles," which act like separate identities in their databases.

In fact, consumer credit reports obtained from the credit bureaus expressly leave off this kind of fraud. If an imposter is using a consumer's Social Security number but his own name and address to open up fraudulent accounts, a consumer-disclosed credit report won't include that information. The rightful number holder will never know.

A lender, however, might find out -- even see all the accounts an imposter has opened using a victim's Social Security number.

Millet, who has sued the credit bureaus, said her husband was denied a credit card even though his credit report was spotless, and he had a superb credit score of 700.

Businesses interested in giving credit to a consumer can pay to see any activity connected to a particular Social Security Number; consumers cannot.  All three credit bureaus sell specialized services with names like "Social Search," that track the entire history of a Social Security number. The services are not available to consumers.

Privacy concerns prevent consumers from seeing a Social Security number-only report, said Equifax's David Rubinger.

"Companies that have signed agreements with us can access data like that. But we can't let every consumer see it," he said. It would be difficult for the firm to establish definitively who the rightful Social Security number holder is, he said. And there would still be potentially sticky privacy issues related to revealing the imposter's information.

Don Girard, a spokesman for Experian, acknowledged his firm had seen the problem, but said it was extremely rare.

"I can tell you we have quite a few people looking into this," he said.

Trans Union did not respond to requests for interview for this report.

'Total purgatory' for taxpayers
Frustration can mount for victims of this kind of fraud. Eventually, the government agencies involved do catch up with the legitimate consumers; but often, not until they are looking for money. Victims can have trouble getting disability or unemployment benefits, Utah's Hamp said. 

Others find the Internal Revenue Service on their backs, looking for payment of back taxes for wages earned by their imposters. Some see refunds held up by the confusion; others see their wages garnished.

Trevino found herself in a financial nightmare. All those imitators made a mess out of her work history, her Social Security benefits records and her credit report. She was haunted by bills and creditors. She received threatening letters from the IRS, asking her to pay taxes on money earned by her imposters. She was told to re-pay unemployment benefits she had received, after the government discovered she was "working" while drawing benefits.

"At the time I'm thinking, 'I'm unemployed. I wish I could have at least one job, let alone all these different jobs,’" she said.

"This is total purgatory that this puts U.S. citizen taxpayers into," said Marti Dinerstein, president of Immigration Matters, a public-policy analysis firm in New York.  "It's a nightmare to get it stopped. And when they do get it stopped, it is only for that particular year. The whole mess could begin anew next tax season."

But neither the Social Security Administration nor the IRS tells consumers that something unusual is happening with their Social Security numbers.  It seems consumers are the last ones in on the joke.

“This is the schizophrenia of the federal government," Huse, the former Social Security inspector general said.  "The Homeland Security people are screaming about the accuracy of records, and you have the IRS taking money from wherever it comes."

Mismatches go unchecked
Since the Immigration Reform and Control Act of 1986, workers must produce a Social Security card or similar identity verification when obtaining employment.  Employers are supposed to verify that the card is legitimate, but many don't. 

By creating a black market for counterfeit Social Security cards, the law may have inadvertently kicked off the identity theft crisis, experts say.

"It's truly an unintended consequences of the 1986 immigration law," said Marilanne Hincapie of the National Immigration Law Center. "That’s why there is this need for comprehensive immigration reform."

For now, with the tacit approval from all involved, undocumented workers buy counterfeit cards from suppliers who steal or simply manufacture Social Security numbers.

About 90 percent of the time in cases he's investigated, Utah's Hamp said, the numbers used belong to a real person. But even in the other cases, there's still harm done: the number may be issued in the future, meaning a baby may be born with a surprising financial past.

"You could end up at birth with a bad credit history and a work record," Hamp said.

The Social Security Administration has made some efforts to straighten out its records, sending letters to hundreds of thousands of businesses, asking that they follow-up on name/number mismatches.

In 2002, the agency sent 900,000 letters to companies that had workers using erroneous names or numbers. The letters confused employers and employees alike: some workers fled immediately, other employers fired workers on the spot.

Immigration rights groups objected, pointing out that inclusion in a no-match list was not an automatic indicator of illegal status. The effort did little to reduce the Earnings Suspense File or fix Social Security accounting, so the agency backed off.

Meanwhile, the IRS, which is charged with enforcing the requirement that employers collect accurate Social Security number data, has never once levied a fine against a corporation for failing to do so.

Change tied up with key policy shifts
The issue of Social Security number abuse is getting some attention as the Bush administration presses ahead on two related issues: Social Security reform and undocumented worker legalization.

The single best way to reduce the amount of entries into the Earnings Suspense File -- and remove the need for immigrant identity theft -- would be to provide a path to legal status for undocumented workers.

On the other hand, removing items from that file would actually increase future liabilities for Social Security, since more wage earners would have a claim on future Social Security payments, adding a bit of fuel for those who warn about Social Security deficits looming in the future.

As things stand, payments made by workers that land in the Earnings Suspense File -- for 2002, Social Security taxes paid on wages of $56 billion -- represent essentially free money to the system, since they come with no future payout liabilities.

In the meantime, neither the Social Security Administration nor the IRS has any public plans to attempt to notify consumers who might be sharing their identity with an undocumented worker -- or 30. 

Telling the number's rightful holder that someone else is using it might create more panic then necessary, some Social Security investigators said -- and there's not a lot of good advice the agency could offer, anyway. There's little a victim could do at that point. Uncovering just who is the rightful owner of the Social Security number -- and who is the imposter -- could also pose a challenge. So would finding correct contact information for victims.

Betsy Broder, the attorney in charge of the Federal Trade Commission's efforts to combat identity theft, said more government coordination is surely needed, but she sympathized with the challenge facing the IRS and SSA.

"Of course consumers are always better off if they know how their information is being misused. But having said that, it's really complex with federal agencies," she said. "There are restrictions under the Privacy Act. You can't release to one person another person's information. And the agencies are often not in a position to know with any certainty who was the right person and who was the imposter, leading to possible problems with unauthorized disclosure of information."

The credit bureaus cite much the same concerns, indicating they simply couldn't sell Social Security number-search tools to any consumer who wants them. Even data aggregators like ChoicePoint don't sell such a product to consumers.

Millet thinks there's another motivation for agencies to not deal with the problem. Everyone except the consumer is profiting from the situation, she said. Notifying every consumer whose number is being misused by someone else would be disruptive to the American workforce, and would force government agencies to face the sticky undocumented worker problem.

"If there was no issue, the government would issue work visas to all of them," she said. "But if we gave them all their own Social Security numbers, they'd be able to compete for real wages. That's why no one is dealing with this."

Bob Sullivan is author of Your Evil Twin: Behind the Identity Theft Epidemic.