They make it sound like the big, easy, legal fix.  People can protect themselves from data thieves and maybe, just maybe create a new identity to start credit fresh.  Maybe they have collections, a bankruptcy, collection agencies making threatening phone calls.  This will stop all that harassment and make everything all better, they imply.

They are called Credit Privacy Numbers (CPN), or Secondary Credit Numbers (SCN), either creating “File Segregation” that begins a new credit identity. The companies that sell them promise that no one can steal customers’ Social Security Numbers and thus their identities because they won’t be giving out their Social Security Numbers but rather a Credit Privacy Number instead.  They promise new credit lines attached to a new credit report based on the Credit Privacy Number.  The lowest price to create a new self I found on the internet is $250 and up to $1500 for the full package of a guaranteed 790 FICO score within 30 days and two new credit lines of up to $25,000 each.  Sounds great, doesn’t it?  It isn’t.

These companies give their customers a new number that looks very much like a Social Security Number, and in fact may be a real one, just not theirs.  One way they do it is by going online and getting an Employer Identification Number (EIN) from the IRS.  It is nine digits long, just like a Social Security Number. Trouble is, in order to obtain an EIN, the IRS wants a Social Security Number that belongs to the person applying for the EIN.  Use a bogus one, and it’s a felony. Another way is by finding the Social Security Numbers of children with no credit history, long-term prison inmates, or dead people and selling it to the their customer as a CPN.  The third way is by “issuing” a Social Security Number that hasn’t been issued, and in fact may never be issued.  The Social Security Administration lists the ranges.  They include any numbers that include -83-, second number set, because the SSA doesn’t issue any of those until all the numbers from -01- to -82- are issued. In addition, area numbers, the first three, run from 001-772.  Areas 666 and 734-749 are unused by the Social Security Administration.

Nothing in the law says anyone has to give out his or her Social Security Number to anyone except the IRS and other government agencies, and people from whom he or she is applying for credit.  And no one has to give out his or her SSN to someone from whom he or she is applying for credit, but nothing says the creditor has to loan money, either. Here one huge problem.  Title 18 USC Section 1028A states, “Whoever, during and in relation to any felony violation enumerated in subsection (c), knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of 2 years.”  Lying on a credit application is a felony.  People lying to an employer about their identity by using another number than their own in order to get hired will ensure they don’t get hired if the employer runs a credit check.  If they try to rent an apartment,  assuming the landlord checks credit, it will mean rejection because of a nonexistent credit report or credit lines that are too new to be believable.

And the bills they have run up, the ones that are in collection, they still owe them.  Of course the companies that sell these numbers and new credit lines suggest that customers get a new phone number and address to hide from those pesky bill collectors.  That implies creating a new identity even though the companies are careful to say that customers still owe the debt, albeit in tiny print buried in the “Terms and Conditions.”

The upshot of this program is that it is of questionable legality at best.  The “new Social Security Number” or CPN may already belong to someone else, hence identity theft.  An EIN is for a business, not an individual, and used for business reporting.  To use it for anything else, says the Federal Trade Commission, “is a federal crime.”  It adds, “further, you could be charged with mail or wire fraud if you use the mail or the telephone to apply for credit and provide false information.  Worse yet, file segregation likely would constitute civil fraud under many state laws.”

If you are an employer or landlord and checking the credit of an applicant, you may see some red flags run up when you look at a credit report.  The first thing to always check is the “Social Security Number” itself.  By doing a “Social Search,” available from a screening company,  you can see first, whom the number belongs to and  second, if it has been issued at all.  Either a number that has yet to be issued or an EIN will come back as “no record found.”  That’s a red flag too large to ignore and entitles you to immediately reject the applicant, assuming he or she wrote the supposed Social Security Number correctly.  Whether you report it to the police is your decision.

A bogus Social Security Number that is one not found will also mean you wouldn’t be able to deduct income taxes or FICA because the IRS will send back a notice that it can’t find the person whom you are sending money for or that the person you are sending money for died two years ago.  (The government does keep track now.)

Most of all, do you want to hire or rent to someone who is using a CPN or “file segregation”?  What might be his or her reason?  As Desi Arnaz said often, they’ve got “some ‘splainin’ to do.”

By Robert L. Cain

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