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5 SSN Verification Tips for the Financial Services Industry

There is some concern surrounding the use of social security numbers (SSNs) for personal identification. If you work in an industry that handles SSN data, SSN verification can help protect you, your clients, and your customers. 

The original purpose of SSNs was to be able to track workers’ earning history and associated benefits. Social Security cards even used to read, “FOR SOCIAL SECURITY AND TAX PURPOSES—NOT FOR IDENTIFICATION”. Lately, however, it seems that our SSNs are used more and more to authenticate our identities. 

This overdependence on SSNs has made them a commodity for fraudsters. And the consequences of a compromised SSN is almost irreparable. The history of data breaches has made some people question just how secure this personal information is when many different parties store this data.

Now, there are some instances where SSN information is necessary, especially when it comes to financial services. This article is for anyone questioning when it’s safe to provide SSNs and for those who work in the financial services industry. Keep reading to find out how to protect yourself against identity theft and how to ethically handle SSN data.

3 Ways Financial Institutions Use SSNs

You can probably recall at least a handful of times you’ve been asked to provide your SSN. Unfortunately, it’s becoming so commonplace that it can be confusing to understand when it’s absolutely essential to business. 

While there’s an entire list of instances when you might be absolutely required to provide your SSN, this article focuses specifically on financial situations. So, be prepared to provide your SSN when opening a bank account, applying for a mortgage, or opening a line of credit.

SSNs are like the anchors of our financial lives. They are used to track our lifelong earnings, distribute retirement and disability benefits, and report income to the IRS. Therefore, when conducting financial business, you will often be asked to provide your SSN.

SSN verification for financial services extends beyond verifying your identity. While it’s important to ensure that each SSN used is provided by the owner only, financial institutions use SSN data to verify client income and credit history, too.

SSN Verification for Opening a Bank Account

When you open a new bank account, the bank will ask you to provide your SSN. This is so that they can confirm your identity and report your earnings and certain transactions to the IRS when necessary. For example, cash transactions over $10,000 and interest and investment income (and losses) must be reported to the IRS. 

SSN Verification for Applying for a Mortgage Loan

Mortgage lenders will also require your SSN when you apply for a mortgage loan. They will use your SSN to track your income to ensure that you will be able to repay your loan. Banks also use SSNs to report tax-deductible mortgage interest to the IRS.

Mortgage lenders will use your SSN to run a credit check and view your credit score. So they not only want to make sure you can afford the loan but that you also have a good track record of repaying and minimizing your debts and bills.

SSN Verification for Opening a Line of Credit

Credit card companies and banks that offer lines of credit will ask for your SSN when you apply for these services. Similar to mortgage lenders, creditors want to make sure you have a decent credit score (or history of paying off and minimizing debts) before offering you credit. 

Since SSNs are linked to our financial histories, they are used to track our income, payment, and some transaction trends. This is why it’s important to keep our SSNs as private as possible. Stolen or compromised SSNs could allow fraudsters to open lines of credit and run up debts in our names. 

So be careful about providing your SSN. Never provide it over the phone or email; legitimate requests for personal data will be handled in person, and organizations like the IRS will not call you. If they discover an issue that requires your attention, you will receive communication via mail.

What is SSN Verification?

SSN verification allows you to confirm that an SSN belongs to the right person and that people are who they say they are. There are a few different SSN lookup and verification tools you can use depending on your specific needs. These are the most powerful and accurate ways to verify SSN information:

SSN and Name Match verification, for example, is an alternative to eVerify. It determines whether or not an SSN and name combination you have are a match. This search is conducted by a professional researcher who personally reviews your results to ensure accuracy.

Reverse SSN Search allows you to provide an SSN in exchange for the associated name, address, phone number, and other data. As long as you can prove that you have a valid, legal reason for requesting the information, you can hire an investigator to help you locate the owner of a particular SSN.

Finally, you can find an SSN from a name and address. If you need to identify someone’s SSN, you can provide a name and address and get the information you need.

5 SSN Verification Tips for the Financial Services Industry

If you work in the financial services industry, there’s a good chance you handle SSNs. Here are some SSN verification best practices to use to ensure you handle such sensitive information ethically.

1. Avoid Data Entry Errors

First, you can use an SSN check and validator to make sure that an SSN is valid, active, and doesn’t belong to a deceased individual. If you get an invalid result, there might be a data entry error that needs to be corrected. By running a simple check, you can avoid costly mistakes by ensuring that you only work with valid, verified information.

2. Help Prevent Fraud

SSN and Name Match Verification allows you to confirm that an SSN matches the individual providing it. Taking the time to verify this sensitive information could help prevent fraud and identity theft.

3. Handle SSNs Ethically

There is some controversy over whether or not SSNs should be used to verify our identities. Some people think that the overuse of SSNs compromises their security. Their increased importance in identity verification makes them all the more valuable to fraudsters. And the line is blurring between when it’s absolutely necessary for us to provide our SSNs and when it isn’t.

If you collect and use SSNs in your business or industry, be sure to only request SSNs when absolutely necessary. Otherwise, try to use other methods of verification, such as 2-factor authorization (2FA) to help preserve the security of SSNs. And of course, make sure you only use SSNs for their intended, necessary purposes. 

4. Verify Contact Information

You can use a batch data append tool to regularly verify your customer/client contact data. Just upload your list a couple of times a year to ensure that your list of client phone numbers, addresses, and emails are up-to-date.

Otherwise, you risk calling old numbers and discussing personal information with the wrong party. This could hurt your reputation and result in other costly mistakes. Keep your customers’ information private and secure by verifying their contact data before reaching out to discuss sensitive business.

5. Keep Data Safe and Secure

Make sure you secure and protect any and all customer and client data. Data breaches can happen (and have happened to) anyone. Protect yourself and your clients against costly data breaches by regularly updating your software, training employees, and implementing security procedures like strong passwords and data encryption.

Protect Yourself with SSN Verification

As a consumer, it’s important to know when you need to provide your SSN and when you don’t. If you need to open a bank account, apply for a line of credit, or take out a mortgage loan, prepare to provide your SSN. 

SSNs tie us directly to our financial histories, so it’s not uncommon for this information to be requested when it comes to financial transactions. However, you will never legitimately be asked to provide this information over the phone, so don’t ever do so. SSNs are the data most phished for due to their link to our identities, so it’s important to keep them as secure as possible. As a business owner, be sure to handle this sensitive information carefully and ethically. It is your job to protect it, so educate yourself and utilize the many tools available to help you. With SSN verification tools, it’s easy to protect yourself and your customers.