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Social Security fraud usually occurs when an unauthorized third-party gains access to an individual's Social Security number and exploits it for their own financial benefit.
There are other definitions of Social Security fraud that are important to know as well. For example, if you hide information from the federal government that influences retirement security payouts or present fraudulent information on a Social Security form, those are also deemed as Social Security fraud.
Social Security fraud is a serious threat, given the fact that U.S. Social Security Administration (SSA) has given out 453 million Social Security numbers since the program's inception in 1936, and issues 5.5 million new numbers every year.
Thus, it's important to educate yourself about Social Security fraud, and understand how to both prevent and respond to it.
Stolen Social Security Numbers and Identity Theft
By and large, Social Security fraud is a subset of identity theft, a dangerous threat that is growing at a fast pace.
According to Javelin Research, for the first time ever, Social Security numbers (35%) were compromised more than credit card numbers (30%) in personal data breaches.
Identity theft occurs when personal data is stolen from an individual with the intention of committing fraud. Stolen data that can be used for fraud includes your name, date of birth, Social Security number (SSN), or your driver's license and credit cards, according to the U.S. SSA.
"To a thief, your SSN is usually the key to unlocking your identity," the SSA notes. "Identity thieves can use your Social Security number and your good credit to apply for loans, credit cards, and other benefits in your name. Identity thieves then use the credit cards without paying the bills, thereby damaging your finances, credit history, and reputation."
Once an identity thief has a victim's Social Security number, the fraudster can use it to obtain medical benefits, file a fraudulent state or federal tax refund, apply for new credit and/or credit cards, or steal your disability or other benefits.
Types of Social Security Fraud
Social Security fraud can be categorized in different ways:
Benefits Fraud
Social Security benefits fraud occurs when an individual applies for Social Security benefits and intentionally provides bogus application information.
Shielding or Concealing Personal Information
Concealing personal data or information that could impact Social Security payments and benefits is another form of Social Security fraud. Accepting Social Security income for a child not under one's care and supervision is a good example of "concealment" fraud.
Impersonation Fraud
When an individual steals or otherwise directly benefits from Social Security payments, while acting as a representative for a legitimate beneficiary who is incapacitated, that constitutes Social Security fraud. Stealing the identity of, or otherwise impersonating a Social Security Administration staffer or manager, is also considered Social Security fraud.
Purchase or Sale of Social Security IDs and Data
This form of Social Security fraud is defined as the buying and selling of Social Security cards, or Social Security information, on the black market or dark web.
Illegitimate Deceased Benefits Fraud
Failure to notify the Social Security Administration of the death of a family member beneficiary while continuing to accept the deceased's Social Security benefits counts as Social Security fraud.
Supplemental Social Security Fraud
Hiding a marriage or concealing financial assets from the federal government while accepting Supplemental Social Security income is a form of Social Security fraud.
"Insider" Fraud
Social Security Administration managers and employees who use their access to receive payments and/or benefits, or help someone else do so, are also committing Social Security fraud.
Representative Payee Fraud
Sometimes the Social Security Administration will appoint a representative payee to accept Social Security payments for an individual who is incapacitated or otherwise unable to manage their own financial affairs. If the representative payee keeps the money, or mismanages the funds, the federal government deems that to be Social Security fraud.
"Failure to Report" Fraud
Any individual who receives a worker's compensation benefits, in the form of Social Security payments, and doesn't report those payments to the U.S. Social Security Administration, could be charged for Social Security fraud.
The U.S. Office of the Inspector General has a complete list of Social Security-related fraud and investigates claims of Social Security fraud.
How Do You Know If Someone Is Using Your Social Security Number Fraudulently?
Your correct Social Security number doesn't actually appear on your credit reports to protect your identity, but if any other Social Security numbers are attached to your name, those will appear in your personal information section.
An incorrect number doesn't necessarily indicate fraud. For instance, someone could misread or mistype a number when reporting it to the credit bureaus. It's important to look into it immediately—both with the creditor and the credit bureau. You can get a free copy of your Experian credit report here on Experian.com and you're also eligible to get one free report from each of the three credit reporting bureaus (Experian, Equifax and Transunion) every 12 months at AnnualCreditReport.com.
Also, if you see inquiries or new accounts on your credit report, you may have had your Social Security number compromised. SSNs can fall in the wrong hands if you're a part of a data breach and your SSN is included in the hacked or stolen records. Identity thieves can also buy and sell your Social Security number on the dark web.
How to Prevent Social Security Fraud
When looking to prevent Social Security fraud, watch out for scams that can result in having your Social Security card or number compromised by identity thieves. Outside of limited government authorities, certain medical providers and financial institution in which you have and/or applying for accounts, you should never provide your Social Security information to anyone.
Also, track your credit reports and stay abreast of any changes to your account. Use credit monitoring agencies to provide instant alerts. Check your credit report regularly with Experian CreditWorks. Also, don't carry your Social Security card around, or store your number in a mobile phone. In general, don't keep your Social Security number anywhere that presents a risk of being compromised.
Additionally, shred any documents that include personal data, store financial documents and records in a safe place, and install anti-virus protection software on personal computers and digital devices.
If a company or organization requests your Social Security number and you don't think they should need it, it's always a good idea to ask why it's necessary or confirm if it's optional.
What to Do If Your Social Security Number Is Stolen
If your Social Security number is stolen:
- You'll first want to file an identity theft report with the FTC.
- You should also consider freezing your credit or locking your credit with Experian CreditLock. You'll need to freeze your credit with each of the three credit bureaus separately - Experian, Equifax and TransUnion.
- There's also a fraud hotline managed by the Social Security Administration: 1-800-269-0271.
- If you confirm that you're the victim of Social Security fraud, it's also a good idea to contact your state tax office and notify them you've been victimized. For any personal safety concerns, contact your local police department and tell them you believe your identity has been compromised.
- You'll also want to keep a close eye on your credit report for any new accounts being opened. You can use a product like Experian CreditWorks or Experian IdentityWorks to monitor your credit report and get alerts when new inquiries or accounts are added (if your credit is frozen, new accounts can't be opened).
When Can I Request a New Social Security Number?
According to the SSA, they may assign you a new Social Security number if:
- You are being harassed, abused, or are in grave danger when using the original number
- You can prove that someone has stolen your Social Security number and is using it
- More than one person is assigned or using the same number
You must provide evidence that the number is being misused, and that the misuse is causing you significant continuing harm.
The SSA lets you apply for an original Social Security number or a replacement Social Security card for free, but the process can be involved. The application form and additional information about the supporting documents you need to apply are available on the SSA website. There are companies that offer to do the application for you for a fee, but a paid service can't submit an application for you as you'll need to take it to an SSA office in person.
To apply for a new Social Security number, you must prove your age, citizenship or lawful immigration status, and your identity. You'll also need documentation of the misuse or identity theft via an identity theft report from the FTC and/or police report.
Once you have all the documentation and form complete, you visit a SSA office near you.
If you meet certain criteria, you can also request a new Social Security card online via a ‘My Social Security' account online. To do this online, you must:
- Be a U.S. citizen 18 years or older
- Not be requesting a name change or any other changes to your Social Security card
- Live in one of the states who permit online requests (full list is available here)
The Impact of a New Social Security Number
Before getting a new Social Security number, you will want to consider the impact—such as how it might affect your credit. While the SSA says that your old and new numbers will be linked, the reality is that it's not that simple. There is likely going to be a new credit report generated and your credit scores may decrease because there's no credit history associated with the new SSN at first.
How to Report Social Security Fraud
In addition to reporting any lost Social Security card or stolen Social Security number, if you're the victim of Social Security fraud or you know of someone committing Social Security fraud, you'll also want to file a report with The Office of the Inspector General. They investigate all fraud, waste and abuse related to the SSA.
Check Your Social Security Status
If you suspect your Social Security number has been compromised, the SSA advises checking your Social Security account on your own. You can review your statement on their website in the My Social Security section. You can set up a personal online account with the SSA that will give you access to view earnings history, estimates of benefits as well as manage your account including changing your bank account into which your check is deposited.
A "My Social Security" account lets you manage information whether you do or do not receive Social Security benefits.
If you don't receive benefits, creating an account allows you to:
- Request a replacement Social Security card if you meet the above requirements.
- Check the status of your application or appeal.
- Get your Social Security statement to review estimates of future retirement, disability and survivors benefits as well as see your earnings once a year along with the estimates Social Security and Medicare taxes you've paid.
- Get a benefit verification letter stating that you don't receive Social Security benefits.
If you do receive Social Security benefits, you can create an account to:
- Request a replacement Social Security card if you meet the above requirements.
- Report your wages if you work and receive Disability Insurance benefits.
- Get your benefit verification letter.
- Check your benefit and payment information as well as your earnings record.
- Change your contact information, such as address and phone number.
- Start or update a direct deposit for your benefit payment.
- Request a replacement Medicare card.
- Get replacement SSA-1099 or SSA-1042S tax forms.
What to Do If You're an SSA Employee and Your Information Is Compromised
Current or former federal government employees who fear their personal information might have been compromised should review the U.S. Office of Personnel Management's Cybersecurity FAQ page, where they'll receive information on how to report the incident.
Don't Take Your Social Security Data for Granted
Your Social Security card, and number, are your financial lifelines to the U.S. government, in the form of benefits, key documents (like a passport or bank account), and personal identification. It's also a number that's widely used by financial, business and medical institutions to manage individual accounts.
That's why it's so important to safeguard your Social Security data, and keep fraud artists away from you, and wall you off from Social Security fraud.