Just 5 Banks Prohibit Use of Social Security Numbers

Despite the risk of fraud associated with the theft of Social Security numbers, just five of the nation’s largest 25 banks have stopped using the numbers to verify a customer’s identity after the initial account setup, a new report from Javelin Strategy & Research finds.

Social Security numbers are required to open a bank account, but shouldn’t be used after that as a requirement for initiating communications with the bank, Javelin says. Some banks, for instance, require customers to provide the numbers when calling on the phone to speak with a bank representative, or contacting the bank to reset a password.

Use of the numbers can make customers vulnerable to “account takeover,” in which a thief uses stolen information, like a Social Security number along with an address, to gain access to a bank account. About a third of account takeovers involve checking and savings accounts, according to Javelin’s most recent data.

“Everyone would be well served if we would step away from Social Security numbers,” Al Pascual, a senior analyst for security risk and fraud at Javelin, said in a phone interview. “It’s a powerful tool for a fraudster.”

In 2011, Javelin reported in its Banking Identity Safety Scorecard that all the banks in its report used the numbers in some way for customer identification.

This year, five banks reported that they now prohibit their use — an improvement, the report said, but still “distressingly low.”

The five that reported prohibiting the use of the numbers are Comerica, Regions Bank, TD Bank, U.S. Bank and Union Bank. The country’s biggest banks, including JP Morgan Chase, Bank of America and Citibank, still use Social Security numbers, according to the report.

Prohibiting use of the customer’s Social Security number to verify identity “may go a long way” toward protecting customers’ accounts, the report said.

Overall, however, the report gave top marks to Bank of America for prevention and detection of identity fraud, and gave Chase the top ranking for resolving problems once they occur.

Does your bank ask for your Social Security number when you call to discuss your account?