42 U.S.C. § 405b: Reducing identity fraud

Summary

Create or update a Social Security database so banks and their service providers can check a person’s name, Social Security number, and date of birth to help stop synthetic identity fraud when the person gives written or electronic consent. The Commissioner of Social Security must see if an existing system from May 24, 2018, can be changed to do this, and if not, build a new one. The system must match the submitted data to SSA records, handle expected request volumes with good uptime, give instant machine-to-machine answers for single checks, and answer batch requests within 24 hours. Definitions: Commissioner = head of the Social Security Administration. Financial institution = banks as defined by law. Fraud protection data = name, Social Security number, and date of birth. Permitted entity = a bank or its service providers or related companies. Before a bank or provider gets confirmations, it must give a certification (dated within 2 years) saying it is allowed to use the system, follows this rule, follows privacy and data-security law (GLBA), and will keep records for at least 2 years. Requests need the person’s written or electronic consent, and electronic consent must include an electronic signature. The Commissioner can audit users, stop service for noncooperation, share violations with enforcement agencies, charge fees to cover costs, collect at least 50% of startup funds before beginning development, use IT modernization funds, and report yearly to Congress on indirect costs.

Title 42, §405b

The Public Health and Welfare, Source: USLM XML via OLRC

(a)Purpose

The purpose of this section is to reduce the prevalence of synthetic identity fraud, which disproportionally affects vulnerable populations, such as minors and recent immigrants, by facilitating the validation by permitted entities of fraud protection data, pursuant to electronically received consumer consent, through use of a database maintained by the Commissioner.

(b)Definitions

In this section: (1) Commissioner

(2)Financial institution

The term “financial institution” has the meaning given the term in section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).

(3)Fraud protection data

The term “fraud protection data” means a combination of the following information with respect to an individual:

(A)The name of the individual (including the first name and any family forename or surname of the individual).

(B)The social security number of the individual.

(C)The date of birth (including the month, day, and year) of the individual.

(4)Permitted entity

The term “permitted entity” means a financial institution or a service provider, subsidiary, affiliate, agent, subcontractor, or assignee of a financial institution.

(c)Efficiency

(1)Reliance on existing methods

The Commissioner shall evaluate the feasibility of making modifications to any database that is in existence as of May 24, 2018, or a similar resource such that the database or resource—

(A)is reasonably designed to effectuate the purpose of this section; and

(B)meets the requirements of subsection (d).

(2)Execution

The Commissioner shall make the modifications necessary to any database that is in existence as of May 24, 2018, or similar resource, or develop a database or similar resource, to effectuate the requirements described in paragraph (1).

(d)Protection of vulnerable consumers

The database or similar resource described in subsection (c) shall—

(1)compare fraud protection data provided in an inquiry by a permitted entity against such information maintained by the Commissioner in order to confirm (or not confirm) the validity of the information provided;

(2)be scalable and accommodate reasonably anticipated volumes of verification requests from permitted entities with commercially reasonable uptime and availability; and

(3)allow permitted entities to submit—

(A)1 or more individual requests electronically for real-time machine-to-machine (or similar functionality) accurate responses; and

(B)multiple requests electronically, such as those provided in a batch format, for accurate electronic responses within a reasonable period of time from submission, not to exceed 24 hours.

(e)Certification required

Before providing confirmation of fraud protection data to a permitted entity, the Commissioner shall ensure that the Commissioner has a certification from the permitted entity that is dated not more than 2 years before the date on which that confirmation is provided that includes the following declarations:

(1)The entity is a permitted entity.

(2)The entity is in compliance with this section.

(3)The entity is, and will remain, in compliance with its privacy and data security requirements, as described in title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.), with respect to information the entity receives from the Commissioner pursuant to this section.

(4)The entity will retain sufficient records to demonstrate its compliance with its certification and this section for a period of not less than 2 years.

(f)Consumer consent

(1)In general

Notwithstanding any other provision of law or regulation, a permitted entity may submit a request to the database or similar resource described in subsection (c) only—

(A)pursuant to the written, including electronic, consent received by a permitted entity from the individual who is the subject of the request; and

(B)in connection with a credit transaction or any circumstance described in section 1681b of title 15.

(2)Electronic consent requirements

For a permitted entity to use the consent of an individual received electronically pursuant to paragraph (1)(A), the permitted entity must obtain the individual’s electronic signature, as defined in section 7006 of title 15.

(3)Effectuating electronic consent

No provision of law or requirement, including section 552a of title 5, shall prevent the use of electronic consent for purposes of this subsection or for use in any other consent based verification under the discretion of the Commissioner.

(g)Compliance and enforcement

(1)Audits and monitoring

The Commissioner may—

(A)conduct audits and monitoring to—

(i)ensure proper use by permitted entities of the database or similar resource described in subsection (c); and

(ii)deter fraud and misuse by permitted entities with respect to the database or similar resource described in subsection (c); and

(B)terminate services for any permitted entity that prevents or refuses to allow the Commissioner to carry out the activities described in subparagraph (A).

(2)Enforcement

(A)In general

Notwithstanding any other provision of law, including the matter preceding paragraph (1) of section 505(a) of the Gramm-Leach-Bliley Act (15 U.S.C. 6805(a)), any violation of this section and any certification made under this section shall be enforced in accordance with paragraphs (1) through (7) of such section 505(a) by the agencies described in those paragraphs.

(B)Relevant information

Upon discovery by the Commissioner, pursuant to an audit described in paragraph (1), of any violation of this section or any certification made under this section, the Commissioner shall forward any relevant information pertaining to that violation to the appropriate agency described in subparagraph (A) for evaluation by the agency for purposes of enforcing this section.

(h)Recovery of costs

(1)In general

(A)In general

Amounts obligated to carry out this section shall be fully recovered from the users of the database or verification system by way of advances, reimbursements, user fees, or other recoveries as determined by the Commissioner. The funds recovered under this paragraph shall be deposited as an offsetting collection to the account providing appropriations for the Social Security Administration, to be used for the administration of this section without fiscal year limitation.

(B)Prices fixed by Commissioner

The Commissioner shall establish the amount to be paid by the users under this paragraph, including the costs of any services or work performed, such as any appropriate upgrades, maintenance, and associated direct and indirect administrative costs, in support of carrying out the purposes described in this section, by reimbursement or in advance as determined by the Commissioner. The amount of such prices shall be periodically adjusted by the Commissioner to ensure that amounts collected are sufficient to fully offset the cost of the administration of this section.

(2)Initial development

The Commissioner shall not begin development of a verification system to carry out this section until the Commissioner determines that amounts equal to at least 50 percent of program start-up costs have been collected under paragraph (1).

(3)Existing resources

The Commissioner may use funds designated for information technology modernization to carry out this section.

(4)Annual report

The Commissioner shall annually submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the amount of indirect costs to the Social Security Administration arising as a result of the implementation of this section.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Gramm-Leach-Bliley Act, referred to in subsec. (e)(3), is Pub. L. 106–102, Nov. 12, 1999, 113 Stat. 1338. Title V of the Act is classified principally to chapter 94 (§ 6801 et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see

Short Title

of 1999 Amendment note set out under section 1811 of Title 12, Banks and Banking, and Tables. Codification Section was enacted as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act, and not as part of the Social Security Act which comprises this chapter.

§405b Reducing Identity Fraud