Social Security Numbers Overused by Banks
It's understandable that banks and credit unions need our social security numbers when we open accounts. They need to report interest that we earn to the IRS. Unfortunately, many banks have overused the social security number, and that has increased the risk of identity theft. This issue is described in this New York Times Bucks blog article which has a review of a report from Javelin Strategy & Research:
The firm’s annual Banking Identity Safety Scorecard looked at the consumer-security practices of 25 large banks and credit unions. It found that far too many still rely on customers’ Social Security numbers for authentication purposes
One thing that angers me is when a bank or credit union requires social security numbers of beneficiaries that I want to include on my bank accounts. I know readers who have also had this problem.
As I described last week, specifying beneficiaries on bank accounts is an easy way to keep money out of probate. Most banks allow you to add one or more beneficiaries to an account. They typically label beneficiaries as "payable on death" (POD) or "in trust for" (ITF). Many banks only require that you specify the beneficiary names or a few other details like birth date or address.
One of my credit unions refused to add a beneficiary without the beneficiary's social security number. I was wanting to add my brothers as the beneficiaries, but I didn't want to carry their social security numbers. Also, I didn't want to disclose these numbers. I trust the credit union, but nothing is 100% secure. The more you give out these numbers, the more likely it could be found by hackers, and I don't want to be responsible for causing an identity theft issue for my brothers. I can understand that beneficiaries may need to provide their social security numbers if they claim the bank accounts.
Have you experienced banks or credit unions overusing social security numbers?