Identity Theft Protection Blog

By the AllClear ID Team

Vanessa here with AllClear ID. What started as a database to protect Americans from fraud has become a major source of identity theft and misery. Making it worse, this is a database run by the federal government – and it says it’s powerless to stop the database information from going public.

The database in question is the Social Security Administration’s Death Master File. We’ve talked before about ghosting, and unfortunately this file makes the crime simple for thieves. It contains the names, birth dates, and Social Security numbers of more than 90 million deceased Americans. It is updated every week, and can be accessed for free online.

According to media reports, thieves are pocketing fraudulent tax refunds after filing returns with personal information about recently deceased children that they found in the Death Master File. Parents who recently lost a child are increasingly targeted by these thieves. Armed with the deceased child’s Social Security number and other personal information, the crooks falsely claim them as dependents and have the refunds routed to them.

One of the victims is Matt Pilcher of Potomac, Maryland. His daughter, Ava, died at six months old from lung disease following her premature birth. Pilcher’s 2010 income tax filing was rejected by the IRS because someone else had claimed Ava as a dependent. All her information was on the Death Master File.

The database was created in 1980, ironically at the request of U.S. businesses seeking a tool against identity theft.  It seemed like a good government solution to the rising problem of consumer fraud. However, this was before the Internet Age. Now there are serious problems stemming from the Death Master File. The Social Security Administration recently admitted that it accidentally lists about 14,000 living Americans each year in the death database. Living people listed as deceased have trouble getting jobs, opening bank accounts, buying cars and cell phones, and renting housing.

There is little grieving parents can do to protect themselves from tax fraud if thieves decide to take their dead child’s name, birthdate, and Social Security numbers. Crooks only need to file for a tax refund before the family can. By the time the IRS detects something is wrong, the money is already out the door.

What makes this situation even more infuriating is that the Social Security Administration is powerless to act. Information on the Death Master File is information that must be disclosed under the Freedom of Information Act.  Congress would need to amend FOIA laws to limit the amount of information made public. Luckily, that may happen as the House Ways and Means Committee, which oversees the Social Security Administration, recently called a hearing to examine how the Death Master File is handled.

In the meantime, here are a few steps that parents of deceased children can take to protect thieves against identity theft:

• File taxes early. The IRS typically processes returns in the order received. If yours goes in first, a crook using your child’s information is less likely to get away with deceit.
• Don’t expect answers. By law, the IRS cannot share information about the person who claimed your child.
• Contact credit bureaus. It’s possible the thief also tried to use your child’s name to take out credit cards or turn on utilities. To find out, contact the three credit ratings agencies: Experian, Equifax and TransUnion.

Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.