The Social Security Administration (SSA) has announced the development of a portal that would allow financial institutions to join a planned real-time electronic system for verifying the identity of credit applicants.  The new Consent Based Social Security Number (SSN) Verification (eCBSV) service will be an important tool in the fight against identity theft and other financial crimes.

SSA has traditionally been resistant to the idea that SSNs should serve as the nation’s universal personal identifier.  However, the Economic Growth, Regulatory Relief and Consumer Protection Act, which was signed into law last year, directed the SSA to develop a database for accepting and comparing fraud data that is submitted electronically by financial institutions, or those financial institutions’ service providers, subsidiaries, affiliates, agents, subcontractors, or assignees.

Financial institutions must first obtain consumers’ signed consent to verify their identities, but under the eCBSV service, such signatures may be electronic, if compliant with ESIGN, rather than wet signatures.  This will be a major shift away from the SSA’s prior time-consuming approach that required handwritten consent from consumers for financial institutions to confirm the consumers’ identities using SSA records.

SSA has set a deadline of July 31st for financial institutions to apply to join the eCBSV service during the initial enrollment period of the program.  For the initial rollout, SSA will select a limited number of permitted entities, based upon the earliest date and time of the receipt by SSA of a fully completed application.  The service will be made available to the selected number of applicants in June 2020.  Thereafter, the number of users will be expanded within six months.

Any financial institution that submits a valid application prior to the close of the stated deadline, but is not selected for the initial rollout, will have an opportunity to re-submit a full application and user agreement for the later expanded rollout.  However, any financial institution that does not submit a valid application before the deadline, will not have the opportunity to apply for the expanded rollout in late 2020, and must wait until the next open enrollment period, which could be as long as a two-year wait.  Financial institutions unable to participate in the new program must continue to rely on the existing paper-based system, which can delay credit decisions.