Credit Privacy Numbers: Safe or Scam?
A nine digit Credit Privacy Number looks a lot like a Social Security Number, but it is not issued by the government, not recognized by the tax man and it may or may notbe legal, depending on its intended use. So what is this mysterious number, and why do so many celebrities and VIPs clamor to get one?
It Exists to Protect you Financial Privacy
Whenever you apply for a mortgage, a car loan or other form of credit, the person supplying the credit will run a credit check against you to establish whether you have a good track record of paying bills. Organizations known as credit bureaus gather your financial information and turn it into a comprehensive credit report. Credit providers can order a copy of your credit report using your name and Social Security Number.
By law, you only have to disclose your Social Security Number in five circumstances:
· when registering a car
· when buying a firearm
· to the IRS
· when taking out a government-backed loan such as those offered by the Federal Housing Administration
· to your employer.
In all other circumstances you have the right to keep your SSN private. So, instead of an SSN, credit bureaus and lenders let you use a separate number for any credit or finance-related transactions. This number is the Credit Privacy Number or CPN.
Are they legal?
CPNs are completely and 100% legal -- in most cases. They only become illegal when used for an improper purpose, such as misleading someone about your credit score. CPNs commonly pop up in the context of credit repair where a company promises to issue you a CPN so you can qualify for new credit or get rid of old debts. In most cases, this is a fraudulent promise.
One common scam plays on the fact that a CPN looks a lot like an SSN. The credit repair agency gives you someone else's actual SSN, perhaps from someone who's deceased, and encourages you to use that SSN to obtain debt. Creditors using the SSN to pull your credit report are actually reviewing someone else's credit history, and will make a credit decision based on someone else's data. This is fraud. In the eyes of the law you are just as guilty as the credit repair agency, even if you didn't know you were doing anything wrong.
A CPN is a financial alias -- nothing more, nothing less. It does not replace your SSN and it in no way eliminates any previous credit history or debt. Beware companies who promise you otherwise, and never buy a CPN on the Internet.
Who uses them?
CPNs are most commonly issued to corporate, political or government VIPs, individuals in witness protection and celebrities who need a little extra privacy. The reasoning is pretty simple -- if the media got hold of a Hollywood A-lister's SSN they could use it to track what the celebrity was buying and put their finances right in the public eye. Celebrities aside, anyone has the right to establish a CPN. You only get one chance to do it though, and you're responsible for any legal fallout that comes from having a fake or fraudulent CPN.
How do I get one?
The good news is, legal CPNs are completely free. However, it's recommended that you talk to a lawyer to make sure it's done right. Your lawyer will file a request with the federal Social Security office and follow a long, bureaucratic process to get the paperwork you need. Because the risk of fraud is so high, you should expect lots of probing questions from the federal government about your reasons for wanting a CPN, and considerable delay before you get your number.
Remember, you're on the hook for any debts you incur with both your SSN and your CPN. It's up to you to know when you must supply your SSN and when it's okay to use your CPN. You're at the mercy of the law if you misuse the numbers, no matter how unwittingly. For a lot of people the potential traps outweigh the added privacy.