What Is A CPN? Fraud Just Waiting to Happen
A credit privacy or profile number (CPN) is a fraudulent means of diversion marketed as a way to help people with damaged credit hide from their financial past in order to obtain new credit cards and loans. Like wearing gloves to mask fingerprints during a burglary, a so-called CPN is entered into the Social Security Number field on a financial application as a means of obscuring the connection between an applicant’s name and the actual contents of their credit reports.
These nine-digit fill-ins, which also go by the alias “secondary credit number,” actually tend to be stolen Social Security Numbers or SSNs that have not yet been assigned (which puts the term “cradle robbing” into a whole new context). But despite how overtly illegal this numerical subterfuge may seem, a great deal of confusion still shrouds the topic.
Numerous outlets have propagated the spy-novel notion that CPNs are used for the secretive yet potentially legitimate purpose of protecting the identities of Congress members, celebrities, and people who are in the federal witness protection program. Even Google Search indicates that CPNs are above-board with its “direct answers” and top results.
WalletHub, however, followed up on the matter with the Social Security Administration (SSA), the Federal Trade Commission (FTC) and the Federal Bureau of Investigations (FBI). While officials from the SSA and FTC confirmed that their agencies do not oversee CPNs, they could not definitively state that CPNs are never legitimately used – further clouding already muddied waters. The FBI was more conclusive – at least at first.
“CPNs are not legal and are something criminal actors are utilizing to conduct fraudulent activity,” Samantha T. Shero, a spokesperson in the FBI’s national press office, told WalletHub via email. “Often times they lie or mislead individuals who are trying to get a fresh start which can wrap the individual up in illegal activity themselves (i.e. applying for loans with the CPN). They typically use inactive SSNs, such as children or deceased individuals’ SSNs.”
The question of when people can use CPNs without violating the law therefore seems to have an answer – never – but you still have to wonder why so many signs suggest otherwise.
With Regulatory Confusion, Sense Of Fringe Legality Flourishes
At a time when fraud, identity theft and data security are top of mind, the notion that federal agencies central to the narrative of CPN legitimacy may not have a full grasp on the issue is unsettling. If these pseudo-Socials are actually being assigned to Congresspeople and federal witnesses — or even if someone is passing off such misinformation as fact — the SSA and the FTC should probably know enough about the issue to definitively set the record straight.
After all, the SSA issues Social Security numbers and would therefore be the logical choice to assign CPNs, if they were in fact legally used. And if not, one would think the SSA would be among the most knowledgeable agencies on the subject of Social Security number abuse. The FTC, in turn, has the dual mandate of safeguarding consumers and promoting competition. Its tagline is even “Protecting America’s Consumers.”
But neither agency provided definitive responses to our questions about reports of valid CPN practices.
We first contacted the SSA, and after initially receiving a form response with instructions for how to report fraud, the administration’s national press office directed us to the FTC.
“The CPNs you referenced are not assigned or managed by Social Security, press officer William ‘BJ’ Jarrett told WalletHub via email. “The Federal Trade Commission (FTC) has the lead on identity theft and may be able to help.”
This serves as a clue that reports of so-called “legal CPNs” are inaccurate, but it doesn’t solve the mystery.
The FTC ultimately directed us back to the SSA, in typical bureaucratic fashion, but at least provided a more concrete stance on the fringe legitimacy of CPNs. "They are almost always a scam,” said press officer Jay Mayfield III. “We don’t have anything to do with credit privacy numbers.”
But what does “almost always” leave room for? And, while Mayfield meant the FTC isn’t involved in either administering or regulating any sort of legal CPN program, doesn’t the implication offered by the end of his statement still seem to resonate?
New Media Misinformation Fuels The Fire
Fraud operates on an aura of legitimacy, and it’s hard enough to discern the factual from the fake without ostensibly trustworthy information sources lending credence to illegal activities. That’s why the impression given to people who search online for clarity about CPNs is so troubling.
The following is the “direct answer” result that Google provides in response to the query, “what is a credit privacy number.” It’s supposed to be the most accurate answer available, according to Google’s algorithms, and it’s just plain wrong.
Even if there’s a sliver of a chance that CPNs aren’t expressly illegal in theory – after all, could you really ban people from stringing together random numbers and doing nothing with them? – any and all real-world applications are definitively against the law. So while a CPN is indeed a nine-digit number, it certainly cannot “be used in lieu of a Social Security number for credit reporting and other financial purposes.” And though they’re sometimes used to fraudulently apply for loans, CPNs are actually meant to prevent, not enable, identity verification and credit history tracking.
Now, this is more an indictment of Google’s Knowledge Graph system than any particular outlet, but that is perhaps a bigger issue at a time where we are growing so accustomed to asking questions of machines and receiving accurate answers. An estimated 64 of people worldwide now trust search engines more as a source of general news and information than traditional news outlets, according to a 2015 survey by the Edelman Trust Barometer group. Online search is also by far the preferred choice for obtaining general business information as well as confirming or validating business news.
But even if searchers make their way beyond this landing page, the truth about CPNs still isn’t immediately apparent. The top result and many other articles allude to the possibility of illegality in a “sometimes” sense, while also propagating the baseless myth that CPNs are used in an official capacity to meet the privacy needs of high-profile individuals.
Perhaps more interesting than this simple inaccuracy, however, is the fact that numerous websites – such as LegalCPN.com, CreditProfileNumbers.com and LegalUCC.com – connect this claim back to the government-sponsored housing agency Freddie Mac, attributing the following quote to the organization:
“CPNs are commonly used by celebrities, members of Congress, and witnesses protected by the federal government to help protect their privacy and security.”
This information can no longer be found on the Freddie Mac website, but the connection wasn’t fabricated by the shady CPN purveyors. It was simply taken out of context.
“Back in 2013 the company posted an article for lenders about CPN’s being a red flag for mortgage fraud … and the line was in the piece.” Freddie Mac spokesperson Brad German told WalletHub via email. “It was lifted from some third party source as a short hand description of CPN use. “The information did not come from any research by Freddie Mac into the uses, value or legitimacy of CPNs. It is totally wrong for anyone to use a line from an article warning lenders about fraud committed with CPNs to imply some kind of blessing for the use of CPNs.”
This mix-up might alone be understandable, but it’s not the only case of vague language in a mortgage fraud report creating CPN confusion as it is spread around like a financial version of the game “telephone.” A footnote in a 2008 report by the FBI also states that:
“Credit Privacy Numbers (CPNs) are nine-digit file numbers that follow the same algorithm as Social Security Account Numbers (SSANs). Currently, federal law allows individuals to legally use CPNs for financial reporting and protects those individuals who do not wish to disclose their SSAN. Individuals who acquire CPNs are completely responsible for any debt they incur using this number. Acquiring a CPN is supposed to be a free service; therefore, Web sites that offer CPNs for a fee are most likely scammers.”
However, we know that no legitimate service exists and the FBI now seems to be couching its claims.
"Our Financial Crimes Section said that the intention of the footnote in the 2008 Mortgage Fraud report was simply that the existence or ownership of a CPN is not illegal,” FBI spokesperson Samantha T. Shero told WalletHub. “I can’t name any particular forms off the top of my head where you would use a CPN instead of your SSN, and the FBI does not track or disseminate these numbers, but if it’s not used illegally to mask a crime or past financial history, then it would not be illegal. That’s about all we have or can say on the matter, since the FBI does not control or track these numbers."
The Law Underlying The Myth
Like most plausible myths, the idea that you can use a CPN in place of an SSN on a financial application is based loosely in fact – in this case, a provision of the Privacy Act of 1974, which states:
“It shall be unlawful for any Federal, State or local government agency to deny to any individual any right, benefit, or privilege provided by law because of such individual’s refusal to disclose his social security account number.”
Some have pointed to this text as proof that CPNs are allowed, but this flawed logic conveniently ignores a few fundamental facts:
- While government agencies may subsidize or guarantee certain loans, they don’t actually issue financial products;
- The ability to borrow money is not a fundamental right of citizenship;
- You don’t have to give your SSN to a financial institution if you don’t want to, but that financial institution doesn’t have to approve your application, either, if you refrain.
It’s also important to emphasize the distinction between not disclosing your SSN due to privacy concerns and outright lying to a credit card or loan issuer by using a falsified or stolen number. Financial institutions are required by law to confirm the identities of their customers, in part to prevent money laundering and terrorist funding. Using a stolen SSN to obtain credit is therefore an example of fraud that encroaches on significant aspects of financial and national security and thus has the potential to get those who employ it into some serious trouble.
Underscoring the risk involved with this form of financial crime is the fact that credit bureaus neither acknowledge any legitimate applications for credit privacy numbers nor rely solely on Social Security numbers to connect individuals to their credit histories.
“Experian does not recognize so-called ‘credit privacy numbers,’” Rod Griffin, the company’s director of consumer education, told WalletHub. “We would identify them as invalid Social Security numbers. When a credit report is requested, Experian matches the credit history using all of the identifying information provided, not just a Social Security number. Altering or providing false identifying information in an attempt to avoid accurate but negative credit history may be fraudulent, resulting in potential legal ramifications.”
How To Steer Clear Of CPN Scams
Fraud and identity theft are far easier to deal with from a preventive perspective than they are once they’ve infiltrated your financial life. That’s not to say it always announces itself or that someone will ask before stealing your SSN, but rather that a solid defense is the best offense in this scenario.
With that in mind, here are some tips for both shoring up your protections and patching up the holes should incursion ever occur:
Recognize There Are No Shortcuts: The easiest way to avoid falling victim to a credit score scam is to think of credit improvement as being similar to weight loss. We’ve seen enough miracle fat-shredding techniques come and go to know that many of them are bogus, with the potential to leave you lighter in the wallet but not in the britches. But there is ultimately no substitute for diet, exercise and discipline when it comes to shedding pounds.The same is true of credit building. There is no magic trick or service that can somehow “repair” your credit overnight. Negative items on your credit report cannot be removed early, which means the only way to mitigate their impact is to devalue their relevance to your future financial performance through consistent, responsible money management. So, instead of wasting time and money trying to game the system, thereby risking a run-in with the law, it’s a far better idea to place a refundable security deposit on a secured credit card and then proceed to make on-time payments each month.
Progress by these means may seem slow, but it will leave you better positioned for financial success in the long run. For more information about how to build credit the right way, check out WalletHub’s Guide to Credit Improvement.
- Research The Company: The better you understand how credit building actually works, the easier it will be to spot fraudulent claims made by people or companies purporting far-fetched relief capabilities in the hopes of exploiting your financial circumstances. But fraud isn’t always readily apparent, as the confusion regarding CPN legality just goes to show. It’s therefore a good idea to get into the habit of researching any service provider before paying a dime or providing any sensitive financial information. Reading consumer reviews, checking for government fraud advisories and poking around the provider’s website are all steps that will help elucidate their legitimacy, or lack thereof.
- Monitor Your Credit: Regularly reviewing your major credit reports will enable you to spot signs of fraud as soon as possible. Signing up for a credit monitoring service stands to be even better, since you’d receive real-time alerts about changes to your file. If, for example, someone stole your Social Security number and used it to open a credit card in your name, you would know about it.This would speed up your reaction time, so to speak, allowing you to put a freeze on your credit reports and bring the issue to the attention of the credit bureaus and your creditors before much damage can be done.
- Notify The Authorities: Just because regulators and law enforcement officials are a bit unclear about whether, if ever, CPNs can be used legally, that doesn’t mean they take allegations of Social Security number abuse lightly. Stealing someone’s Social Security number is always illegal – whether that person is alive, deceased or not yet born. If you think your SSN has been stolen, the Social Security Administration recommends contacting the FTC, at: 1-877-438-4338.To be safe, you may also want to report the problem to the Consumer Financial Protection Bureau, the Department of Justice and/or your state attorney general.
For more tips on avoiding and dealing with stolen SSNs and other similar scams, check out WalletHub’s Identity Theft Guide.
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