Why A Social Security Number is Required to Get a Prepaid Debit Card

One of the questions we get a lot is whether you can get a prepaid debit card without a social security number. The answer depends on the type of prepaid card you want. For a prepaid gift card, for example, a social security number is not required. For a reloadable prepaid Visa or MasterCard, your name, address, date of birth and social security number are required. Now the big question is why. Let’s take a closer look.

Following 9/11, the federal government passed the USA Patriot Act. As authorized by the Act, The Department of the Treasury, the Financial Crimes Enforcement Network, and the seven federal financial regulators issued final rules that require certain financial institutions to establish procedures to verify the identity of new accountholders (see the press release). The purpose of these rules was to prevent money laundering, terrorist financing, identity theft, and other forms of fraud.

The new regulations require that financial institutions implement reasonable procedures to

  1. verify the identity of any person opening an account;
  2. maintain records of the information used to verify the person’s identity; and
  3. determine whether the person appears on any list of known or suspected terrorists or terrorist organizations.

More specifically, the regulations require that financial institutions implement procedures for collecting standard information such as a customer’s name, address, date of birth and a taxpayer identification number (for U.S. persons, typically a social security number and for non-U.S. persons, a similar number from a government-issued document). These requirements required financial institutions to comply by October 1, 2003.

These rules apply to the following types of financial institutions:

  • Banks and trust companies
  • Savings associations
  • Credit unions
  • Securities brokers and dealers
  • Mutual funds
  • Futures commission merchants and futures introducing brokers

Because reloadable prepaid cards are issued by banks, they must comply with these regulations. As such, they require your social security number to activate a card.

Can You Use a Fake Social Security Number?

Believe it or not, a lot of people ask whether they can get away with a fake social security number. Years ago the answer was probably yes. Today, the regulations cited above require financial institutions not only to obtain an applicant’s social security number, but also to take reasonable steps to ensure that the applicant is who he or she says they are. In short, fake identification won’t work.

  • Patrick Roe

    There’s no such thing as a prepaid credit card; that’s a contradiction in terms & using the phrase only serves to confuse the market/potential customers. A more accurate description is prepaid debit card; credit has nothing to do with them so I’d strongly suggest you don’t use the term going forward…

    • Aaron

      Patrick, I agree that it can be somewhat confusing, but the terms prepaid credit card and prepaid debit card are used interchangeably. In fact, prepaid credit card is the term most often used. The reason is that these cards can be used anywhere that Visa and MasterCard are used.

  • Patrick Roe

    Sorry Aaron but that simply isn’t true. By definition a credit card provides a line of credit; the opposite of a prepaid card. Talk to anyone from MasterCard, Visa, Amex or Discover, all of whom I work with, & they will set you right. Or just think about the terminology for a minute; credit? debit? the latter is obviously correct, the former obviously is not, whatever you may think….

    • Aaron

      Patrick, I guess we will have to agree to disagree. I understand that a prepaid credit card does not have a line of credit, but that is the term that the vast majority of consumers use to describe the card. In fact, that term is used 3 to 1 over prepaid debit card.

      • ken

        who really cares what you call it or why? guys get over yourselves!!!!

  • Edmund

    If this is the case, then how did a hacker named Thor Morris use Barrack Obama’s name and address (1600 Pennsylvania ave.) to falsely register a walmart pre paid Green Dot card for use in an ATM hack in Houston? Without an SSN it could’nt be activated unless he knew some way around it.