Any Michigan business that collects social security numbers must be very careful.  A recently enacted state law subjects those businesses to severe penalties if certain procedures are not followed.  This law is the Michigan Social Security Number Privacy Act of 2005.  This statute was the first state legislation to require any person who collects one or more social security numbers in the ordinary course of business to take all reasonable steps to protect those numbers. 

The importance of this law cannot be overstated.  Around the same time that the Social Security Privacy Act was enacted, the Michigan Court of Appeals issued the nation’s first appellate court decision allowing identify theft victims to recover damages from a company that failed to properly safeguard their private information.  Penalties for violating the Michigan Social Security Number Privacy Act include money damages (minimum of $1,000 for a knowing violation) and possible criminal sanctions.  Since most residential lease applications request the applicant’s social security number, it is imperative that apartment project managers be familiar with the requirements of the Social Security Number Privacy Act, and implement them. 

The first thing that must be done is to establish a social security number privacy policy. This policy must be in writing, with certain required provisions included to ensure the confidentiality of social security numbers that are collected.  To comply with the law, the social security number privacy policy must, among other things:

1. Assure the confidentiality of the social security numbers in possession.

2. Prohibit the illegal disclosure of social security numbers.

3. Limit access to the social security numbers.

4. Provide a method for disposing of papers that contain social security numbers.

5. Establish penalties for violation of the policy.

The Michigan Social Security Number Privacy Act contains a number of other very important provisions.  All residential real estate management companies should immediately work to comply with this law and implement its requirements.  That should go a long way towards reducing the risk of exposure to costly legal damages if an applicant’s or resident’s social security number is somehow stolen and they become a victim of identify theft.