Do you want to make potential and existing customers feel secure? If so, one item that you need to avoid is asking them for their social security numbers. A poll by Consumer Reports National Research found that close to nine of every ten Americans want state and federal lawmakers to pass laws restricting the use of Social Security numbers. So if you want consumers coming back and ordering products from your Web site, you can ask them for many things, just not their Social Security numbers.Consumers are leery of handing over their Social Security numbers because they may fall victim to identity theft. Unfortunately, that crime has become more common recently: Consumer Reports estimated that there were 10 million cases of identity theft in the US last year. This phenomenon stands in juxtaposition to the growth of ecommerce. Once someone logs onto a small or medium business Web site, the company needs to verify the persons identity somehow.

Historically, Social Security numbers have served as a common way to identify individuals. The use of this form of identification is quite common among financial institutions and retailers, who asked three out of four consumers for their numbers during the last year. About one of every two consumers reported having their health care provider request that information. In other cases, employers or potential employers (44%); insurance companies (36%); government agencies other than the IRS or a state tax body (32%); college or other school (28%); service provider such as cable TV or cell phone carrier (26%); utilities (17%), and merchant or retailer (16%) requested individuals Social Security numbers.

Once these companies collect the ID, they are often careless with it. Consumers reported that their numbers were displayed on the Internet, in public records, on identification cards, and in the mail. Such misuses underscore the need for a new way of identifying individuals online. Rather than a Social Security number, vendors need to develop a universal identification system, such as the Liberty Alliances federated movement, one that all companies can access. Until that time arrives, small and medium businesses may want to rely on other identification mechanisms, such as using telephone numbers or street addresses when trying to verify their customers identity. Though these options are more difficult to implement and more prone to mistakes, these options will make the consumer feel more comfortable and therefore more likely to spend time and money at your Web site.

How does your company verify the identity of potential customers? How vulnerable do you think your system is? What do you view as the silver bullet for verifying online identities?