Social Security numbers exist for the purpose of tracking earnings and paying benefits, according to Cheezum. Although President Franklin Roosevelt signed an order requiring federal agencies to use SSNs for record-keeping systems, they were never meant to be used by businesses as an identifier, but have taken on that role because everyone has one.

But the snowballing problem of identity theft is spurring some governments to limit the use of SSNs.

California is leading the way with its recently enacted law barring businesses, health care providers and schools from:

• Publicly posting SSNs or requiring them for access to products or services
• Printing of SSNs on cards required for accessing products or services
• Requiring an individual to use his or her SSN to access a Web site unless a password is also required to access the site.
• Printing an individual's SSN on any materials that are mailed to the individual.

The state of New York limits the use of SSNs in schools and colleges. New York public and private schools cannot publicly display SSNs. Many are opting to assign students identification numbers. Arizona has passed similar legislation.

Foley says she hopes other states will follow suit and be even more restrictive so that SSNs will eventually be used only for a few selective purposes.

But, Foley says, until that happens, the first defense against the fraudulent use of SSNs are the companies that issue credit.

"Are they verifying that the person applying for credit is the true consumer? Are they looking carefully for red flags that might alert them to possible fraudulent use? If a credit application has a last name spelled incorrectly or an address different from the credit record, that should provoke someone into calling the consumer."

Some privacy rights proponents say SSNs shouldn't be used for obtaining credit. Does that mean a second number would have to be issued for people seeking credit? Would that be any better than the current system?

Perhaps California's newly enacted privacy law offers a better option.

In addition to limiting the use of SSNs, the law allows a consumer to place a "security freeze" on their credit report. The freeze prohibits consumer credit reporting agencies from releasing the consumer's credit report or any information from it without express authorization from the consumer.

Time will tell if that provision works better than the more common "alerts" that many people put on their credit reports. With an "alert" a consumer is supposed to be notified that someone is attempting to obtain credit in his or her name. But stories abound of breakdowns in the system.

If someone uses your SSN to obtain credit and doesn't pay their bills, you'll discover the fraud as soon as the bill collectors come calling. But sometimes an identity thief actually pays their bills and, in those instances, it could be a long time before you discover the fraud.

The best way to find out if someone is fraudulently using your SSN is to request copies of your credit reports at least once a year. There are three main credit-reporting agencies. It's a good idea to get a copy of your report from each agency so you can check for discrepancies. You can order your credit report from: TransUnion, Equifax and Experian.

If you suspect someone is fraudulently using your Social Security number, contact the Social Security Administration's fraud hotline at (800) 269-0271 from 10 a.m. to 4 p.m. Eastern, or e-mail: OIG.hotline@SSA.gov.