oversight

Illegal Aliens: Fraudulent Documents Undermining the Effectiveness of the Employment Verification System

Published by the Government Accountability Office on 1999-07-22.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             United States General Accounting Office
                                                                                 /12ยข?/6,/
GAO                          Testimony
                             Before the Subcommittee  on Immigration and Claims
                             Committee on the Judiciary, House of Representatives



For Release on Delivery
Expected at 10:00 a.m. EDT
Thursday July 22, 1999
                             ILLEGAL ALIENS

                             Fraudulent Documents
                             Undermining the
                             Effectiveness of the
                             Employment Verification
                             System
                             Statement of Richard M. Stana, Associate Director
                             Administration of Justice Issues
                             General Government Division




                              .           GAO
                                      Accountability * Integrity * Reliability

GAOT-GGD/HEHS-99-1 75                    / o 7s
                             /gcteff /           a 73 88/
Statement

Illegal Aliens: Fraudulent Documents
Undermining the Effectiveness of the
Employment Verification System
                Mr. Chairman and Members of the Subcommittee:

                I am pleased to be here today to discuss the impact of fraudulent
                documents on the effectiveness of the employment verification system
                established by the Immigration Reform and Control Act (IRCA) of 1986
                and efforts to reduce such fraudulent use. My statement will summarize
                pertinent information from two of our reports: Illegal Aliens: Significant
                Obstacles to Reducing Unauthorized Alien Employment Exist (GAO/GGD-
                99-33, Apr. 2, 1999) and Social Security: Mass Issuance of Counterfeit-
                Resistant Cards Expensive, but Alternatives Exist (GAO/HEHS-98-170,
                Aug. 20, 1998).

                The availability of jobs is one of the primary magnets attracting illegal
                aliens to the United States. Immigration experts believe that as long as
                opportunities for employment exist, the incentive to enter the United
                States illegally will persist and efforts at the U.S. borders to prevent illegal
                entry will be undermined. IRCA's employment verification system was
                intended to prevent employers from hiring aliens unauthorized to work,
                therefore reducing the job magnet.

                In this statement, I make the following points:

              * Significant numbers of aliens unauthorized to work in the United States
                have used fraudulent documents to circumvent the employment
                verification process designed to prevent employers from hiring them.

              * The Immigration and Naturalization Service (INS) has taken steps to
                reduce the number of documents that could be used to verify employment
                eligibility and to improve the security features in its work authorization
                documents. However, opportunities still exist for unauthorized aliens to
                circumvent the employment verification process and obtain employment.

              * In 1997, the Social Security Administration (SSA) estimated the cost of
                producing and issuing a counterfeit-resistant Social Security card that
                could be used to establish employment eligibility to all 277 million
                cardholders ranged from $3.9 billion to $9.2 billion, depending on which
                types of security features and data were incorporated into the card. While
                alternatives exist that could reduce these costs, these options require
                legislative action to move forward.




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                         Illegal Aliens: Fraudulent Documents Undermining the Effectiveness of the Employment
                         Verification System




                         IRCA' made it illegal for employers knowingly to hire unauthorized aliens.
Background               IRCA requires employers to comply with an employment verification
                        process intended to provide employers with a means to avoid hiring
                        unauthorized aliens. The process requires newly hired employees to
                        present documentation establishing their identity and eligibility to work.
                        Employees have the choice of presenting 1 document establishing both
                        identity and eligibility to work (e.g., an INS permanent resident card) or 1
                        document establishing identity (e.g., a driver's license) and 1 establishing
                        eligibility to work (e.g., a Social Security card) from a list of 27 acceptable
                        documents.2 Generally, employers cannot require employees to present a
                        specific document. Employers are to review the document or documents
                        that an employee presents and complete an Employment Eligibility Form,
                        INS Form I-9. On the form, employers are to certify that they have
                        reviewed the documents and that the documents appear genuine and
                        relate to the individual. Employers are expected to judge whether the
                        documents are obviously fraudulent. INS is responsible for checking
                        employer compliance with IRCA's verification requirements.

                        IRCA's employment verification process is easily thwarted by fraud. Large
Fraudulent Documents    numbers of unauthorized aliens have used fraudulent documents to
Have Undermined         circumvent the employment verification process. For example, data from
Effectiveness of INS'   INS' employer sanctions database showed that over the 20-month period
Employment              from October 1996 through May 1998, about 50,000 unauthorized aliens
TVeffication Process    used 78,000 fraudulent documents to obtain employment. About 60
Verification
           Process      percent of the fraudulent documents used were INS documents; 36 percent
                        were Social Security cards, and 4 percent were other documents, such as
                        drivers' licenses. During this same time period, INS determined that about
                        2,100 employers it had investigated had complied with the employment
                        verification process and did not knowingly hire unauthorized aliens, but
                        that these employers hired unauthorized aliens who used fraudulent
                        documents to circumvent the process.

                        Counterfeit employment eligibility documents are widely available. For
                        example, in November 1998 in Los Angeles, INS seized nearly 2 million
                        counterfeit documents, such as INS permanent resident cards and Social
                        Security cards, that were headed for distribution points around the
                        country.



                         P.L 99-603, 8 U.S.C. 1324a et seq.

                        Attachment I lists the 27 acceptable documents.




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                            Illegal Aliens: Fraudulent Documents Undermining the Effectiveness of the Employment
                            Verification System




                            INS has undertaken two initiatives to improve the verification process.
INS Is Taking Steps to      First, INS has started the process to reduce the number of documents that
Improve the                 employees can present to determine employment eligibility. Second, it has
Verification Process,       begun issuing new documents with increased security features that it
But Opportunities for       hopes will make it easier for employers to verify the documents'
Fraud Will Still Exist      authenticity. However, opportunities for unauthorized aliens to use
  Fraud        Exist
               Will Still   fraudulent documents to obtain employment will still exist.

                            Various studies of IRCA's employment verification process have advocated
                            that the number of documents be reduced to make the process more
                            secure and reduce employer confusion. For example, in 1990 we reported
                            that the multiplicity of documents contributed to (1) employer confusion
                            about how to comply with the employment verification requirements and
                            (2) discrimination against authorized workers. 3

                            INS first proposed reducing the number of usable documents in 1993;
                            however, INS has made little progress to date in reducing the number of
                            documents that employers can accept to determine employment eligibility.
                            In February 1998, INS issued proposed regulations to reduce the number
                            of such documents that can be used from 27 to 14. Under the proposed
                            regulations, INS plans to:

                            * Retain all eight of the documents that currently establish both identity
                              and employment eligibility, including the INS permanent resident card
                              and the various versions of INS' employment authorization card.

                            * Eliminate 9 of the 12 documents that establish identity, such as the
                              school identification, voter registration, and various military
                              identification cards.

                            * Eliminate five of the seven documents that establish employment
                              eligibility, such as the Certificate of Birth Abroad issued by the State
                              Department and the U.S. citizen identification card, a card no longer
                              issued by INS. INS proposes to retain the Social Security card and the
                              Native American tribal document and add the Arrival-Departure Record,
                              Form 1-94 for aliens authorized to work for a specific employer.

                            According to an INS official, as of July 14, 1999, comments on the
                            proposed regulations were being reviewed within INS.


                            :' Immigration Reform: Emplover Sanctions and the Question of Discrimination (GAO/GGD-90-62, Mar.
                            29, 1990).




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                         Illegal Aliens: Fraudulent Documents Undermining the Effectiveness of the Employment
                         Verification System




                         INS has also begun issuing new documents with increased security
                         features, which it hopes will make it easier for employers to verify the
                         documents' authenticity. In February 1997, INS began issuing a new
                         Employment Authorization Card with improved security features,
                         including a hologram, microprinting, and etched barcoding. In April 1998,
                         INS began issuing a newer version of the card for lawful permanent
                         residents, commonly called the green card, with improved security
                         features, including a hologram, a digital photograph, and an optical
                         memory stripe containing information on the cardholder.

                         With respect to the new security features on INS documents, this may not
                         have a significant impact on unauthorized aliens' use of fraudulent
                         documents to obtain employment. According to an INS official in Los
                         Angeles, that office has already seized counterfeit versions of the new
                         green card INS began issuing in April 1998. According to this official, the
                         counterfeit cards do not have all of the security features of the new INS
                         green card. While they are easily detectable by trained INS employees,
                         they will appear genuine to untrained employers. Consequently, they could
                         be used to obtain employment. Also, current procedures do not require
                         aliens to show employers the INS document that authorizes them to work.
                         Other widely used documents, such as the Social Security card, do not
                         have the security features of the INS documents. Further, INS plans to
                         phase in the replacement of existing versions of the permanent resident
                         card issued between 1989 and 1998 as they expire, which could take up to
                         10 years. Cards issued from 1977 to 1989 have no expiration date and will
                         remain valid until INS replaces them. Therefore, unauthorized aliens
                         seeking employment can circumvent the improved security features of INS
                         documents by simply presenting counterfeit versions of the new cards, less
                         secure versions of INS documents, or non-INS documents (e.g., Social
                         Security cards) to employers.

                         Because the Social Security card has become one of the primary
Enhancing the Social     documents to determine employment eligibility, it is important that this
Security Card for        card be a secure document. This would mean that there are strict controls
Employment Eligibility   over card issuance and that the card itself is counterfeit-resistant.
Verification Would Be    Ufrtunately, neither situation is currently true. Historically, the purpose
Costly                   of the Social Security card was to document the card holder's Social
                         Security number, not serve as a means of identifying the individual.
                         Consequently, the controls over whom the card was given to and the
                         security features built into the card have not traditionally been a priority.

                         Regarding the controls over card issuance, since 1978 SSA has required
                         applicants for original Social Security numbers to provide proof of age,


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Illegal Aliens: Fraudulent Documents Undermining the Effectiveness of the Employment
Verification System




identity, and citizenship or alien status. However, the identity data
contained in Social Security records are only as reliable as the evidence on
which they are based. Regarding security features of the card, SSA
introduced its first counterfeit-resistant card in'response to the Social
Security Amendments of 1983. 4 Since that time, the current card has
incorporated certain limited security features including use of banknote
paper, a marbleized pattern on the card that shows signs of alteration,
small multicolor discs randomly placed on the card, and printing that has a
raised effect and can be difficult to replicate. However, concerns continue
to be raised that the card's security features did not make it significantly
more difficult to counterfeit and that employers could not easily determine
a card's authenticity for work authorization purposes.

Because of these concerns, Congress in the Illegal Immigration Reform
and Immigrant Responsibility Act of 19965 (IIRIRA) required SSA to
develop cost estimates for a prototype counterfeit-resistant card made of
durable tamper-resistant material with various security features that could
be used in establishing reliable proof of citizenship or legal noncitizenship
status. In 1997, SSA estimated the cost of issuing the enhanced cards to all
277 million current number holders and provided estimates for 7 card
options employing a range of card technology features.

SSA assumed that it would use existing Social Security application
procedures to reissue all enhanced cards and establish reliable proof of the
citizenship or alien status for number holders for whom proof had not
been previously established. SSA reported that the total cost of issuing the
new cards would range from $3.9 billion to $9.2 billion, depending on the
technology selected, and would involve 73,000 work years. 6 These
technologies ranged from the use of plastic cards with multicolor,
miniprinting, and transparent holograms to digital photographs and optical
memory storage. SSA's estimates showed that processing costs for five of
the seven card options, which mainly included personnel costs, accounted
for about 90 percent of the estimated costs to issue an enhanced card. So,
regardless of the option selected, issuing an enhanced card to all number
holders would involve an enormous cost and have a significant impact on
SSA's resources.


' P.L 98-21.

' P.L. 104-208, 110 Stat. 3009-719.

' Attachment II contains a table showing the enhanced card options and associated costs for issuing
them to all number holders.




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                Illegal Ailiens: Fraudulent Documents Undermining the Effectiveness of the Employment
                Verification System




                IIRIRA also required us to review SSA's cost estimates. We found the
                estimates to be generally reasonable.7 However, we also identified the
                following alternatives to the mass reissuance of a new Social Security
                card, which could provide a more cost-effective approach to preventing
                those individuals who are unauthorized to work from obtaining jobs:

              * Issue a new enhanced Social Security card only to those who need it to
                prove work eligibility. For retired individuals who are no longer working
                and the very young who have not entered the workforce, there may be
                little advantage to issuing a new card. Also, many individuals of working
                age would not change jobs and would have no need for the card. Bureau
                of Labor Statistics data suggested this approach could have reduced the
                number of individuals "needing" an enhanced card from 277 million to an
                estimated 118 million. This option could help increase control over illegal
                workers while significantly reducing cost.

              * SSA could issue the new card only to those applying for a new Social
                Security number and those who normally request replacement cards. This
                option would also substantially reduce the cost of card issuance. But this
                option provides no new employment authorization internal controls for
                many current number holders.

                If Congress decides to change the Social Security card to enhance
                employer reliance on that document for work eligibility determinations, it
                would need to specifically provide funding to accomplish it. The Social
                Security trust funds have historically borne the cost of issuing original and
                replacement cards. However, under section 274A of the Immigration and
                Nationality Act (8 U.S.C. 1324a), payment for major changes, such as
                implementation of an enhanced counterfeit-resistant Social Security card,
                cannot be paid for by the trust funds.

                Significant numbers of unauthorized aliens can still obtain employment
Conclusions     because IRCA's employment verification process can be easily thwarted by
                fraud. INS has efforts under way to reduce the number of documents that
                can be used for employment verification purposes and improve the
                integrity of the documents it issues. However, this will not substantially
                affect unauthorized aliens' ability to obtain employment. The most
                common counterfeited documents will still remain on the list of acceptable
                documents. In addition, counterfeiters may be able to manufacture
                "passable versions" of even the most secure INS documents, thwarting

                 Social Security: Mass Issuance of Counterfeit-Resistent Cards Exopensive. but Alternatives Exist
                (GAO/HEHS-98-170, Aug. 20, 1998).




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 Illegal Aliens: Fraudulent Documents Undermining the Effectiveness of the Employment
 Verification System




 INS' hope of giving employers more confidence in the authenticity of the
 documents they review.

Providing a more secure Social Security card to all current number holders
was estimated to cost between $3.9 billion and $9.2 billion, depending on
which types of security features and data were incorporated into the card.
While alternatives exist that could reduce these costs, these options
require legislative action to move forward.

The steps being considered to improve document security could make it
more difficult for an unauthorized alien to obtain employment. But
significant numbers of unauthorized aliens can still obtain employment
because the employment verification process can be circumvented or
easily thwarted by the use of widely available fraudulent documents.

Mr. Chairman, this concludes my prepared statement. I would be pleased
to answer any questions your or other members of the Subcommittee may
have.

Contact and Acknowledgment

For further information regarding this testimony, please contact Richard
M. Stana at (202) 512-8777. Individuals making key contributions to this
testimony included Michael P. Dino, Nancy Kawahara, Tom Jessor, Roland
H. Miller III, Jeff Bernstein, and Jacquelyn Stewart.




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 Attachment I

 Current List of Acceptable Documents for
 Employment Eligibility Verification


                      A                                           B                                                      C
Documents that establish both identity         Documents that establish identity                Documents that establish employment
and employment eligibility                                                                     eligibility
U.S. passport (unexpired or expired)            Driver's license or identification card issued U.S. Social Security card (other than a card
                                               by a state or outlying possession of the        stating that it is not valid for employment)
                                                United States, provided it contains a
                                               photograph or information such as name,
                                               date of birth, sex, height, eye color, and
                                               address
Unexpired foreign passport, with form 1-551    Identification card issued by federal, state,   Certification of Birth Abroad issued by the
stamp                                          or local government agency or entity,           Department of State (form FS-545 or form
                                               provided it contains a photograph or            DS-1350)
                                               information such as name, date of birth,
                                               sex, height, eye color, and address
Alien registration receipt card with           School identification card with a               Original or certified copy of a birth certificate
photograph or permanent resident card          photograph                                      issued by a state, county, or municipal
(INS form 1-551)                                                                               authority or outlying possession of the United
                                                                                               States bearing an official seal
Unexpired temporary resident card              Voter registration card                         Native American tribal document
(INS form 1-688)
Unexpired employment authorization card        U.S. military card or draft record                  U.S. citizen identification card (INS form I-
(INS form 1-688A)                                                                                  197)
Unexpired employment authorization             Military dependent's identification card            Identification card for use of resident citizen
document issued by INS, which contains a                                                           in the United States (INS form 1-179)
photograph (INS form 1-766)
Unexpired employment authorization             U.S. Coast Guard Merchant Mariner card             Unexpired employment authorization
document issued by INS, which contains a                                                          document issued by the INS (other than
photograph (INS form 1-688B)                                                                      those listed under A list)
For aliens authorized to work for a specific   Native American tribal document
employer, unexpired foreign passport with
form 1-94 containing an endorsement of
aliens' nonimmigrant status
                                               Driver's license issued by a Canadian
                                               government authority
                                               School record or report card'
                                               Clinic, doctor, or hospital record'
                                               Day-care or nursery school record'
                                                Note: For employment eligibility verification purposes, one document from list A or one each from list
                                                B and C are required.
                                               'For persons under age 18 who are unable to present a document listed above.
                                               Source: INS, "List of Acceptable Employment Eligibility Verification Documents for Form 1-9," under
                                               interim rules, as of Sept. 30, 1997.




                                               Page 8                                                                    GAO/T-GGDMHEHS-99-175
Page 9   GAOfLr-GGD/HEHS-99-175
Attachment II

SSA's Estimates of Cost to Issue 277 Million
Enhanced SSN Cards

(Dollars in billions)
                                                                                                  Card, equipment, and
                                                                                                  number holder
Card option                  Card description                      Processing cost                correspondence cost               Total cost
1           Basic plastic with name and SSA data printed                    $3.6                           $0.3                          $3.9
            on front. There are two versions; one with and
            one without a statement concerning number
            holder's citizenship status.
2           Plastic with name and SSN data on front and                      3.9                           0.4                            4.3
            electronically captured photograph and sex -and
            date-of-birth data on back.
3           Plastic with name and SSN data on front and a                   3.9                            0.4                            4.3
            secure bar code data storage stripe to hold
            identifying information and a biometric
            indentifier on back.'
4           Plastic with name and SSN data on front and                     3.9                            5.3                            9.2
            optical data storage stripe on back that can
            store large amounts of identifying information.
5           Plastic with name and SSN data on front and a                   3.6                           0.4                            4.0
            magnetic stripe on back.
6           Plastic with name and SSN data and                              3.9                           0.4                            4.3
            photograph on front and a magnetic stripe on
            back.
7           Plastic with name and SSN data and a                            3.9                           3.4                            7.3
            microprocessor (computer chip) on front and a
            magnetic stripe and photograph on back.
                                              'Biometric indentifiers can capture a living personal characteristic such as a fingerprint in digital or
                                              analog form.
                                              Source: SSA, Report to Congress on Options for Enhancing the Social Security Card (Sept. 1997).




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