The Privacy Act of 1974
The Privacy Act of 1974 (Pub. L. 93-579, in section 7), which is the primary law affecting the use of SSNs, requires that any federal agency that requests your Social Security Number has to tell you four things:
1. the authority (whether granted by statute, or by executive order of the President) which authorizes the solicitation of the information and whether disclosure of such information is mandatory or voluntary;
2. the principal purposes for which the information is intended to be used;
3. the routine uses which may be made of the information, as published annually in the Federal Register, and
4. the effects on you, if any, of not providing all or any part of the requested information.
The Act requires state and local agencies which request the SSN to inform the individual of only three things:
1. whether the disclosure is mandatory or voluntary,
2. by what statutory or other authority the SSN is solicited, and
3. what uses will be made of the number.
In addition, that section makes it illegal for Federal, state, and local government agencies to deny any rights, privileges or benefits to individuals who refuse to provide their SSNs unless the disclosure is required by Federal statute, or the disclosure is to an agency for use in a record system which required the SSN before 1975. ( 5 USC 552a note). So anytime you're dealing with a government institution and you're asked for your Social Security Number, look for a Privacy Act Statement. If there isn't one, complain and don't give your number. If the statement is present, read it. Once you've read the explanation of whether the number is optional or required, and what will be done with your number if you provide it, you'll be able to decide for yourself whether to fill in the number.
There are several kinds of governmental organizations (see the list in the Short History section) that usually have authority to request your number, but they are all required to provide the Privacy Act Statement described above. The only time you should be willing to give your number without reading that notice is when the organization you are dealing with is not a part of the government.
One weakness of the Priavcy Act is that it doesn't carry any penalties. ( Bob Gelman claims there are some that haven't been exercised in court.)