IMMIGRATION AND NATURALIZATION SERVICE
REPLACEMENT OF RESIDENT ALIEN IDENTITY CARDS

Audit Report 97-06, (1/97)

TABLE OF  CONTENTS

AUDIT RESULTS

FINDINGS AND RECOMMENDATIONS

I. A SINGLE VALID IDENTITY CARD IS NEEDED FOR PERMANENT RESIDENT ALIENS

Recommendations

II. THE IDENTITY CARD REPLACEMENT PROCESS COULD BE STREAMLINED

Recommendations

III. COST-BENEFIT ANALYSES ARE NEEDED TO DETERMINE OPTIMAL CARD PRODUCTION CAPACITY

Recommendation

IV. THE FUTURE OF IDENTITY CARDS

STATEMENT ON COMPLIANCE WITH LAWS AND REGULATIONS

SCHEDULE OF DOLLAR-RELATED FINDINGS

APPENDIX I - OBJECTIVES, SCOPE AND METHODOLOGY AND BACKGROUND

APPENDIX II - INS RESPONSE TO DRAFT REPORT

APPENDIX III - OIG AUDIT DIVISION ANALYSIS AND SUMMARY OF ACTIONS NECESSARY TO CLOSE REPORT

AUDIT RESULTS

The Immigration and Naturalization Service (INS) issues identity cards to assist in providing and controlling immigration benefits and services to legal resident aliens. Historically, these cards have been highly susceptible to fraud and have been used to illegally obtain public benefits and employment.

In FY 1995, the INS had 19 versions of identity cards in circulation. Seventeen versions expired in March 1996. One of the remaining versions expires 10 years from issuance, while the other version does not expire. In FY 1995, approximately 10 million cards were in circulation and about 700,000 applications for replacement cards were processed. The INS charges a $75 fee for each replacement application. In FY 1995, fee collections for replacement applications totaled about $52 million.

In October 1995, the INS awarded a 3-year contract, for a maximum of $275 million, for the purchase of a system to produce several new types of cards at INS Service Centers. One of these cards will be a new resident alien identity card. The INS expects to begin producing the new identity cards in 1997. The purchase of this equipment is part of the INS' $2.3 billion automation initiative designed to overhaul management information systems. Our audit, which focused on identity card replacement, found that:

• If the INS continues to use identity cards as the primary means for identifying and controlling benefits and services, one secure version of the card should be used. In our judgment, unless the two current versions of the card are replaced with one secure, verifiable card, the 10 million older identity cards will continue to be counterfeited and used to illegally obtain employment and public benefits, costing the taxpayers millions of dollars.
• Streamlining the card replacement process could yield an estimated $45 million in funds that could be more effectively used, reduce the 6 months to 1-year waiting period, improve the level of service, and eliminate the use of temporary stamps, which promote fraud through counterfeiting.
• The INS has not performed a cost-benefit analysis on production equipment for the new card. Without analysis to determine the most effective use of program funds, the INS may purchase equipment with the capacity to produce about 8 million cards in excess of anticipated needs. Based on the equipment contract, the cost of the excess production equipment may be over $7 million.
• While the INS continues to rely on an identity card as the cornerstone of its verification system, future events may limit the usefulness of the card. The INS is in a difficult position because political issues and technological advances continually change, which could result in the need for less technologically advanced cards, or no cards at all. In our judgment, the INS should begin to consider alternatives to the use of cards as the primary means of establishing resident alien identity.

These matters are discussed in greater detail in the findings and recommendations section. The objectives, scope and methodology, and background information are contained in Appendix I.

FINDINGS AND RECOMMENDATIONS

I. A SINGLE VALID IDENTITY CARD IS NEEDED FOR PERMANENT RESIDENT ALIENS

The INS has recently completed an 18-year process to issue replacement identity cards1 for 17 easily counterfeited versions of the card, thereby invalidating about 1 million cards. However, two versions of the identity card remain valid and account for an estimated 10 million cards in circulation. Of these cards, 3 million were issued without an expiration date, and an estimated 7 million are valid for 10 years after issuance. The INS plans to develop and issue a new version of the Alien Resident Card (ARC)2 by 1997, but has no formal plan to replace the 10 million cards in circulation with the new card. As long as more than one version of the identity card is valid, older cards with fewer security features will continue to be counterfeited and used fraudulently to obtain employment and public benefits.

The November 1994 INS strategic plan, Toward INS 2000, Accepting the Challenge, cites deterrence of illegal immigration as a goal to be achieved by reducing the use of fraudulent documentation. The development of a plan to replace the current identity cards with the proposed card will help the INS meet this goal.

The INS has issued identity cards since the early 1950s to control immigrant benefits and services available to legal resident aliens. By 1975 there were 17 versions of the identity card in use. This caused INS officials to express concern about the ability of INS inspectors to recognize valid cards. Adding to their concern was the possibility that Congress would enact employer sanctions legislation requiring the nation's employers to verify that employees hired are eligible to work in the U.S. As a result, the INS determined that the 17 versions of the card would have to be replaced with one card to facilitate recognition of genuine documents by INS inspectors and employers. The 1986 Immigration Reform and Control Act (IRCA) required validation by employers of prescribed documents as proof of employment authorization, and verification by government agencies of public benefits eligibility to INS databases.3

In 1992, the INS implemented a plan to replace all 17 versions of the I-151 card with the I-551 card. The INS has considered, but not yet developed, a similar plan to replace the two versions of the 10 million I-551 cards currently in circulation.

At the time of the audit, the INS had 17 versions of the I-151 card, and two versions of the I-551 card in circulation (see Table 1).

TABLE 1

Source: Immigration Card Facility (ICF) data

As detailed in the table, the I-151 card became invalid on March 20, 1996, reducing the number of valid identity card versions from 19 to 2. However, an estimated 3 million cards issued without expiration dates will be valid indefinitely and an estimated 7 million cards are valid for 10 years after issuance. Production and issuance of the proposed card is scheduled to begin in 1997. Consequently, three versions of the identity card will be in circulation until 2007. Thereafter, two versions will be in circulation, until those who hold the older version of the I-551 card become naturalized citizens, leave the U.S., lose their card, or die.

Fraudulent Use of Documents

The identity card is proof of immigration status and eligibility for employment and public benefits. Older cards with fewer security features are often counterfeited and fraudulently used to obtain employment, public and immigration benefits. Lack of public and INS confidence in the security of the identity card has hampered the INS' ability to enforce immigration laws, particularly those that pertain to employer sanctions.

To gain a sense of how widespread the use of fraudulent documents is, we examined information maintained by INS fraud and employer sanctions investigation units. Since INS does not consolidate this information in a comprehensive database, we examined individual case files at selected INS district offices (see Appendix I for sampling methodology details). From the case files, we determined that 69 percent of the fraudulent documents confiscated were counterfeit versions of the I-151 and I-551 cards (see Table 2).

TABLE 2

Source: INS Investigative case files, 1990-1995
*Birth certificates, drivers' licenses, passports, social security cards

In addition, we selected 160 employer sanctions cases for review. At district offices in Atlanta, Dallas, Chicago, Los Angeles, Miami and New York, we found fraudulent documents were used to obtain employment in 40 of the 160 cases examined. As shown in the following graph, 68 percent of the fraudulent documents used were I-151 and I-551 cards.

* Birth Certificates, Drivers' Licenses, Employment Authorization Documents, and Passports

Without a comprehensive INS database we could not determine the overall magnitude of fraudulent document use; however, in our sample, the majority of documents used fraudulently were counterfeit I-151 and I-551 cards.

Replacement of Multiple Versions of the Identity Card

In our judgment, the replacement of the two current versions of the I-551 card with one secure, easily recognizable card would aid those who must determine the validity of identity cards. The replacement of previously issued I-551 cards with the new ARC will enable the INS to avoid repeating the difficulties encountered when the INS had 17 valid versions of the I-151 card in circulation for almost 20 years. One card will facilitate recognition of genuine cards, thus alleviating the confusion of inspectors and employers who must verify card validity. One card will decrease the proliferation of fraudulent use that multiple versions encourage. The decrease in fraudulent use will increase the overall integrity of the identity card system.

INS officials have stated that the replacement of cards issued without expiration dates between 1977 and 1989 may begin in 5 years; however, there is currently no formal plan for the replacement of all valid identity cards with the ARC. In our judgment, with the onset of production of the ARC, the INS should replace all existing identity cards in order to meet the strategic plan's goal of a single identity card in circulation.

INS Should Reevaluate the 10-Year Card Expiration Date

As previously stated, the INS began issuing identity cards with 10-year expiration dates in 1989. According to a 1986 Study and Evaluation of Identification Technology, expiration dates negate the necessity of future recall programs, significantly increase security by ensuring that features incorporated in the card will not be compromised, and enhance the recognition and verification capabilities of examination personnel by forcing updates to the biographical and biometric data incorporated in each card. INS Examinations officials stated that the 10-year expiration period was related to the number of years immigrants usually waited before becoming naturalized citizens.

Technological advances and card wear and tear over a 10 year period must also be considered. Rapid changes in card data storage methods, security features, and materials used for card production may result in a need for greater flexibility and shorter expiration periods.

The Integrated Card Production System (ICPS)5 contract requires that the new card have a 10-year useful life. Information provided to the INS indicates that the known life of the base card material and optional security features to be used in the ARC is 3 to 5 years. We noted that the materials to be used in the ARC are similar to those used in drivers' licenses, which usually last about 4 years. In a Congressional subcommittee hearing on March 3, 1995, the Social Security Administration Commissioner noted the GAO's finding that plastic cards wear out and must be replaced every few years. A further consideration is that some of the security features planned for use in the proposed card may have life expectancies well under 10 years.

For these reasons, we believe a 10-year expiration period may be too long. In our judgment, the INS should consider a reduction of the expiration period for the proposed identity card.

INS Automated Databases and Card Replacement

An additional benefit of card replacement is the ability to update databases with current information obtained from card applications. This should increase INS database accuracy. Increasing reliance on automated databases to verify eligibility for public benefits and employment requires the maintenance of accurate database information. Historically, INS databases have been reported to be inaccurate and insufficient to the needs of the INS (see Appendix I for report synopses).

* * * * *

We discussed this finding with INS officials and they generally concurred with the recommended replacement of existing identity cards with the proposed new card. However, INS officials expressed concern whether all 10 million cards in circulation could be replaced by FY 2000. Instead, INS officials suggested an incremental plan to replace all cards in circulation by the year 2007. The officials stated that the increased vulnerability of the system created by using less secure cards until 2007 could be mitigated by increasing the use of the Telephone Verification System (TVS)6 and by other means. Additionally, INS officials stated they will determine the feasibility and desirability of reducing the 10-year card validity period for the proposed replacement card.

In our judgment, if INS continues to use identity cards as the primary means for identifying and controlling benefits and services, one secure version of the card should be used. To accomplish this, the two current versions of the card should be replaced by the proposed card as quickly as possible. The 3 million I-551 cards without expiration dates are more vulnerable to fraudulent use, and therefore should be replaced with the proposed card by FY 2001. The remaining 7 million I-551 cards with 10 year expiration dates should be replaced with the proposed card as soon thereafter as possible. Timely card replacement will increase database accuracy and improve the integrity of the identity card system. When multiple versions of the identity card are replaced with a single card, the INS may begin to rely on the enhanced security features of the proposed card, with the knowledge that counterfeiters must now attempt to emulate the sophisticated features of the new card, rather than target older cards with less advanced security features.

Recommendations

We recommend that the Commissioner, INS:

1. Develop a plan and replace all I-551 cards without expiration dates with the proposed card by FY 2001.

2. Develop a plan and replace the remaining I-551 cards, as soon thereafter as possible, with the proposed card.

3. Shorten the 10-year expiration period for the proposed card.

1 For the purpose of this report, we have used the collective term "identity card" to refer to permanent resident alien cards unless specific reference is made to the I-151 card, the I-551 card, or to the proposed ARC. Three identity card samples are shown on page 33 of this report.

2 The proposed card is referred to as the "ARC" in the Integrated Card Production System (ICPS) contract, and the "ICPS Card" by INS officials.

3 INS developed the Systematic Alien Verification System for Entitlements (SAVE) to provide alien status verification information to benefit granting agencies responsible for administering unemployment compensation and other federal benefits.

4 The Immigration Card Facility is located in Texas and is currently used to produce identity cards. The equipment is government owned and contractor operated.

5 The ICPS will replace the current Immigration Card Facility in Texas.

6 An INS program that allows an employer to verify over the telephone that the identity card presented by a job applicant is valid.

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