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I had the same thing happen to me with the first Yaris I looked at purchasing. I was paying cash, yet they insisted they had to have my social security number and all kinds of paperwork to sell me the car. They did mention the Patriot Act when I protested, come to think of it. I ended up leaving, and I financed a new Yaris at a different dealership instead of buying the used LB. It will cost me more, but my privacy is worth more to me - it's one thing for them to use my information if they're providing the financing, but there is no reason for it if you are paying them upfront.
Edited to add: Why do they need to confirm your identity, anyway? It's not like you're going to skip out on payment. Your driver's license should be all the confirmation they need.
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