Most people are acutely aware of the need to protect their identities, but parents may not realize that their children face the same threats. Child identity theft is dangerous because a child’s credit history is basically a blank slate, and the probability of discovery is extremely low because most parents don’t monitor their child’s identity or credit history. In many cases, the theft may not be identified for years until the child applies for a student loan, takes out a credit card or makes a major purchase requiring a credit check.
Sometimes, parents are lucky and realize there might be a problem when they start getting calls or notices from bill collectors for unpaid balances on cars their child can’t possibly own or credit cards that haven’t been opened by anyone in the family. For children who don’t find out about the problem until they are adults, the results can be devastating.
The number one identifier usually compromised is the child’s Social Security number. According to a study by Carnegie Mellon CyLab, Social Security numbers are particularly valuable to thieves because they can be paired with any name and any birthdate, something prized for anyone involved in illegal immigration. They can be used to apply for jobs, a mortgage, a driver’s license, utilities, phone and other services. Alessandro Acquisti, a CyLab researcher, says their investigation found that “criminals are increasingly targeting minors’ (even infants’) SSNs for identity theft, and the SSNs of younger U.S. residents are much easier to predict than the SSNs of those born before the 1990s.”
Identifying information is frequently stolen by someone close to the child, a family member, care giver or close family friend. The risk of child identity theft seems to be higher in lower income households. A 2012 Child Identity Fraud Report by the Identity Theft Assistance Center found that 50% of the households affected by child identity theft had incomes under $35,000, while only 10% of households with incomes over $100,000 reported problems with theft.
When a child is victimized by this type of theft, it can take a year or longer to resolve the issues associated with it, and according to the Child Identity Fraud Report, child identity fraud is much harder to resolve than adult fraud.
Here are some factors to keep in mind to protect your child’s identity.
1. Keep all personal information in a safe place. This includes Social Security numbers, birth certificates, passports and children’s birth dates. Only share the information with people whom you trust and ask them how it will be used, why they need it and how they will dispose of it. Don’t share any information through an unsecured wireless connection in a public place.
Schools may request Social Security numbers or other personal identifying information. Ask if this is necessary or if other information can be used to identify the child.
2. Talk to your children about sharing information with outsiders. Teach them not to post information on the Internet or social media sites, not to give out information over the phone or to anyone who asks them for it.
Tell them about scams they might encounter online and teach them to protect their passwords and logins for sites.
Protect computers from malware and spyware, and make sure to keep virus software up to date.
3. The Federal Trade Commission says that some signs that your child’s identity may have been compromised include:
- Calls from collection agencies
- Bills from credit card companies or medical providers
- Credit card offers for your child
- Bank checks in the child’s name
- Requests from the IRS or Social Security Administration confirming that your child is employed
- A denial of government benefits because they are being paid to someone else with the same Social Security number
- A notice from the IRS saying your child failed to pay any taxes even though he or she is not employed
- A notice from the IRS that your child’s name and Social Security number have been used on another tax return
4. If your child’s identity is compromised, here are the steps to take:
Step 1: Contact the local police, report the crime and show them any evidence you have collected such as credit card bills, collection notices, or letters from the IRS or other agencies. Get a copy of the report and not just an investigation number because you will need to show this to other parties.
Also consider filing a report with the Federal Trade Commission. This can be done electronically and the FTC will provide a completed complaint known as an Identity Theft Affidavit.
Both reports may be needed as you go through the process of resolving the various credit issues.
Step 2: Alert each of the credit reporting companies: Equifax, Experian and TransUnion and explain that your child is a minor. You will have to provide documentation of this.
Request a copy of any information they have regarding credit issuers or collection agencies that were contacted by the fraudster. Contact each company and explain that the victim is a minor. They may request a copy of the police report that was filed.
Ask the credit reporting companies to remove all accounts, inquiries and collection notices from your child’s credit file.
Step 3: Place an initial fraud alert on your child’s record with one of the reporting agencies. When an alert is placed with one company, that entity will notify the other two. A fraud alert advises any creditors that they need to verify an individual’s identity before extending any credit. When they find out that a minor is involved, they usually will not extend credit to the individual making the request.
Another option is to place a credit freeze on the child’s account so creditors cannot get a copy of the credit report. This makes it more difficult for the thief to open new accounts. It will be important to lift the freeze before the child applies for any student loans, jobs or bank accounts.
Step 4: Monitor your child’s credit report to see whether any new accounts were opened. If a child has bank accounts, monitor those to make sure no funds were dispersed and that it is flagged as being compromised by identity theft.
5. If a child’s identity is stolen, the Social Security Administration may assign him or her a new number, but usually only if the child is in grave danger, is being harassed or abused when using the original number, or if it is being used illegally. Getting a new number won’t solve all the problems or give a child a fresh start, but it will make it easier to limit fraud for the new number.
Parents also should watch their medical bills to ensure that the number has not been used to secure services from medical providers that are not for the child. If there is an invoice for unauthorized services, contact the medical provider immediately, get a copy of the medical records and ask the provider to separate any charges for the child from the rest of the family’s.
If the imposter has used the child’s Social Security number to secure employment, contact the Social Security Administration and request a copy of the “child’s work statement – form 7040.” This identifies all the places the child has “worked” and will need to be amended.
The bottom line is that a child’s identity needs to be guarded even more carefully than an adult’s. Fraudsters know that it’s highly unlikely that the crime will be noticed for an extended period of time. Taking the steps early to prevent fraud will go a long way toward averting years of credit damage for your child.