Playing house is all fun and games, until your eight-year-old defaults on their second mortgage…
The Identity Theft Resource Center, a non-profit organization dedicated to identity theft education, experienced a 300 percent increase in child identity theft inquires and reports in 2014.
Adults have become well aware of the financial burdens identity theft can create, but only just recently has the same attention been placed on the consequences and emerging incidence rate of child identity theft.
So what’s a concerned parent to do? Let’s start from square one.
What is child identity theft?
Child identity theft occurs when anyone unlawfully uses a child’s personally identifiable information, like their Social Security number (SSN), for personal or financial gain.
This includes opening credit cards or loans, securing employment (usually to hide a criminal record), obtaining medical services or evading detection from law enforcement using the child’s information.
Personal information used to overtake a child’s identity is often stolen through personal theft, data breaches or via a family member who has hit hard times.
How thieves get away with it
There are relatively few safeguards naturally in place to protect a child’s SSN.
A thief just needs to pair their name and date of birth with the child’s SSN to create a brand new credit identity, this method is known as synthetic identity theft. Because children have no credit history, creditors lack a vital reference point from which to verify a criminal’s SSN.
The further a thief goes to perpetuate their crime — building credit, opening long-standing accounts, etc. — the more validity they provide creditors and the more entangled their personal data and the child’s become.
Impact on children
Most child identity theft isn’t detected until victims apply for credit themselves, typically as they enter college or the workforce as a young adult.
This means children are in for a rude awakening as they are inexplicably denied for housing, financial aid, student loans or credit cards. Furthermore, children might face legal issues or trouble finding a job if the thief falsely provided the child’s information instead of their own at the time of an arrest.
Because of the extended period of data abuse, child identity theft is exceptionally difficult to repair. This could mean postponing major life events, such as entering college, starting a new job or moving out.
Take immediate action to protect your child’s data if you notice these signs of child identity theft.
- Pre-approved credit cards. Never assume a pre-approved credit card or loan offer in your child’s name is just a mix up at the credit company; often it’s a sign your child’s credit file is active.
- They have a credit report/score. A credit report is only established after credit is opened using a particular SSN. If you don’t have credit, you won’t have a report.
- Rejected for government benefits. An identity thief may already be enrolled in government benefits, including Medicare, or may pollute the child’s record with misinformation (i.e. wrong age or income) making them ineligible to receive assistance.
- Collection calls or IRS requests. Independently investigate any collection calls or IRS requests for your child by pulling their credit report.
- They’re already claimed as a tax dependent. If the IRS sends notice that your child was already claimed as a dependent on someone’s income taxes that means their information was used to file a fraudulent tax return; alert the IRS immediately.
- Unfamiliar medical records. Review your insurance providers’ Explanation of Benefits statement for unfamiliar tests, procedures or drugs. These red flags are indicative of medical identity theft.
Protect your child’s identity with a credit freeze
Besides taking standard precautionary measures — like safeguarding your child’s personal data, promptly responding to data breach notifications and attempting to pull their credit report — you may consider placing a credit freeze (security freeze) on your child’s credit file.
A credit freeze prevents your child’s credit file from being shared with potential creditors; so new lines of credit cannot be opened in their name.
Currently, there are no federal laws regarding credit freezes for minors and, as a result, not all bureaus allow parents to freeze a child’s credit report. However, some state laws have been enacted to empower parents to establish a credit freeze.
The following states allow credit freezes for minors: Arizona, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Michigan, Montana, Nebraska, New York, Oregon, North Carolina, South Carolina, Tennessee, Texas, Utah, Virginia and Wisconsin. Some require a fee ranging from $3 to $10.
Equifax is the only major credit bureau that allows a credit freeze regardless of state law. Experian won’t place a freeze unless a child’s credit report has already been created. However, a child wouldn’t have a report unless they’ve already a victim of child identity theft. TransUnion has a Child Identity Theft Inquiry form that allows parents to see if their child has been victimized.
Lift a credit freeze before your child applies for credit of their own.
“My child’s identity has been stolen”
If your child is already a victim of child identity theft, please report the incident to the FTC and contact each of the three credit reporting bureaus directly. You will need to work with each of the bureaus to remove incorrect information from your child’s credit report.
The views and opinions expressed in this article are those of EZShield Inc. alone and do not necessarily reflect the opinions of any other person or entity, including specifically any person or entity affiliated with the distribution or display of this content.