You know that you need to check your credit reports regularly to look for suspicious activity. But what you might not know is that even people with no credit history, like your underage children, can become victims of identity theft. Here’s an overview of the problem and what you can do to protect your kids.
Why Identity Thieves Target Children
If you understand what identity thieves value, you’ll understand why they want children’s personally identifying information (PII). Social Security numbers (SSNs) are the most valuable piece of information since they’ve become the key to so many essential transactions in the United States. A Social Security number is either required – or will simplify the process – if you want to get a job, a driver’s license, a passport, health insurance, government benefits, a credit card, a bank account, a car loan, utility service, a mortgage and more. Children have valid SSNs that haven’t yet been used for many of these tasks, making it easy for thieves to misuse them. (Learn more in The Purpose of Having a Social Security Number.)
“It is harder and harder to protect people when we are designing systems based on convenience instead of security,” says Ondrej Krehel, founder and managing director of LIFARS, an international cybersecurity and digital forensics firm.
Many kids also have pristine credit files, and there’s usually no one keeping an eye out to make sure a child’s Social Security number or credit profile isn’t being used fraudulently. The theft of a child’s identity can go undetected for years since no one is monitoring their credit reports and they aren’t applying for loans, apartments, utilities or other things that typically result in a credit check that might reveal suspicious activity.
The younger your child, the more vulnerable he or she is, because identity thieves know it will likely be many more years before anyone notices a baby’s compromised identity than, say, a teenager’s. Being able to get away with their crimes with a low likelihood of detection until it’s too late is incredibly attractive to identity thieves.
“Children are far more likely to become victims of identity theft than adults, and the consequences can be significant, particularly because it can be difficult to remedy the problem years after the identity theft occurs,” says attorney Steve Weisman, author of “Identity Theft Alert” (Financial Times Press, 2014) and senior lecturer in law, tax and financial planning at Bentley University in Waltham, Mass. “Often, children and their families do not become aware that a child’s identity has been stolen until the child applies for a job, credit or financial aid, where their credit report becomes a factor.”
Kids’ identities get stolen in the same way adults’ identities do: data breaches, unsecured mailboxes, sensitive paperwork that’s improperly stored or disposed of, break-ins, computer viruses, email phishing scams and more. Kids’ identities are also vulnerable in unique ways – through their schools and extracurricular activities, in particular. Paperwork often asks parents to supply their child’s Social Security number, and each time you give that number out, you create another opportunity for it to be stolen. (For related reading, see Whose Fault Is Identity Theft?)
Thieves don’t even have to steal kids’ (or adults’) SSNs: They can buy them from other criminals and, in some cases, they can even guess them correctly. Since the government didn’t start assigning numbers randomly until June 25, 2011, thieves can predict real numbers assigned before that date.
How Big a Problem Is It?
We know: You’re sick of hearing about data breaches and how you need to constantly be on guard against identity theft. Now you’re supposed to worry about your kid’s identity, too? (To learn how big a threat adult identity theft is, read Are You a Target for Identity Thieves? and Identity Theft: How Much Should You Worry?)
Unfortunately, it is a threat to take seriously. Thieves are increasingly going after Social Security numbers, millions of which were exposed last year in the Scottrade, Anthem and Office of Personnel Management data breaches. There aren’t nearly as many statistics available on child identity theft as there are on adult identity theft, but a 2012 child ID theft study by AllClear ID, an identity theft protection service, searched credit, utility and employment databases and found 2,875 possible cases where someone else was using a child’s Social Security number. This number represents 10.7% of the 26,989 children whose numbers the service scanned. The study also found that children were 35 times more likely to be victims than adults. Fight back with 10 Ways to Protect Your Social Security Number.
If your child’s identity is stolen, there’s a good chance that yours has been, too, LIFARS’s Krehel says. Parents’ and children’s information are often comingled in data files for healthcare, government benefits and taxes.
Why – and How – It Works
You might think that when an adult submits a credit application using a child’s Social Security number, the sophisticated systems that process that data and decide whether to approve or deny the application would recognize that something is amiss: The applicant’s stated date of birth doesn’t match the SSN, for example. Such safeguards sometimes work for adults who already have credit files, but for kids who don’t, the system only makes sure the SSN is valid. This means an identity thief can create a synthetic identity using your child’s valid SSN and someone else’s name, date of birth and address. Someone can also take the simpler route of using your child’s name and a fake date of birth that makes him or her appear to be an adult.
The identity thief can then start applying for credit and building a good credit history that allows him or her to apply for increasingly larger loans and credit lines. Eventually, the thief defaults on all the accounts, leaving your child with an SSN that’s associated with a wrecked credit profile.
If your child’s identity is stolen, the consequences can be far reaching. He or she may be:
- unable to get a driver’s license
- unable to land a job
- haunted by a false criminal history
- pursued by debt collectors (see Protect Yourself From Zombie Debt Collectors and Dawn of the Zombie Debt)
- turned down for student loans
- declined for credit card applications
- unable to lease an apartment
- unable to lease a car or get an auto loan
With such serious potential problems, you’re probably wondering what you can do to prevent your child’s identity from being stolen and abused.
How to Prevent Child Identify Theft
Prepare to be frustrated: There’s only so much you can do to prevent your child’s identity from being compromised. There are situations in which you have no choice but to give out your child’s Social Security number, and after that, you have no control over how well the company or other organization you gave it to protects it.
Still, you can limit giving out Social Security numbers whenever possible – just because someone asks for it doesn’t mean it’s really needed. You can also take a few other proactive steps to make it harder for thieves to do extensive damage. (For more tips, see Avoid Becoming an Identity Thief’s Next Victim.)
Weisman says parents should limit the places that have their child’s Social Security number. They should also learn about the federal Family Educational Rights and Privacy Act, which can help protect the privacy of children's school records and lets parents tell schools not to share their child's information with third parties.
One thing many of us are naïve about is that a parent’s friends and relatives – and sometimes even parents themselves – are the ones stealing a child’s identity. In 2012, for example, a Nebraska woman was sentenced to six months in jail and three years of probation after using her son’s SSN to get a job because she had a felony record for forgery and theft. Keep sensitive documents locked up in your home, and if someone who could have gotten access to your child’s SSN, like an ex-spouse, suddenly seems suspiciously well off, be aware of the possibility that they might have used your child’s identity to get that Mercedes loan. (Read What to Do If Your Identity Is Stolen.)
Consider a Credit Freeze
Krehel says the protection really comes from continuously monitoring your child’s credit, or at least checking it once a year, and from setting up a credit freeze.
A credit freeze won’t stop all forms of identity theft, but it can prevent ID thieves from committing financial fraud.
A credit freeze is supposed to prevent anyone who might request a credit report on your child – like a credit card company an identity thief submitted an application to – from viewing your child’s credit report. Since the report can’t be viewed, the credit card company in this instance won’t have any information to base its credit decision on, and at least theoretically, it won’t let the thief open the account. Later in your child’s life, when he or she needs to apply for a job or a loan, you end the freeze, or temporarily lift it and then replace it for ongoing protection after the job or loan has been secured.
The problem is that you can’t freeze someone’s credit if they have no credit history – which is exactly when you want to be able to do it for a child. The credit bureaus are only required to create a credit file for a child, then freeze it, in 23 states and only if a parent requests it. To create a freeze, you have to submit a bunch of sensitive personally identifying information (PII) for both you and your child through the mail to the credit bureaus – an act that puts you and your child at risk for identity theft. You’ll have to decide whether the risk is worth it. It’s certainly not an ideal system.
You can freeze your child’s credit by contacting the three major credit reporting bureaus (Equifax, Experian and TransUnion).
You may pay a small fee ($5 or $10) to freeze each credit report if your child is not an ID theft victim.
What More Can You Do?
Unfortunately a credit freeze can’t prevent a thief from using your child’s PII to falsify a job application, get a driver’s license or pretend to be someone else when getting arrested. To monitor this type of identity fraud, you could use AllClear ID’s ChildScan service, which scans credit records, employment records, criminal records and medical accounts for your child’s Social Security number so you can learn if someone is using it who shouldn’t be.This service is different from the typical identity theft protection services that only monitor credit reports for suspicious activity. (Learn more in Identity Theft Protection Services: Worth Having?)
It’s also essential to teach children about online safety. Explain the risks in an age-appropriate way and make sure they’re well-informed about what information they shouldn’t be sharing and when it isn’t safe to click on a link or download software to a computer, smartphone or tablet.
The Bottom Line
Child identity theft is a significant problem. While you don’t have much control over it, you can be aware of the problem and the steps you can take to minimize it or detect it early. Give out your child’s Social Security number as infrequently as possible, consider freezing his or her credit and keep an eye out for suspicious activity. Be even more alert as your child prepares to apply for a job or a loan so that if there’s a problem, you have ample time to clean it up and allow your child to get on with life.