Identity theft is damaging to all its victims, yet when a child is the casualty, it can be especially devastating. Unfortunately, children are powerless to protect themselves — so they must rely on their parents' watchful eyes and much-needed legislation to help them.
According to the Federal Trade Commission, in 2005 there were 11,601 identity theft reports on behalf of victims under 18. Minors are ideal targets for identity thieves because the younger the victim, the more time there is to use the child's identity. Crime can go undetected for years as most parents and children are unlikely to check their credit file until they turn 18 and begin to take on credit of their own.
What is the damage?
A minor's financial credit can be damaged well into the adult years. Not only can victims be denied credit card or a car loan, they may also be forced to delay educational goals if student loans will not go through, or miss out on job opportunities if employers require a credit check. It may take months to clean up a credit report, long after the position is filled.
Identity theft isn't always just an issue for the victim; it often becomes society's burden. An identity thief can use young victims' social security numbers to apply for credit or loans and claim children as dependents on tax returns to reduce income taxes. The information can also be sold to someone looking for a social security number to get a job, or used to assist a criminal looking for a fresh start.
Who are these thieves?
It's not always faceless, shadowy figures working under the cover of darkness, stealing identities. Sometimes it is the child's own parent. Some parents will use their child's identity to set up an account with a utility company. Others will establish credit card accounts or take out loans in their child's name, if they are unable to qualify on their own. If parents are unable to keep up with payments, the child's credit is ruined. But the damage is rarely discovered until children apply for their own credit.
When a thief applies for credit using a child's social security number, the credit reporting agencies (CRAs) do not cross-check birthdates. When a social security number is used for employment, the Social Security Administration (SSA) does not cross-check the age of the worker or report the age to the employer. Adding to the problem, the SSA doesn't monitor or investigate fraud of social security numbers, even when there's reason to believe that more than one individual is using the same social security number or that the social security number in question belongs to a minor.
Most identity thieves have found a number of ways to beat the system, so protecting our youth ultimately lies in the hands of lawmakers. Legislation that automatically freezes credit files of those under 18 years of age could ensure that no one can receive credit in a minor's name until he or she is of age. In most jurisdictions, those under the age of 18 cannot typically enter into a financial contract without parental approval. So if someone is applying for credit in the minor's name, chances are it is an identity thief looking for the next victim.
How parents can help
—Check your child's credit report. The credit reporting agencies do not knowingly maintain credit files on children, so unless the minor has been an identity theft victim, a check into the child's credit should turn up nothing until the age of 18.
To obtain a credit report, a parent must contact the credit bureau by forwarding their child's complete name, address, date of birth, as well as a copy of their birth certificate and social security card. The parent also needs to send a copy of their own driver's license or other government-issued proof of their identity, which includes their current address. A current utility bill containing the current address is also required. This information must be mailed to the credit reporting bureaus at the following addresses:
P.O. Box 740256
Atlanta, Georgia 30374
P.O. Box 9532
Allen, Texas 75013
P.O. Box 6790
Fullerton, CA 92834
—Check for an earnings statement from the Social Security Administration. Unless the child is an identity theft victim, there should be no earnings associated with the social security number. You can get your earnings statement by requesting it online at www.ssa.gov, calling the Social Security Administration at (800) 772-1213, or visiting your local office.
—Safeguard social security numbers.Shred anything with a social security number and keep all social security cards safe at home.
—Warn your children not to give out personal information unless absolutely necessary. Explain to them that if they are asked, especially via the internet, not to oblige.
—Be leery of credit offers to your children. If you see anything suspicious, notify the credit bureaus then check your child's credit report to find out if someone is using their credit.
—File a complaint with the Federal Trade Commission. If you suspect your child's identity has been hijacked, contact the FTC at www.ftc.gov or call (877) IDTHEFT.
Everyone pays the price when a child's identity is stolen. With vigilance on the parents' part, it is possible to protect the innocence of our youngest members by spotting fraudulent activities while they are happening.
Michelle Pastor is an Accredited Financial Counselor and Identity Theft Specialist. She consults for Truston, an identity theft protection company. You can try Truston's free ID theft prevention service at www.mytruston.com