Identity Theft: Do You Know Where Your Child’s Credit Is?
Identity theft is happening at epidemic proportions these days, a crime that costs consumers, credit card companies, and financial institutions billions of dollars every year. Fortunately, awareness has spread about this financially devastating crime, spurring many consumers to monitor financial affairs and credit report activity more closely.
However, despite the added care taken by the average consumer, rates of identity theft continue to rise, frequently perpetrated against the most vulnerable members of our society, such as the elderly population and, in increasing numbers, our children. Many parents, while they have become much more aware of the necessary precautions against the theft of their own identity, have yet to realize the need to guard against this hazard on behalf of their children.
Identity thieves, always on the prowl for the easiest victims, have found a new and very profitable niche in their business. Children have proven to be very good targets for these criminals on a number of levels. Most children have no credit accounts open in their own names until they reach college age, and credit reports are not established until credit is applied for and used.
There is no way for credit reporting agencies to verify the age of new credit applicants, so the age listed in the first application for credit is accepted without question. An identity with no credit report attached to it makes the work of identity thieves easy as they establish a credit history under the assumed identity. Also, since victims and their guardians are not aware of the existence of any credit reports in the name of the child, obviously they are not monitored, so these criminals very often get away with using these accounts without discovery for much longer than they would if the identity exploited was that of an adult.
According to Federal Trade Commission Reports, the number of people who have their identity stolen as children is rising, with 2006 statistics showing 10,835 cases reported, as compared to 6,512 cases in 2003. But, even those numbers probably do not reflect the true amount of child identity theft, as cases often are not found and reported for 10 years or more. The most frequent means by which child identity theft is discovered is by credit denial when a young person applies for that first credit card or student loan. Often the child’s personal information has been exploited for many years by that point. Imagine the debt that could accumulate by the time a child has reached college age, if his or her identity has been stolen as a baby or toddler.
The issue of child identity theft is one that many have attributed the changes in federal tax law, mandating the use of children’s social security numbers on tax forms in order for parents to claim them as dependents. This has forced parents to have these numbers issued to their children much earlier, as the IRS requires social security numbers to be provided for all children over the age of one. Since these changes took effect in 1986, children’s social security numbers have been requested as identification for an ever growing range of purposes, such as school related forms, sports team registration, and medical care. As children are now issued these numbers much earlier than in past years, when children typically were not registered until approximately 14 years of age, the window of opportunity available for identity thieves to exploit them is much larger.
Many victims find, as they reach the age to strike out on their own financially, that they have two names attached to their social security number, their own of course, and that of a total stranger. In other, cases they find that a credit report in their name reflects thousands in unpaid debt, run up over years of fraudulent use of their personal information. While financial crimes are the most commonly reported in identity theft cases, impostors have used the identity of a child to obtain prescription drugs, or fugitives have used these assumed identities to avoid arrest. Some even find that their identity thief has accumulated a criminal record in their name, causing the victim to have arrest warrants filed against them. Driver’s licenses sometimes are granted to the identity thief, or the victim’s information can be sold to illegal aliens to provide them with the identity of a citizen, helping them gain employment or apply for government aid programs.
For a young person, just establishing their own financial identity, these crimes can be particularly devastating. Victims who find out that they have been hit by identity theft as they apply for student loans have had to delay school until the financial mess created by their criminal impostor has been straightened out. Career plans have been delayed by identity theft, as victims are denied employment, or even fired from positions already obtained due to the fraudulent activity perpetrated by the identity thief under names. Rental applications are often denied on the basis of poor credit, making housing more difficult to obtain for a young person who has been the victim of identity theft. Many have had to change their social security numbers to protect themselves from being plagued by further financial crimes, and many others spend years attempting to remove the taint from their credit histories.
Among the signs for parents to watch for that can indicate that their child may have become one of the growing numbers of childhood identity theft victims are promotional mailings, such as pre-approved credit offers from credit card companies, car dealerships, and financial institutions. While these advertisements are often sent to minors by mistake, parents should never assume that this is the case, especially if these promotions are received frequently. Bills or collections notices arriving in the mailbox or by phone in the name of your child can be an indication of trouble, as can a denial when you attempt to open a bank account for your child’s college fund.
Parents who order their own credit reports once a year for the purpose of monitoring for identity theft should also request that the credit reporting agency in question check for the existence of reports in their children’s names. If there are none, it is reasonably safe to assume that identity theft has not become an issue, although some accounts may not show on a report until they have become delinquent, so it is wise to check regularly. However, if reports are found, immediate action should be taken to protect the financial future of your child. Creditors listed on the report should be contacted to report these transactions as fraud, and police reports filed. Information on these fraudulent accounts should be passed along to police to aid in their investigation.
Unfortunately, as more adults thwart identity thieves with increased vigilance over their financial affairs, many have sought out the identities of minors as an easier target. Taking advantage of the huge window of opportunity that exists between the time social security numbers are issued to children and that first application for credit by young adults, these criminals have found a very lucrative area in which to operate, adding yet another type of predator to the list of many that parents must protect their children against as they grow into adulthood.
Sharon Secor writes regularly for a broad range of publications and websites, including Lenders Mark and Direct Lending Solutions, where further information about protecting yourself and your loved ones from identity theft is available.