Family Secrets: Parents Prey On Children's Identities As Victims Stay Silent
"Burdened Beginnings" is a series examining the problem of child identity theft. Other stories in the series can be found here.
Ana Ramirez rents a cramped, two-bedroom house in southern California with her husband and three young children. Someday, she hopes to buy a home.
But according to her credit report, the 25-year-old already owns a home. In fact, she has been a delinquent homeowner, at least on paper, since she was 10 years old, she said.
Ramirez said her mother stole her identity to take out a mortgage when she was a child, but failed to make timely payments and nearly fell into foreclosure. When Ramirez became an adult, she discovered her credit was trashed.
So Ramirez had a choice: She could either report her mother to police -- a necessary step to fixing her credit -- or say nothing and enter adulthood with a tarnished financial reputation.
She decided to keep quiet.
Now, her blemished record is preventing Ramirez and her husband from acquiring a home loan, she said. She feels helpless and frustrated, but out of a sense of family loyalty, she refuses to file a police report that would repair her credit.
"I get angry sometimes when I think about it," Ramirez said. "But it's my mom. I wouldn't want to do that to her."
Ramirez said she is a victim of child identity theft, a crime that is capturing the attention of authorities as young adults find their Social Security numbers have been abused for years without detection. When victims turn 18, they encounter a series of financial roadblocks, unable to acquire loans for college, cars or homes due to damaged credit.
But advocates say cases like Ramirez's are the most difficult to detect and resolve because the ones who are supposed to monitor children's credit -- their parents -- are the thieves, and victims are often unwilling to report them. Without a police report, experts say it is nearly impossible to restore a victim's good name.
An estimated 500,000 children have had their identities stolen by a parent, according to ID Analytics, which sells identity fraud protection. It is a crime of opportunity, with the culprits having total access to their children's unused Social Security numbers and the victims unaware they are victims at all.
"Why would a family member do this?" Russell Butler, executive director at the Maryland Crime Victims' Resource Center, said at a July conference on child identity theft. "Well, it's easy -- as easy as taking candy from a baby. Because you have a child, and they don't even want the candy. They don't even know they have credit."
An Unreported Crime
The concern over child identity theft comes as Americans have a greater need for clean sources of credit. Last April, 25 percent of Americans had credit scores of less than 600 -- the least-creditworthy category -- compared to 15 percent before the recession began, according to data compiled by Deutsche Bank. Therefore, the temptation to hijack a child's pristine credit may be greater than ever.
Government efforts to stop child identity theft have only created new problems.
In 1987, the federal government launched a program to encourage parents to apply for their newborn's Social Security numbers at birth so identity thieves didn't apply for them first. But the program had an unintended consequence: By issuing Social Security numbers in a predictable sequence based partly on the year a person was born, identity thieves could infer a child's 9-digit identifier based on public information, according to Alessandro Acquisti, associate professor at Carnegie Mellon University.
In response, the Social Security Administration in June began assigning a randomized series of numbers to children. But some say this may complicate future efforts to prevent child identity theft. The credit card industry, for example, relies on the older, predicable sequence to reject applications linked to Social Security numbers that appear to belong to children.
"I am concerned that it might make it a little easier for children to be victimized," said Doug Johnson, vice president of risk management policy at the American Bankers Association.
In the largest study on child identity theft to date, researchers at Carnegie Mellon University earlier this year found the identity theft rate among children (10.2 percent) was 51 times higher than among adults (0.2 percent) in the same population
The stolen identities of children were used to purchase homes and cars, open credit card accounts, gain employment and obtain driver's licenses, according the report. The study was based on data provided by Debix, which sells identity theft services and offers free scans for parents who want to find out if a credit file exists on their child.
Last year, more than 18,000 identity theft complaints were reported to the Federal Trade Commission by victims 19 and under, making up about 8 percent of all complaints. That number has remained mostly flat over the past three years.
But experts say figures on child identity theft are likely much higher because the crime often goes unreported. ID Analytics estimates more than 140,000 children are victims of identity theft each year, based on a one-year study of children enrolled in the firm's identity protection service.
Advocates say the lack of reporting is most common when parents hijack their children's Social Security numbers. The unwillingness of victims to report these cases can be found in a small survey taken this year by the Identity Theft Resource Center.
Out of 55 identity theft victims who were targeted by family members, 24 percent said they "did not feel right" about filing a police report, the survey found. An additional 13 percent said "my family is ashamed and remains in denial" and 9 percent said "my family will turn against me if I take any action against this person."
"They're really torn about whether they should do something or not," said Gabby Beltran, a spokeswoman for the Identity Theft Resource Center. "They'll say 'It's my mom' or 'It's my dad, and I don't want anything to happen to them.' A good number of them don't do anything."
Some states have stiffened penalties for parents or guardians who steal children's identities. Florida, for example, has made the crime a second-degree felony with a maximum punishment of 15 years in prison.
Still, experts say more should be done to help children sort through the time-consuming and expensive process of repairing credit fraud. Victims of identity theft spend an average of 330 hours fixing their credit and incur more than $850 in expenses, according to the Identity Theft Resource Center.
Police are often unwilling to take a report when parents use their child's Social Security number, viewing it as a domestic matter, experts say. And the child-welfare system is not equipped to handle cases of parents stealing their children's identities because children are not allowed to retain legal assistance on their own, said Butler at the Maryland Crime Victims' Resource Center. Advocates say the law should view these cases like child abuse.
"You don't have a system now that considers the financial abuse of a child as a gateway to needing assistance," Butler said. "There's got to be someone who can step into those shoes and act in the child's best interests."
A Family Secret
Parents use their children's Social Security numbers for a variety of reasons. Some use them to get jobs because they have felony convictions on their records. Others use them to apply for credit cards and utilities because their own credit is tarnished.
Last April, Maryland resident Jimmy Louis Craighead, 40, was convicted of stealing the identities of his three children -- ages 6, 4 and 2. He told a judge he and his wife were not able to get credit in their own names, so they used their children's names to get money for food, fuel and other necessities, according to the Carroll County Times.
"They have maxed out their ability to get credit, so they borrow their child's thinking, 'Oh, it's okay. I'll pay all the bills so by the time they turn 18, they'll have great credit,'" Linda Foley, co-founder of ID Theft Info Source and an expert on child identity theft, said at a conference in July. "Well, they haven't unlearned the bad behaviors that got them in debt in the first place, so at 18, the child ends up in debt."
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First Posted: 11/11/2011 7:43 am Updated: 01/11/2012 4:12 am