"Burdened Beginnings" is a series examining the problem of child identity theft. Other stories in the series can be found here.
When Jennifer Andrushko applied for public aid two years ago, a state employee entered her son Carter's Social Security number into a computer and discovered something strange: The boy appeared to have been earning wages for the past eight years.
"I thought, 'How could this be happening? He's only three years old,'" Andrushko said.
It turned out an undocumented immigrant had been using Carter's number to acquire jobs since before he was born. But Carter proved relatively fortunate. Unlike many child identity theft victims who do not realize their credit is ruined until they reach adulthood, his case was caught while he was young, giving him time to recover his good name.
In Carter's case, the crime was foiled by a unique campaign underway in Utah to eradicate the growing problem of child identity theft. The state cross-references an employment database with a list of children receiving public assistance to reveal people who have used children's Social Security numbers to secure employment. Since 2007, Utah's checks have found "thousands" of instances of child identity theft, including one in which nine people used a nine-year-old's Social Security number to gain employment, according to Utah Assistant Attorney General Richard Hamp.
Utah's successful efforts highlight the existence of potentially potent responses that can be wielded to limit the problem of child identity theft, an emerging crime that leaves young adults with tattered financial histories. But such efforts remain patchy and scarce, providing thieves with substantial opportunities to tap into the pristine credit histories of children, experts say. Parents too willingly hand over their children's Social Security numbers to schools and health care providers, and these institutions are not sufficiently vigilant about preventing the data from falling into malevolent hands. One agency alone -- the Social Security Administration -- could significantly reduce the vulnerability by making it easier for credit agencies to discern that a given Social Security number belongs to a child, experts say.
"All of us have a little bit to do with solving the problem...We are no longer going to passively hand our children over to bad guys, who are only focused on exploiting their good names," Michelle Dennedy, chief privacy officer at the security firm McAfee, said at a July forum on child identity theft.
Last year, more than 18,000 cases of child identity theft were reported to the Federal Trade
Commission, compared with about 6,500 cases in 2003. The real figure, however, is probably much higher because the crime often goes undetected, experts say. ID Analytics estimates that more than 140,000 children are victims of identity theft each year, based on a one-year study of those enrolled in the firm's identity protection service.
In the largest study on child identity theft to date, researchers at Carnegie Mellon University found that 10 percent of children were victims of identity theft, compared with less than 1 percent of adults. The study, which was published this spring, analyzed more than 800,000 records -- including 40,000 belonging to minors -- compromised by data breaches in 2009 and 2010. The data was provided by the credit monitoring service Debix.
The stolen identities were used to purchase homes and cars, open credit card accounts, gain employment and obtain driver's licenses, the report found. The youngest victim was five months old. In one case, eight people were suspected of opening 42 accounts and racking up more than $725,000 in debt using a 17-year-old's Social Security number.
Thieves now exploit a gap in the system used by the three major credit bureaus to check consumer credit. When the bureaus pull reports, they look for matching names, birthdates and Social Security numbers. But identity thieves escape detection by pairing a child's number with a different name and birth date, creating the appearance of a consumer who is applying for credit for the first time. Debix says it recently ran credit reports on 381 cases of confirmed child identity theft and found that credit reports only turned up fraudulent activity in four cases, or 1 percent.
Experts say the Social Security Administration could fix this flaw by allowing companies to validate whether a given Social Security number belongs to a child. Since 2008, companies have been able to check this information with the Social Security Administration, but the agency charges a $5,000 fee upfront, plus $1 for each check, because the service is not part of the agency's mission, according to agency spokeswoman Kia Green.
Bo Holland, chief executive at Debix, said companies are likely unwilling to pay those fees, so Congress should pass a law that funds the agency to provide the service at no charge.
"It would stop every one of these attacks we've seen," Holland said.
Meanwhile, unique partnerships are forming in a growing effort to stop child identity theft. In January, Utah officials plan to team up with TransUnion, a credit bureau, to launch a new program aimed at catching identity theft of all children in Utah, not just those who receive public aid.
"It should effectively shut down people opening credit on kids' numbers," Hamp said.
Some also say lenders should be more diligent by raising questions about suspicious loan applicants -- such as older applicants with thin or empty credit files -- and requiring more documentation to qualify for loans.
"How can somebody open up any kind of account with just a name and Social on its own?" Stuart Pratt, president of the Consumer Data Industry Association, the trade association for the three credit reporting agencies, said at a July forum on child identity theft. "Authentication should be much more than that. It has to be robust."
For decades, most children did not have Social Security numbers. Then in the late 1980s, the Social Security Administration began requiring that parents list their children's numbers to claim them as dependents on their tax returns. This led to a rapid expansion of newborns being assigned pristine credit slates that are left unchecked until their 18th birthday, making them particularly attractive to identity thieves.
Many child identity theft cases are not caught sooner because laws do not permit minors to request their credit reports, according to Mark Fullbright, a fraud specialist with Identity Theft 911. If teens could access their credit reports at 16, victims would have time to restore their credit "before they turn 18 and everything counts," Fullbright said.
Instead, many victims are like Jaleesa Suell, of Oakland, Calif., whose identity was stolen to open a credit card when she was 17 but went undiscovered until she turned 21 and was denied her first credit card. The unpaid debt, which totaled $300, went to a collection agency, destroying her credit, she said.
Now 22, Suell has spent the last six months disputing the fraud with Plains Commerce Bank, based in South Dakota, where the account was opened. Before accepting the charges were fraudulent, the bank insisted that Suell provide a full police report. But the Oakland Police Department has refused to provide such a report because $300 does not meet the department's threshold.
Identity Theft 911, which is working pro-bono to help Suell, plans to write letters to the FDIC, FTC and the Better Business Bureau to pressure the bank to "do the right thing," according to Kelly Colgan, a spokeswoman for Identity Theft 911.
If her case is not resolved, Suell fears she will graduate college in May and be unable to rent an apartment or acquire student loans for graduate school due to her damaged credit.
"I'm at an impasse," she said. "It's extremely frustrating."
Even those who have resolved their cases have faced roadblocks. On the day after her 18th birthday, Katrina Haywood used her credit for the first time to apply for Internet service. She was denied. Then she was denied an apartment, a bank account, and jobs at retail stores in Sacramento.
The reason: Her credit report included a list of unpaid credit cards, utilities and payments to tow truck companies totaling about $6,000. The debt was accrued by her mother, she said.
"I was really upset," Haywood said. "I tried to clear it myself but didn't know how to do it and didn't get very far."
But recently, Haywood was able to acquire a detailed police report that proved she was only 11 when the fraud began. She sent the report to the three credit bureaus, which quickly removed the bad debt from her name.
Now, Haywood has a job at a clothing store at a mall. She has opened her first bank account. And this month, she moved into her first apartment with her 1-year-old daughter.
"Everything is going good now," Haywood said. "I have a fresh start."