Imagine this: Your teenager applies for her first credit card or student loan -- and she's denied. Turns out, her identity was stolen years ago, and she's thousands of dollars in debt.
Child identity theft is more common than you think. One out of every 10 kids is a victim, according to Carnegie Mellon's CyLab. In fact, kids are 50 times more susceptible than their parents.
Scammers target youngsters -- even infants! -- so they have years to use the identity (racking up credit card debt, buying a home or car, getting a job or driver's license) before being discovered.
Fortunately, parents can help protect their kids. Here's how:
Be a Little Nosy
In the era of "helicopter" parenting, no one wants to be accused of hovering too closely. But parents should be aware of the websites their children visit, especially elementary schoolers surfing the Internet alone.
Decide which websites are appropriate, and block any inappropriate sites using parental control software. Then, set a few ground rules: don't buy anything online without permission, never open emails from a stranger, and never click on pop-up ads.
Set Rules About Sharing
Oversharing on social networks like Facebook can be risky. Make it a rule that your child never gives out any personal information like her birthdate, address, phone number, or school when on the computer.
Thieves often only need your name and the last four digits of your Social Security number and voila, they're able to call your bank and request a change of address -- meaning they start receiving your sensitive documents.
Explain that scammers use Social Security numbers or other information to open credit cards or create fake documents, racking up way more debt than she will ever have her piggy bank.
Be on Fraud Alert
To make sure your kids are in the clear, contact each of the credit reporting agencies (TransUnion, Experian, and Equifax) every few years and ask if your child has a credit report. If yes, check it for fraud or errors. (No report means there's no problem.)
Make Kids Street Smart
Start a conversation about identity theft by reviewing the tips at MoneyAsYouGrow.org (in the 6-10 and 11-13 age groups), the tool I helped develop with the President's Advisory Council on Financial Capability. And for more ways to safeguard your child's financial future, visit here.
At the very least, following these four steps will ensure that once your kids are older, they won't be naïve enough to post photos of their debit or credit cards on Twitter. (Yes, folks are really doing that!)
How are you teaching your kids about identity theft?
Beth Kobliner is a personal finance commentator and journalist, the author of the New York Times bestseller Get a Financial Life: Personal Finance in Your Twenties and Thirties, and a member of the President's Advisory Council on Financial Capability. Visit her at bethkobliner.com, follow her on Twitter, and like her on Facebook.
This post was originally published on Mint.com.
© 2012 Beth Kobliner, All Rights Reserved
Follow Beth Kobliner on Twitter: www.twitter.com/BethKobliner