I'm sorry to report that child identity fraud is alive and well in 2014. If anything, the problem may be worsening as identity thieves devise new methods to steal -- and use -- children's personal information. Most commonly, they'll harvest kids' dormant Social Security numbers and use them to illegally obtain jobs or open fraudulent bank and credit accounts, mortgages or car loans.
According to a recent survey sponsored by the Identity Theft Assistance Center, one in 40 households with kids under 18 has had at least one child's personal data compromised by identity thieves. Furthermore, ITAC suspects that child identity theft is underreported because friends or family members often are involved.
Many victims don't realize there's a problem until years later, when they apply for a student loan, bank account, job or apartment and are turned down because of the poor credit history someone else racked up in their name. In extreme cases, children and their parents have even been hounded by collection agencies or arrested because the debts or criminal activities executed by thieves were so extreme.
So what can you do to protect your children's identities? There are no completely foolproof methods, but here are some precautions you can take:
Social Security numbers (SSNs). While it's tempting to simply not register your kids for SSNs until they turn 18, that's not practical in today's world. For one thing, they'll need one to be claimed as dependents on your taxes. You may also need SSNs for your kids to obtain medical coverage or government services or to open bank accounts in their names.
Most parents register their children for SSNs when they apply for birth certificates at the hospital using Social Security's Enumeration at Birth Process. If you wait until later to apply, you must provide proof of your and your child's U.S. citizenship and identity. To learn more about the application process, CLICK HERE.
Because each person's SSN is unique, it's not uncommon for schools, health care providers, insurance companies, banks and other institutions to require them as identification tools. However, don't be afraid to ask:
- Why do they need to use an SSN -- is there a legal requirement and if so, what is it?
- Will they accept alternative identification?
- What will happen if you don't disclose it?
- What security precautions do they take with personal information?
- Will they agree not to use the SSN as your child's personal identification number on correspondence, account statements or ID cards?
Note: The Family Educational Rights and Privacy Act protects the privacy of student records and gives parents the right to opt-out of sharing contact or other directory information with third parties, including other families.
Warning signs. Watch for these clues your child's personal data may have been compromised:
- They receive preapproved credit account offers.
- They receive calls or billing statements from collection agencies, creditors or government agencies (including the IRS and Social Security).
- You're unable to open a bank account in their name because one already exists with the same SSN.
- They are denied credit, employment, a driver's license or college enrollment for unknown or credit-related reasons.
Remember, there could be legitimate reasons why your child is receiving credit offers. For example, it could be a marketing outreach from an affiliate of your bank or because you opened a college fund in their name.
If you strongly suspect or have evidence that identity theft has been committed, you can:
- File a police report and keep a copy as proof of the crime.
- Contact the fraud units at the three major credit bureaus for instructions: Equifax (800-525-6285), Experian (888-397-3742) and TransUnion (800-680-7289).
- Notify the Federal Trade Commission (877-438-4338), whose Identity Theft site contains information on fraud alerts, credit freezes, how to work with police and much more.
- File a complaint with the government-sponsored Internet Crime Complaint Center, which forwards cybercrime complaints to appropriate law-enforcement and regulatory agencies.
- Contact Social Security (800-772-1213) to ask whether anyone has reported income using your child's SSN. In extreme cases, they may even issue a new SSN, but that alone is not guaranteed to solve the problem. See Identity Theft and Your Social Security Number for details.
- Contact the IRS' Identity Protection Unit (800-980-4490).
The Federal Trade Commission provides a comprehensive guide that shows how to spot and report child identity theft. They recommend contacting the three credit bureaus around your child's 16th birthday to see whether they have credit reports on file. (There usually wouldn't be unless your kid is an authorized user on one of your accounts.) If there is a report -- and it has errors due to fraud or misuse -- you'll have time to correct it before you kid needs to apply for a job, rent an apartment, etc.
When your kids are old enough, warn them about the dangers of revealing personal information over the phone, in response to an email or text, or on social networking sites. Don't be shy about monitoring their accounts and installing parental blocking software. And remember, if they share your computer, a downloaded virus could infect your accounts as well.
Bottom line: With the stakes so high, everyone is vulnerable to identity theft, no matter your age. Make sure you know the warning signs and what to do if your kid's personal information has been compromised.
This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.