Identity theft occurs when criminals unlawfully gain access to someone's personal information and steal it for their own financial gain. Whether it's using somebody's social security number to open new accounts or illegally hacking into a bank account, all forms of identity theft can be serious and have different outcomes. It's not a new problem, but with so much of our personal information stored electronically these days, this crime is happening more often, especially to children.
Data about the prevalence of child identity theft victims is limited, in part because children don't become aware that their personal data has been stolen until they are old enough to apply for a driver's license or a credit card. More than 1 million children had their identities stolen in 2017, according to a study conducted by Javelin Strategy and Research and sponsored by Identity Guard. The study also found that 66% of child ID theft victims are under the age of 8—more than 10 years away from being able to sign a legal contract.
These stats clearly show that this is a problem we all need to pay more attention to. Here are some common questions about child identity theft—and some answers.
A child's identity can be stolen when criminals create what is known as a "synthetic identity," a process by which crooks "combine a child's Social Security number (SSN) with a different date of birth," says Joe Mason, senior vice president of Identity Guard, the identity theft protection firm, and author of Bankrupt at Birth. The 2012 ITAC survey found this to be the most common method of child identity fraud. Using an actual SSN, the most crucial piece of every American's identity, "confuses the credit issuers and they think it's a new person," says Robert P. Chappell Jr., a law enforcement professional and author of Child Identity Theft: What Every Parent Needs to Know.
The study revealed that 60% of child victims know the identity thief. Indeed, 22% of these frauds are perpetrated by a parent or a stepparent. Other relatives, including uncles, cousins, and siblings, account for 10% of the frauds. The most common perpetrators are "family friends."
Chappell says, there are "two categories of people committing this crime: people who know the child and complete strangers. In hard economic times, parents sometimes turn to things that are not legal." Illegal activities may include using a child's name to create a new account to turn on utilities, such as gas and electricity when they're shut off. "The problem is," Chappell continues, "it doesn't usually stop there. If I get my heat turned back on, it snowballs into getting the cable turned on. Or purchasing an item I try to justify as a necessity. What happens is, parents can't pay their own bills. They start out thinking they'll be able to pay their child's, but they can't. Then the child's credit becomes ruined." To start the lengthy process of cleaning up their records, the victim must file a police report, but children may be unwilling to report their own parents. This means that it is highly likely that the rate of child identity fraud is much higher than any of the studies and surveys have found.
As for the 73% of identity thieves who don't know your child, disreputable people may gather your children's personal information from forms (school, tax, doctor's office, and so forth) that may or may not have been stored securely. Even customs forms filled out when traveling abroad could, in theory, wind up in the wrong hands. Internet security breaches can also lead to personal information being stolen or leaked, such as the 2011 Sony incident in which 77 million accounts were compromised after personally identifiable information (including outdated credit card information) was stolen.
"Child identity theft is a crime in which criminals have specifically targeted children for personal data such as their SSN, date of birth, and name," Chappell says. Children are being targeted more because their info is more difficult to detect, so it's more lucrative. "You could steal a child's information at birth and abuse that information for up to 18 years before [the child] knows [he's] been victimized," he says. When an unauthorized person uses your credit card number to make unauthorized purchases, most banks will contact you the moment they suspect suspicious activity. But when an unauthorized person uses your child's name successfully to get a credit card—either by using a pre-approved card offer stolen from a mailbox or by creating a synthetic identity and applying for a new card—it is highly unlikely that anyone will contact you. As far as the bank or credit bureau is concerned, the false identity is real because thieves use a child's clean slate to establish a new credit history.
"One of the first things you want to do is get a credit report for yourself and your child," Chappell advises. "If your child is victimized, your information may have been stolen, too." By law, you are entitled to a free copy of your credit report once a year; simply go to annualcreditreport.com and follow the instructions.
The good news: If your child has no credit history, odds are that everything is all right. The bad news: Anyone under 18 who has a credit history has most likely been victimized. If this is the case, contact a credit agency—TransUnion, Equifax, or Experian—and place a 90-day credit alert on your child's file. This requires them to get in touch with you before issuing credit in their name. (You will have to renew this request every 90 days on your own.) After obtaining a credit report and placing an alert on your file, contact the police. Ask that each of your credit card companies place a note on your child's file that the "account [was] closed at consumer's request," Mason suggests. Follow up with credit card companies in writing; it is crucial to keep detailed records of everything that happens as you attempt to undo the damage.
"I ask families to start a journal because this could be a long, involved process," Chappell says. You can request that credit agencies scan and search their database manually to look only for SSNs instead of your child's name. This way, you have a chance of catching the criminal even if he is using your child's SSN to create a synthetic ID. You can also notify the FTC so the agency can keep track of more thefts.
When an adult has her identity stolen, it can affect her credit history for years. Imagine if your child has a bad credit report before she is old enough to read, or she goes to the DMV to apply for her first driver's license and is surprised with "a bill for hundreds of dollars in unpaid tickets," Mason says. The FTC recommends that parents check to see if their child has a credit report when she turns 16 to avoid that unpleasant surprise. Or consider a more frightening scenario related to medical records of someone in your area stealing your child's information. If you happen to "visit the same hospital [where] the identity thief had a medical procedure, [by] the time you take your child to the same place, the blood type [and] allergic medication may be changed," Chappell explains.
The bottom line: As a parent, you have to consider child identity theft and take it very seriously.