Even 5-year-olds can have their identities stolen. It can wreck their credit as adults and cost their parents now. Here's how to prevent it.
We write about identity theft a lot, and for good reason. It’s been the No. 1 consumer complaint to the Federal Trade Commission for the past 12 years.
But this is the first time I’ve heard about it happening to kids: The FTC received more than 19,000 complaints about child identity theft last year – more than triple the number in 2003. A year ago, Carnegie Mellon University released a study of more than 40,000 kids – and found that more than 10 percent of them were victims.
I figured minors are too young to establish credit, so there’s no point in stealing their names and numbers. Apparently a lot of parents figured the same, according to a survey credit reporting agency Equifax released Tuesday. It found only 16 percent of parents said they were aware of child identity theft, and 13 percent of respondents “have a friend or family member who is the parent of a child identity theft victim.” How does it happen?
Child identity theft occurs when someone obtains the Social Security number or other identifying information of a minor and uses it to apply for a credit card, bank account, loan, job, driver’s license, or even government benefits.
The CMU study adds, “The primary drivers for such attacks are illegal immigration (e.g., to obtain false IDs for employment), organized crime (e.g., to engage in financial fraud) and friends and family (e.g., to circumvent bad credit ratings, etc.).”
And the theft could go undetected for years, because few think to check their kids’ credit. When do parents find out? “When collection agencies call or when the child becomes an adult and is turned down for his or her first credit card,” Equifax says. The CMU study adds some examples…
- 303 victims under 5 years old – and one only 5 months old
- 537 cases where a child’s Social Security number appeared in property records, including those related to mortgages and foreclosures
- a 16-year-old girl defrauded for $725,000
Equifax not-so-subtly offered a self-serving solution: its Complete Family Plan, which costs $30 a month and monitors credit for up to two adults and four kids. But as we explained in Should I Buy Credit Monitoring?, this expensive solution won’t prevent identity theft. It only notifies you after the fact.
And although we recommended a credit freeze as a cheaper alternative in that post, you can’t place one on children, because they don’t (or at least shouldn’t) have credit files to freeze. As the Washington state attorney general explains, “credit bureaus don’t have the ability to create a file for a child because a parent wants to place a preventative freeze.” So for kids, this is another too-late solution: Agencies can’t start blocking applications for credit until they receive one.
That means parents just have to be more proactive. Here are some ideas from the FTC…
- Find out who has access to your child’s personal information at school, and verify that the records are kept in a secure location.
- Pay attention to materials sent home with your child, through the mail or by e-mail, that ask for personal information. Look for terms like “personally identifiable information,” “directory information,” and “opt-out.” Before you reveal any personal information about your child, find out how it will be used, whether it will be shared, and with whom.
- Read the notice schools must distribute that explains your rights under the federal Family Educational Rights Privacy Act. FERPA protects the privacy of student education records, and gives you the right to: inspect and review your child’s education records; consent to the disclosure of information in the records; and correct errors in the records.
- Take action if your child’s school experiences a data breach. If you believe there’s been a data breach and your child’s information has been compromised, contact the school to learn more. Talk with teachers, staff, or administrators about the incident and their practices. Keep a written record of your conversations. Write a letter to the appropriate administrator, and to the school board, if necessary. The U.S. Department of Education takes complaints about these incidents. Contact the Family Policy Compliance Office, U.S. Department of Education, 400 Maryland Ave., SW, Washington, DC 20202-5920, and keep a copy for your records.
You should also know that teenagers can request a free credit report from each of the three credit reporting agencies once a year – just like adults. Go to AnnualCreditReport.com. For children under 13, parents must file a request in writing.
For more identity theft advice that applies to the whole family, check out 7 Ways to Prevent Identity Theft and 7 Steps to Recover.