Child ID Theft: You Need to Know About "Synthetic" Identities
In 2012, the Federal Trade Commission received 22,400 identity theft complaints concerning child victims. Child identity theft is one of the fastest growing crimes sweeping our nation. Recent security breaches, like the Anthem hack, where hackers gained personal healthcare records, are particularly harmful to families with children.
Tim Rohrbaugh, an Identity Guard executive, referred to the Anthem breach as “catastrophic” and “predicts the stolen information ‘will be used in waves of financial crimes’ against American children for decades.” Because a minor’s Social Security number (SSN) isn’t associated with a credit file, children become easy targets. Thus opening doors for cyber criminals to take advantage of your child’s financial innocence. Let’s explore how you can protect your child’s credit before it’s too late.
What Exactly Is Child Identity Theft
In the United States, identity theft is becoming more prevalent, affecting more than 9 million people. What most people don’t realize is that children are prime real estate for this type of criminal activity. Carnegie Mellon University’s CyLab report found that 10.2% of children had someone else using their SSNs. That’s “51 times higher than the rate for adults of the same population.”
Child identity theft occurs when someone illegally obtains a child's private information, like SSNs, hospital documents, or birth records. Identity thieves usually steal this personal information from doctor’s offices and schools. They even may obtain records from trash bins at your home. Due to advances in technology, these thieves are also acquiring this data through online security breaches at major banks and corporations. It quickly becomes clear that child identity theft is a serious issue that requires an attentive eye.
How It Happens
To steal a child's identity, criminals create what is known as a “synthetic identity.”
This occurs when thieves “combine a child’s Social Security number with a different date of birth,” says Joe Mason, senior vice president of Identity Guard. Normally, when an unauthorized person uses your credit card, most financial institutions will contact you. However, a synthetic identity doesn’t initially raise any red flags. If your child’s name is successfully attached to a credit card, it’s unlikely you will ever be notified. In fact, that’s a major flaw in our current credit system.
Credit reporting agencies don’t verify the age of an applicant. So, anyone can be funded without adequate proof of identity. Giving criminals a clear path to ruin your child’s credit. The banks will think that the false identity is real because your child has a clean credit history. The thieves then have ample time to make lavish purchases without you even knowing. It’s not until your child applies for a job or fills out a college application that you will realize that fraud has occurred. And by then, you’re working nonstop to help your kid restore his or her credit.
According to the 2012 Child Identity Fraud Report, people the children know commit 27% of identity thefts in America, sometimes even by their own parents. When guardians can’t pay their bills, they may feel compelled to create a new account under their child’s name just to get the water or electric turned back on.
David Howe of SubscriberWise noted “parents often use their children’s SSN to obtain new cable accounts to avoid paying for an unpaid account balance in their names. “This ruins the child’s credit and subjects the parent to criminal liability.”
However, the majority of child identity theft cases involve complete strangers. And all a criminal needs is a legitimate address. “It can be anybody's address, but ideally it’s somewhere the crook can retrieve documents associated with the account they’ve made up,” says Anne Wallace, president of the Identity Theft Assistance Center. “Really the rest of the elements of this identity can be fabricated.”
Here are a few warning signs that your child’s identity may have been compromised.
- Your child receives offers for credit cards, insurance, or other financial offers in the mail.
- Your child has an existing credit report.
- Your child gets denied a bank account due to a poor credit history.
- Your child gets issued a warrant for his or her arrest.
Why Are Your Kids Targeted
Why would someone want my child’s SSN? What will they do with a new identity? Don’t the crooks know they will eventually get caught?
Like most human behavior, some actions seem incomprehensible. There’s no way to really explain every criminal’s intent. What we do know is that people want to begin new financial lives. For example, the thief may want to secure a fraudulent loan or build a false credit report.
Some may want to dodge other criminal acts they’ve committed. Others may just enjoy the thrill of buying expensive things.
Children’s financial information is not monitored closely. Unlike adults, kids don’t check their credit reports regularly or possess recurring debt. For instance, think about children in the foster care system. Because their information is shared with several local and state agencies, it’s more susceptible to identity theft. “The more [personal information] is out there, the more chance it has for exposure,” states Eva Velasquez, president and CEO of the Identity Theft Resource Center.
Social media is also playing a role in child identity theft. Parents are constantly sharing everything online, even vital information about their children. “92% of all two-year-olds already have a footprint on the internet,” says Chuck Cohen, Commander of the Cyber Crimes unit for the Indiana State Police.
And what about teenagers? Even though most are tech savvy, their missteps may lead to an unfortunate situation. Online updates with location statuses can tip off thieves. A teen’s misplaced smartphone can be unlocked. And personal data can be transmitted via public Wi-Fi, like when you log into your bank account.
Hackers are everywhere using technology to their advantage, and these simple actions can lead criminals to your children’s personal records. “If I can take your kid now and get their social security number, I can open up any kind of account in his name. And you’re not going to know until they’re 15, 16 years old,” states Local Identity Shield Associate Jeffrey Jansen.
“By the time they (want to go) to college, they may not be going to college, because they have really bad credit, or because somebody decided to go open an account in their name.” Online predators are ready and willing to target your kids.
The Impact and Consequences
According to the Federal Trade Commission, new account fraud causes victims both out-of-pocket expenses and the time it takes to repair the damage.
One common misconception about identity theft is that it’s not harmful. Some people believe it’s a victimless crime. However, that’s simply not the case. Preying on children’s vulnerability is dangerous and stealing their identity can bring a lifetime of consequences. So, what can happen once a child’s identity gets stolen? For starters, they will be denied their first credit card due to the past fraudulent behavior. Going to the doctor will become a hassle because their records will not match their identity.
Moreover, college loans may be denied and the DMV may link them to criminal activity. In the book “Child Identity Theft: What Every Parent Needs to Know” by Robert P. Chappell, Jr., the author explains how the economy is drained by this crime. It costs us over 60 billion dollars a year. Emotional consequences are also associated with identity theft. Since the situation is so exhausting, parents and even teens may suffer sleepless nights. People may feel anxious worrying about their insecure information.
The negative circumstances can result in embarrassment. Some parents blame themselves for mishandling important documents. Others don’t report the crime because they believe they are responsible for falling for the scam.
It’s a frightening situation. Similar to physical boundaries, when emotional lines are crossed, people become unsafe and manifest feelings of sorrow, anger, and bitterness. In 2012, “Maryland became the first state to enact legislation targeting this unseen theft.” The state government now gives parents and guardians the authority to preemptively freeze their child’s credit record.
A freeze makes it impossible for anyone to use your child’s SSN to establish credit. To create this roadblock, the parent or guardian can contact the credit reporting agencies. This preventive measure helps keep your child’s credit untouched. Advocates are applauding the state’s efforts to ensure child identity security.
Victims of Child Identity Theft
We never think something could happen to us until it does. So, before excluding yourself from these circumstances, think twice and consider protecting your children. Identity thieves want access to your kid’s information. Here are three real-life stories highlighting the challenges of child identity theft.
At the age of 8, Jaleesa entered foster care. While moving to six different foster families, someone stole her identity to apply for a credit card. When Jalessa decided to get her first credit card at 21-years old, her application was denied. Her credit report revealed that she had payments in default due to identity theft.
For nearly six months, she talked with the credit bureaus and the bank about removing the fraudulent payments. However, nothing happened. Jalessa feared that her issue wouldn’t be fixed upon her graduation. With no credit, it would be hard for her to rent an apartment. “I've spent my life wondering if I’ll have a place to stay,” she said. “And now that my identity is stolen I find myself in the same circumstance.”
One day, Angie Brackin received a phone call questioning why her son Adam hadn’t reported thousands of dollars in income. She told the caller that was impossible because her son was only in the fourth grade.
The mother then learned that 38-year-old Marco Lopez had stolen her son’s SSN, just months after his birth. For 14 years, Lopez used Adam’s identity to “to rent homes and apartments, to secure jobs, to title eight different cars, and to run up thousands of dollars in unpaid bills.”
Now, Adam and his mom spend countless hours trying to stop Lopez, who continues to use Adam’s personal information. “This is a crime. It’s illegal. It’s stealing,” Angie said. “I don't know how he got Adam’s social security number, and who knows how much damage he’s doing.”
In 2012, NBC Connecticut reported how eight-year-old Hannah had her identity stolen. Their insurance provider notified the family that a file with Hannah's personal information had been stolen. “It’s scary and it’s frustrating because you’ll never know who did it,” said Brigitte Duncan, Hannah’s mom.
Her mother discovered that a criminal financed a $21,000 vehicle under Hannah’s name. When the family learned about the car purchase, they filed a police report and put a freeze on Hannah's credit record. If the identity theft had not been detected, Hannah might have had financial difficulties as an adult.
How to Protect Your Kids
Child identity theft is real, and it’s to your benefit to be proactive, rather than reactive, about your child’s safety. Here are a few ways to minimize your child’s risk of identity theft.
1. Be mindful of the warning signs.
Sometimes, criminals do leave behind clues. So, don’t ignore them. For example, a notice from the IRS stating that your child owes money is an indicator of fraud. If you receive collection calls for services you’ve never paid for, contact your credit agencies immediately.
2. Destroy personal documents.
Don’t just throw away your important documents. Any papers with personal information, including SSNs, birth dates, and addresses, should be shredded or burned immediately. Criminals can’t benefit from damaged records.
3. Be Smart Online
The Internet has become a breeding ground for scams. From deceptive emails to misleading sweepstakes, thieves are trying their hardest to access your data. Purchase items from secure, encrypted websites. Use strong passwords and anti-virus software. And if something seems too good to be true, avoid it.
4. Get Free Credit Monitoring
Add fraud alerts on your kid’s credit reports. Credit monitoring services will search credit records to discover where your child’s SSN is being used. A simple Google search with keywords “free credit monitoring for kids” will help you. AllClearID also provides a free ChildScan report.
5. Be Proactive
Unfortunately, across the country, parents and children are dealing with the consequences of child identity theft. And no one is immune. Victims suffer emotionally and financially from the experience. More often than not, they can’t do anything to restore their damaged credit. Be proactive. Protect your kids from child identity theft.
6. Safeguard Personal Information
Secure all paper and electronic records with your child’s details in a safe location. Before throwing away any documents, shred or burn them. And always ask schools and doctor’s offices how they safeguard records.
7. Educate Your Kids
Warn your kids about the dangers of identity theft. Tell them to never give out their personal information to strangers. And if someone does ask for their Social Security number or birth date, make sure your children notify you ASAP.
8. Beware of Scams
If it’s too good to be true, then it probably is. Be mindful of online and offline scams that prey on your emotions. Don’t sign up for foreign lotteries
Gerry Smith. Child Identity Theft Takes Advantage Of Kids’ Unused Social Security Numbers. Huffington Post. December 23 2011. http://huff.to/1SjZGXk
Michelle Dennedy. 5 Real-life Consequences of Child ID Theft. The Identity Project. 2012. http://bit.ly/1RoVqpw
Richard Power. Child Identity Theft. Carnegie Melon Cylab. 1-19. http://bit.ly/1e15nK9