Protect Your Child from the Growing Trend of Identity Theft Child identity theft is very real and can cause a lifetime of headaches. Here's what you need to know. BY JOHN SILEO
Keeping an eye on your child's credit can save them from a tremendous amount of financial heartache in the future.
Are you as protective of your kids as I am of mine?
As parents, we are called on to protect our children from many things. Even before they are born we practice good preventative care. We take pre-natal exercise classes, coax ourselves to eat right for their benefit, learn CPR and screen regularly for signs of trouble. Once they are born, we provide the best nourishment, the finest medical care, ample playtime, rest and an infinite flow of unconditional love. We do everything in our power to prevent complications and to give them the best chance to grow up healthy, happy and in harmony with the world around them. That is our responsibility, our purpose and our joy.
But how often do you check their credit report?
Their what?! I can hear your questions: "Check my kidísÖcredit report? But she is only seven! She doesnít even have her front teeth yet, let alone a credit card! There are so many years to go before we need to worry about that. Right?"
Unfortunately, no. Because children have untouched and unblemished credit records, they are highly attractive targets. Thieves steal a childís identity early on, nurture it until they have a solid credit score, and then abuse and discard it.
Child identity theft is the fastest growing sector of the identity theft "industry," and the numbers are staggering. Although itís difficult to estimate exactly how many children lose their identities since the crime can go undetected for years, the FTC says 5 percent of identity theft cases target children, which translates into 500,000 kidnapped child identities per year, and growing. The Identity Theft Resource Center discovered that in 54 percent of the cases, the child was under the age of six.
How Does it Happen?
All an identity thief needs to ruin your childís bright financial future is her name and Social Security Number (SSN). "Shouldnít my childís age show up on any credit background check, shouldnít the merchant recognize that the person in front of them buying a car on credit isnít seven years old?" you ask. Yes, it should, but the people screening the credit report rarely give it the time and care necessary to detect fraud.
All too often, background checks involve simply matching the name and the SSN provided. This leaves doors wide open for scandalous minds to wreak havoc on your childís perfect credit. The most unsettling part is that the age of the applicant (in this case, the person posing as your child) becomes official with the credit bureaus upon the first credit application. This makes clearing a sabotaged credit record even more difficult because you have to prove to the credit bureau that your child is only seven and isnít responsible for thousands of dollars of debt.
In no time at all, your child could have a maxed out credit card, unpaid bills and a huge mortgage for beachfront property across the country. You might not discover the illegal purchases until your child opens a bank account, applies for a job, tries to get a driverís license or enters college. At that point, you are left with the time-consuming dilemma of cleaning up someone elseís fraudulent mess.
Who Does This?
The identity thief is not always a stranger. In many cases, itís a relative with bad credit who takes advantage of a childís pristine credit. Conveniently, these family members generally have access to the information necessary to maximize the fraud with little attention.
This seems absurd, but imagine a parent who is strapped for cash, has a bad credit score and needs to make a purchase out of their reach. In this case, short-term thinking blinds the parent, relative or friend to the long-term consequences. In other instances, the childís future is not taken into consideration at all.
Frankly, it doesnít take much to get the crime underway; all a criminal needs is the childís name and SSN. These pieces of personal information are exposed in a variety of ways:
1. When registering for daycare, schools and recreational sports
2. On medical, dental and hospital records
3. When joining organizations like the Girl Scouts, Boy Scouts, etc.
4. When the above information is permanently stored and accessed by volunteers or
5. When one of the above organizations is breached by a hacker or malicious software
6. When an adult befriends your child on a social networking site (MySpace, Facebook, etc.) and eventually socially engineers private information out of them.
The Three Basic Types of Child Identity Theft
Child identity theft generally falls into these 3 categories:
1. Financial identity theft - when the name and SSN is used to establish new lines of credit.
2. Criminal identity theft - when the criminal uses the childís identity to obtain a driverís license or substitutes the childís identity if caught in a criminal act.
3. Identity cloning - when a childís identity is collected (sometimes through a black market purchase) for financial, criminal and governmental purposes. The most common form of cloned identity theft is committed on behalf of undocumented workers looking for an identity that will keep them in this country.
For parents, cleaning up the disaster of identity theft for their children is costly and incredibly time consuming. Getting a new SSN is almost impossible and rarely the best option. Taking steps right now to protect your child from this horrible crime is one of the greatest investments you will ever make in their financial and emotional future.
Protecting Your Children
Acting now on behalf of your child will protect them from consequences common to child victims:
1. Starting adulthood with a credit rating low enough to scare away the hungriest of loan sharks.
2. Being denied a first loan, credit card or apartment rental because of a crime committed 10-15 years earlier (the passage of time makes this crime very hard to clear up).
3. Being denied access to college or a new job.
4. Having a warrant out for her arrest for crimes that she didnít commit.
In the same way that you canít protect your children from every bruise and scrape, you canít entirely remove the risk of identity theft. You can, however, prevent or soften the fall if it does happen. Start with these four steps:
1. Stop giving out your childís personal information. Until you are confident that it is absolutely necessary to receive the services desired, withhold their personal information. More than 80 percent of organizations that ask for your childís SSN donít actually need it to establish services. If you must give it, ask them how they will use it, how long they will keep it and how it will be protected while they have it. Vigilance is highly effective. And never carry your childís SSN with you.
2. Order a free credit report for your child at least once a year. All three major credit reporting bureaus (Equifax, Experian and TransUnion) offer one free credit report per year per individual. Order one for your child at the same time you order yours and review them both for red flags indicating fraudulent activity. I recommend that you order the first one (Equifax) right now; order a second report (Experian) in 4 more months; order the third report (TransUnion) four months after that and then repeat the process the following year. For a more convenient option, you can use an identity monitoring service for you and your family.
3. If you find evidence of fraudulent activity, contact the police, the source of the fraud and all three credit bureaus. Filing a police report helps to establish your childís innocence in an official way. Have the credit bureaus freeze your childís credit for maximum protection. Keep detailed records of all correspondence between yourself, the police, the merchant and the credit bureaus. It will come in handy should you ever find yourself in court, as I did.
4. Educate your children on the importance of protecting their personal information. Teach them about the value of their personal information: their name, address, phone numbers, e-mail address, SSN and any passwords and PIN numbers. Reinforce that they own their private information and that it should not be shared with friends over the internet or with anyone whom they donít know or trust. Education is absolutely the best financial gift you will ever give to them.
Because you love and protect your children as much as I do, you should start this process immediately. In the case of child identity theft, an ounce of prevention is worth a lifetime of financial security. Donít let the center of your universe become just another statistic.
After losing his business to data breach and his reputation to identity theft, John Sileo became Americaís leading identity theft and data breach speaker. His recent clients include the Department of Defense, the FDIC, Blue Cross Blue Shield and Pfizer. To learn more about John, visit www.ThinkLikeASpy.com.