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Wednesday, February 22, 2012

Is someone stealing your kid's identity?

A study released at the 2011 FTC forum on Child Identity Theft confirmed that every year, approximately 140,000 kids have their identities stolen. Kids are prime targets for thieves looking to bank in on stealing someone's identity due to their clean records. Furthermore, kids are targeted over 50 times more than adults (www.news.consumerreports.org).

Once someone obtains your child's social security number they can use it to open credit cards, get a car loan and even a mortgage. They can also use it for things people don't always associate with identity theft such as getting a job and applying for medical and government benefits (typically something an illegal immigrant might use it for). A scary reality of this all is that the theft can go undetected for many years since no one is checking their credit, since kids don't use credit. So, it might not be until they are 18 or older that you find out.

Why does it matter? If you child's credit is ruined they may not be able to get a job, financial aid, insurance  an apartment or home, credit card, car loan, and possibly not even a bank account.

Who's stealing your child's identity? According to the Identity Theft Resource Center, the majority of thefts are occurring through organized crime operations. However, more and more relatives and close friends that may have access to your child's social security number have been found guilty of using a minor's information fraudulently. Many times they have no intention of harming the child (if they have no credit and need to open an account with a utility company for example), but then if they can't (or don't) pay, it harms the child.

What can you do?

  • Do not share your child's social security information freely; never respond to an email asking for this information; ask questions, and when in doubt- don't provide the information until you know more.
  • Shred any documents that hold their personal information.
  • Keep social security cards in a locked place in your home (not in your wallet please!)
  • Read this information from  the FTC on protecting your child's personal information at school

What can the credit bureaus or our legislators do?

In Utah, Transunion (one of the 3 primary credit bureaus) is working with the state's Child Identity Protection program to hopefully reduce fraud. TU places the kids' SSNs (who are enrolled in the program) into a database; then if someone attempts to apply for credit using that SSN, the creditor will receive a warning that this may be a fraudulent situation. I think this is a step toward helping our kids. I can't believe there are not more states doing this... the other two credit bureaus should follow suit as well.

Maryland is currently reviewing legislation that would make it the first state to officially protect a minor's credit. This legislation would allow parents to create a credit report for their child and then immediately freeze it. When a report is frozen, a creditor is unable to access the report and will hence greatly reduce the chances that a thief will be able to open a line of credit using that SSN. This is a good first step, however, the success of this bill would depend entirely on whether parents actually create the report and freeze it.

Considering the fact that many adults don't freeze their own reports (even though its a good thing to do if you are worried about ID theft), what percentage would do it for their kids? I don't know. This is why I think the credit bureaus need to work together with the states to flag all minor's social security numbers so that they cannot be used until they are 18 or at the very least provide a warning to the creditor that the SSN that is being used belongs to a child.



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