Imagine getting a phone call from a collection agency.
The representative says Nathan has racked up a whopping $34,000 in debt by buying things like a big screen TV, a high-tech drone and even a slightly used car. His debts are way overdue and the agency needs answers.
Now, imagine Nathan is your son, and he’s only 5 years old.
What Is Child Identity Theft?
Child identity theft is when someone gets a hold of a minor’s personal information and uses it for personal gain. As with regular identity theft, this can severely damage the victim’s credit score.
Even newborn babies and young children can become victims. If a thief is able to get their Social Security number and birth date, they can use that information to apply for credit cards, bank accounts, loans, government benefits or even get a job.
Why would they choose to use a child’s identity? Two very simple reasons:
- A child’s Social Security number comes with a clean slate. They have no credit score to speak of, so a thief with a terrible credit score can get loans and benefits that would otherwise be out of reach.
- Most people won’t realize what’s happened until much, much later. Think about it. When did you first memorize your SSN? For me, it was when I was 18 and started applying to colleges and then for my first credit card. And that’s pretty typical.
Researchers estimate approximately 1.3 million kids have their identities stolen each year. Why is that just an estimate? Because as many as 50% of them are under 6 and may not discover the crime until years later. There’s no great way to track it.
In other words, while little Johnny is playing in his sandbox, some bad dudes could be out there ruining his credit and his future.
Unfortunately, all too frequently, the bad dudes are close to home.
“The key to most identity theft is the Social Security number. Now you have a child with a Social Security number. Who is going to steal it? Sometimes it is a family member,” said Steve Weisman, a lawyer whose website Scamicide helps to educate people on the threat of identity theft. “I’ve seen it more with other family members than actual parents. Maybe it’s aunts, uncles or extended family members.”
Weisman said the motive behind child identity theft is usually financial.
“It is used to rack up debt and credit without paying that money back,” he said. “When you steal the identity of a child, you have a clean slate. There’s no crimes, no bad credit and no negatives.”
By the time the victim or their parents discover the issue, the victim’s credit score could have already sustained years of damage. It can be fixed, but it’s a long, exhausting and expensive process.
How Does It Happen?
Since you don’t really think about kids having Social Security numbers, much less a credit score, it may seem odd that they’d be vulnerable to identity theft. But since they can have both, the threat is always present.
Identity theft often happens when the bad guys get their hands on a child’s Social Security number. It frequently happens when parents unwittingly put their child’s SSN out there for people to see or hear:
- A trip to the pediatrician’s office. The person at the front desk asks for the the SSN and the parent recites it out loud, allowing the entire waiting room to hear.
- The parent fills out paperwork for school. It could be a field trip or just some basic background information for the school office.
- The parent carries their child’s Social Security card around with them and loses track of it.
- The parent leaves their child’s information vulnerable within their own home.
- In some cases, criminals even scan graveyards for fresh graves belonging to children as a starting point.
How Is Child Identity Theft Usually Discovered?
Not surprisingly, it’s usually the parents who realize what’s happened first. Kids don’t look at their credit scores.
Unfortunately, in most cases, the parent doesn’t realize what’s happened until their child is nearly grown.
Parents can be alerted to child identity theft by a few red flags:
- Collection agencies are calling to collect unknown debts in the child’s name.
- An application for a car loan or other transaction is rejected due to poor credit.
- Their child is denied a driver’s license because a driver’s license with their name and SSN already exists.
- The youth is denied employment without explanation.
- The youth is sought by the police for unknown crimes.
However it happens, discovering your child’s identity has been stolen can be a horrifying experience. What do you do? Can you fix it?
The key is to remain calm and take the appropriate steps.
What to Do When You Discover the Identity Theft
Once you’ve discovered that your child is a victim of identity theft, it’s crucial that you move quickly to stop the damage. Then you can move on to repairing it. Here are your first steps.
- Contact one of the three major credit-reporting companies: Equifax, Experian and Transunion. Ask it to put a fraud alert on your child’s credit report. By asking one agency to do this, you can rest assured that they will contact the other two agencies and make the same request. A fraud alert forces anyone requesting access to that credit score to verify the holder’s identity before issuing new credit.
- Consider putting a freeze on the child’s credit report. This limits access to that credit score so no one, including your child, can open new accounts.
- Request a copy of your child’s credit report. A number of companies, like Credit Sesame, offer free credit score reports.
- Contact any business where you can see that the child’s information was misused to try to cancel accounts. This will stop any further charges.
- Create an identity theft report. This will serve as an official report of the crime as well as help you figure out the next steps to repairing your child’s credit.
- Keep thorough notes. Keep track of every name, number, date and anything else you can for every communication you have throughout the process. It will make things much easier as you go along.
Prevent it Before It Happens
The best way to handle identity theft, whether it’s for you or your child, is to take steps to avoid it before it ever happens. When it comes to your child, you can take some basic steps to ensure that their identity stays safe.
- Do not carry your child’s Social Security card with you. Keep it in a safe place and memorize the number for when you may need it.
- Question every situation when someone requests your child’s Social Security number. Do they really need it, or could some other form of identification work?
- Check your child’s credit score periodically, just to be sure that it is in good standing. If not periodically, at least by the time he or she is 15 because that score may soon become much more relevant.
- If possible, put a freeze on their credit accounts as soon as they have a Social Security number. Unfortunately, this is not yet legal in every state. As of this writing, only 29 states allow parents to put freezes on their children’s credit.
Weisman hopes more states will allow parents to freeze their children’s’ credit scores.
“This is something that should be a no-brainer. There’s no drawback to it,” he said. “These laws permit parents to establish a credit report with the three agencies and immediately freeze it.”
He’s also a fan of Childscan.
“Childscan will look at credit records tied to your child’s Social Security number. If your child’s SSN shows up, this is a good way to see if it’s out there and if the ID has been stolen. The service is free.”
Don’t Wait for That Call
The good news is that child identity theft can be avoided more easily than other forms of identity theft. By protecting your child’s information and putting a freeze on their credit, you can stop it before it ever becomes an issue.
Because your child won’t have a credit or debit card that they’ll use at places like Kmart or even Sonic, there are fewer opportunities for their information to get leaked.
Don’t wait to get a call from a collection agency or hold your breath to see if your child can get a driver’s license.
You tell them to protect their teeth by brushing and to protect their heads by wearing a helmet when riding a bike. Do your part and be proactive to protect your child’s identity.
Tyler Omoth is a senior writer at The Penny Hoarder who loves soaking up the sun and finding creative ways to help others. Catch him on Twitter at @Tyomoth.
This was originally published on The Penny Hoarder, one of the largest personal finance websites. We help millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. In 2016, Inc. 500 ranked The Penny Hoarder as the No. 1 fastest-growing private media company in the U.S.
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