Child identity theft occurs when the fraudster steals the identity of a person under legal age, which in most states is 18 years old. The criminals want to get the child’s Social Security Number so they can use that to create a new “stolen” identity. The most common type of identity theft affecting children is the use of a child’s Social Security Number and identity to obtain loans and credit cards. Surprisingly, family members who mismanaged their own credit are usually the perpetrators in the theft of a child’s identity. Often, a child doesn’t find out about his or her identity being stolen until he or she applies for student loans or attempts to get a job. By then the damage has already been done.
In one case the fraud was exposed when the child was ready to go to college. She filled out her FASFA information and was denied her scholarship and student loans because of charged-off accounts on her credit report. While investigating the fraud it became apparent that the person who stole her identity was her aunt. She was able to obtain the child’s Social Security Number from her mother buy telling her she wanted to buy a US Savings Bond for the child, who was 12 at the time, and letting her know the bank required the child’s Social Security Number to record it on the bond. The aunt was then able to use the child’s name and Social Security Number, with a different birthdate and address to establish credit in the child’s name.
The general public as several misconceptions about the difficulty of committing child identity theft. People often assume that creditors verify the date of birth and/or age of credit applicants. Usually this information is taken at face value based on what was entered on the credit application. Another misconception is that the credit reporting agency will know that the Social Security number belongs to a minor. Unfortunately, the birth date in the credit bureau’s file becomes official when the first request for a credit report is sent to the credit bureau. Even the name associated with the Social Security Number can be manipulated because the credit bureau’s do not verify every name and Social Security Number with the Social Security Administration. Because the parents are required to provide the IRS with a Social Security Number in order to claim them as dependents on their tax forms, children are usually issued Social Security Numbers within months of their birth. Unfortunately, neither the children nor the parents monitor the child’s Social Security Number. Identity thieves know this and have been taking advantage of the system.
Prevention – To help reduce the risk of child identity theft parents should obtain copies of their child’s credit bureau on an annual basis. Make sure you order a copy from all three credit bureaus. This can be done for free at annualcreditreport.com. Any activity on a child’s credit report should be considered suspicious. Order the first copy when you get your child’s Social Security Number, this ties the child’s name and date of birth to the credit report for that Social Security Number and makes it harder for identity thieves to access credit with that Social Security Number. Parents should also consider purchasing credit monitoring services for their children so they can be notified if there is any credit activity involving the child’s identifying information.