What is Child Identity Theft?
Child identity theft is the act of using a minor’s Social Security Number (SSN) or personally identifiable information (PII) for fraudulent activities such as applying for loans or credit cards using the minor’s information. Child identity theft is steadily on the rise because new lines of credit often go undetected by parents since the minor’s identity is not being used or monitored.
In 2017, over 1 million children were victims of ID fraud. According to Javelin’s 2018 research study, the victim’s families paid $540 million out-of-pocket for professional services and tools to recover their minor’s identity, which often includes paying for the fraudulent charges in the minor’s name. The most recent Experian child identity theft survey shared that 82% of child theft victims’ SSN was stolen.
CEO of Safr.me and Security Awareness Expert Robert Siciliano shared how child identity works. “It all begins and ends with the child’s social,” he said. “And it really revolves around what the parent should and shouldn’t be doing with that Social Security Number.” He also explained how lines of credit are opened once the SSN lands in the wrong hands. “They lie about the child’s age. So the child that’s two is listed as 22 and credit is generated. Whoever was successful in getting that line of credit now has access to unlimited lines of credit until they’ve established bad credit.”
The Effects of Child ID Theft
Depending on when you uncover the hard reality that your child is a victim of ID theft, financial costs can vary from nothing to thousands of dollars in recovery costs. It takes nearly three years to recover from child identity theft depending on when it’s detected and how much damage is done.
“If it happens to your baby today and the credit is soiled over the next 3 to 5 years you may not know about until they’re of age and they begin to apply for loans for schools or cars or apartments,” Siciliano explained. “But, you can’t put costs on things that would impede your ability to flourish at as a tax paying citizen.”
Spotting the Warning Signs of Child ID Theft
Experian shared that 44 percent of victims had their identity stolen between the ages of 15 and 17. Most parents learned that their child was a target from a collection agency phone call, or when a bill or credit card was mailed to the minor.
The signs of identity theft aren’t always apparent, but Siciliano shared a few red flags:
- Calls from bill collectors
- Mail addressed to your child demanding payment or pre-approved credit card offers
- An IRS notice that your child’s SSN has already been listed on a tax return
- A knock on the door by law enforcement for a crime committed
- Denial for insurance, benefits and services
The biggest indication of child identity theft is the denial of services including rejection for apartments or loans.
Child ID Protection Tips for Parents
Fraudsters successfully steal children’s SSN because most parents aren’t in the habit of monitoring their minor’s identity. Many parents assume their personally identifiable information (PII) isn’t up for grabs because they aren’t old enough to use their own credit and any report should be blank. As a result, parents are surprised when their child credit is ruined before they’re able to use it.
“We as a culture don’t want to think ‘that could be me,’” Siciliano pointed out. “Recognize the risk and do something about it.” There are a few steps guardians can take immediately to protect their minor’s identity. Most options are free and only require a few minutes of time and attention.
1. Understand the School’s Information Policy
The Federal Trade Commission (FTC) recommends keeping track of the companies you’ve shared your child’s SSN and other PII with – including schools. Always carefully review each form before completion, and always ask why their PII is needed, how it will be used, who it will be shared with and how it will be stored.
Every school year, your child’s school administration should send a notice for you to review your rights per the Family Educational Rights and Privacy Act (FERPA). In short, FERPA gives parents the right to their child’s education records held by the school. There’s one section of the act that parents should pay close attention to regarding directories that states:
“Schools may disclose, without consent, "directory" information such as a student's name, address, telephone number, date and place of birth, honors and awards, and dates of attendance.”
However, parents have the right to request that their child’s school not disclose this information, and schools must allow a reasonable amount of time for parents to consider any request. The FTC also advises parents to pay attention to other information from their child’s school including surveys and forms sent via mail and email regarding the use of PII.
2. Safeguard Your Child’s SSN
The first line of defense to protect your child against ID theft is to guard their SSN. “The rule of thumb is don’t give out your child’s SSN. But, that’s not always practical because in certain circumstances,” Siciliano shared. “For example, you’ll have to provide the social to an accountant if you want the child to be listed as a dependent.”
Siciliano recommends always asking companies why they need your child’s SSN. In some cases, it’s required for services, but Siciliano advises parents to resist until service cannot be granted without it. But the best guard to your child’s SSN is freezing their credit until they’re of age.
3. Freeze Your Child’s Credit for Free
Since September 2018, the Economic Growth, Regulatory Relief and Consumer Protection law allows adults to freeze and unfreeze their credit report for free with all three credit bureaus. The law also permits parents and guardians to freeze and unfreeze their child’s credit on their behalf until they’re 16.
“I tell all parents that they’d be irresponsible not to freeze their child’s credit, Siciliano said. “By getting a credit freeze you’re significantly reducing the impact.” While the credit freezing process can be tedious because it requires verification of your parental relationship, it’s the strongest safeguard to prevent thieves from opening new lines of credit in your child’s name.
“Once it’s completed, the parent or guardian now has control over whether or not the child’s credit can be accessed or granted,” Siciliano explained. “Otherwise, you’re at the mercy of whoever has access to your child’s social. Why put yourself in that position when you have more options?” When children turn 16, the law grants them the right to freeze and unfreeze their own credit reports for TransUnion, Experian and Equifax free of charge.
4. Invest in Professional Identity Monitoring and Recovery Services
Identity theft monitoring services don’t prevent your child from becoming a victim of fraud or identity theft. Instead, the service regularly scans databases and websites for your PII and automatically notifies you if your data is being used. “It may not prevent the child’s identity from being compromised, but proactively investing in ID theft protection can mitigate any fraud that may occur,” Siciliano shared.
If your minor’s information is targeted, most identity monitoring services also offer recovery assistance to secure your child’s personally identifiable information again and prevent further damage. “When your child’s social is compromised in some way, at least the restoration component kicks in where services are available to make that problem go away,” he added. “They have relationships with other experts and service providers that can make that problem go away much quicker.”
If the parent or guardian has identity theft protection, children can be added for as low as $3/mo.
5. Keep Track of Your Paper Trail and Digital Files
Taking the right security measures to protect your digital and printed files can help prevent your child’s information from easily falling into the wrong hands.
Siciliano suggests storing any paperwork listing PII in a flame-retardant safe instead of filing cabinets or separate folders. He also recommends protecting digital files from cybercriminals with common digital security steps including network firewalls and regularly updating software and hardware.
Reporting and Recovering From Identity Theft
Report your child’s identity theft victimization immediately with the Federal Trade Commission (FTC) online or by phone. Visit IdentityTheft.gov or call 877-ID-THEFT. You’ll be asked to answer questions including how the thief used your information. They will also ask for specific details including affected account numbers, estimated fraudulent charges and the company associated with the fraudulent account to best assist in your recovery efforts.
Recovering your child’s identity can be time-consuming and costly. Fortunately, the FTC will then assist in creating a recovery plan to send create fraud alerts with credit bureaus, reconcile fraudulent charges, closing fake accounts and correcting your credit report.
Tips for Teaching Your Child to Protect Their Identity
As your child gets older, they’ll need to know how to protect their identity. Start with these quick tips to help keep their personal data safe.
- Never carry your child’s SSN with you unless it’s necessary. Store it in a safe, fire-retardant safe or box.
- Teach your child to never give out personal information via phone, text, email or social media.
- Teach them how to make complicated passwords for each online account. Remember not to use the same password for different accounts.
- Discuss the importance of digital safety including phishing, reporting spam, regularly updating software and changing passwords.