One In Four Children Will Suffer This Financial Harm -- Will Yours?
As Previously Published on Forbes.com
Imagine you are trying to apply for your first credit card and you discover that a shadow life has been set up in your name. From mortgages you didn’t apply for to credit cards with balances you didn’t accrue to tax returns you never filed - a whole web of financial transactions on a life you haven’t lived.
Now imagine that you’re learning this when you are only 17.
As incredible as it seems, child identity theft is a growing problem nationwide. Javelin Strategy and Research’s 2018 Child Identity Fraud Study found that there were over a million cases of child identity theft reported in 2017, resulting in $2.6 billion of total losses. And that is merely what was reported. Many more children may be the victim and not even know it yet.
Child identity theft can have long term financial implications. Once identified, it typically takes most victims three years to resolve issues with creditors and reporting agencies. But for some victims, there is lingering damage, including not being able to get a credit card, being denied a loan and being in debt as a result of the crime.
Children Are Easy Targets
Children are a target for two main reasons. “First, you have a virgin identity that can be exploited in many ways. And second, you have a gap between [the theft] and the time of discovery,” says Michael Bruemmer, Vice President of Consumer Protection at Experian.
Experian’s recent Aftermath of Child Identity Theft Survey found that most victims were 12 years old when their identity was stolen, but discovery did not occur until age 17. This gap gives identity thieves significant time to do some real damage to a child’s identity. Discovery typically occurs when a teenager applies for their first credit card.
“When you steal a child’s identity, you have a fresh blank slate. To use for maximum gain, you don’t immediately apply for mortgage or credit cards,” says Bruemmer, explaining that most thieves start small with a utility account or cell phone service. “Priming that identity and getting credit worthiness before opening a line of credit, or financing a car or mortgage is the typical pattern in child identity theft cases.”
In two-thirds of child identity theft, the child’s name, Social Security number and date of birth were compromised. With this threat, parents need to be a first line defense, especially regarding Social Security numbers. But the level of threat varies by age – and protecting a teenager from identity thieves can be a lot harder than protecting a toddler.
How Parents Can Protect Young Children
Parents should be proactive the moment they are handed the child’s Social Security number, which can occur in the hospital if the parents opt for it as part of the birth certificate process. In fact, a child’s birth could be a good moment to invest in a home safe to store these valuable documents.
The challenge is that parents must navigate a system that regularly asks for Social Security numbers. It can be hard to determine when it is appropriate to use your child’s Social Security number. Keep in mind the one place that it is absolutely required is when claiming them as a dependent on your tax return.
Providing Social Security numbers at doctor’s offices, schools and even extra-curricular activities is not always necessary. If the organization requires a birth certificate or Social Security card for age verification, parents should ask if just showing the document will suffice. Oftentimes, there is no need to leave a copy.
Further, children need to be considered when running annual credit reports. Experian, for example, is making its data and analytics available to parents through its Child ID Scan service. This one-time service allows parents to check if an Experian credit report is in existence for the child. The existence of this report is an indicator that the child’s identity may have been compromised.
Knowing that your child’s credit remains clean is important even if the child hasn’t even learned to spell their own name.
Protecting Tweens and Teens from Identity Theft
Parents have a greater challenge when their child reaches the tween years when social media becomes a bigger influence. Identity thieves can determine significant personal details from posts on sites like Facebook, Snap and Instagram.
Parents must continually educate their children about certain data that should never be made public. One best practice is for families to have a “Social Media Agreement” to help formalize the rules on what not to post, ranging from not posting last names, addresses or birth dates to no photos of the front of the family home.
Further, parents should monitor their child’s social media posts. According to the 2016 Common Sense Census: plugged-In parents of tweens and teens found that 57% of all parents were more like to actively monitor their tweens on social media “always” or “most of the tine”. But that number drops to 27% with parents monitoring teens. As a result, teaching strong habits early on is important so that they stay with the teen as they get older.
Finally, parents should set up an annual ritual with their teenager to run their Annual Credit Report that is free under federal law.
As Bruemmer emphasized, “The Social Security number is really the crown jewel. Be vigilant and look for anything suspicious.”
Showing your teenager what to be aware of as well as discussing the importance of good credit can help keep them vigilant.
Guarding the Crown Jewels
Safeguarding your children’s personal data requires different approaches as they grow up. While your children might roll their eyes or complain about the enhanced emphasis on protection, parents can feel secure that they are taking the right steps to protect their children from a financial nightmare.