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Is Someone Using Your Child’s Identity?

by on September 02, 2018 5:00 AM

 

By Brittany N. Cox
Registered Investment Advisor at Nestlerode & Loy Investment Advisors

The Social Security number of a minor child is highly sought after by identity thieves. Getting their hands on a Social Security number of a minor with no credit history allows them to apply for credit cards, rent homes, or even get government benefits. It could be years before a parent realizes that their child’s information has been used. I was stunned to read in a recent article by Yuka Hayashi in the Wall Street Journal that one in four children will be a victim of identity theft by the time they become an adult. Experian, one of the three main reporting bureaus, has designated Sept. 1 “Child Identity Theft Awareness Day”.

The rate of identity theft for children is hard to gauge because there is a lack of data and surveys tend to undercount the number of actual cases, but it is certainly a problem. According to a 2011 report on the subject from Carnegie Mellon University, the rate of identity theft for children is 51 percent higher than that of adults. This is because the Social Security number of a minor can be linked to any name and date of birth, and it is a completely blank slate. According to Parents.com, 60 percent of child victims of identity theft know the thief and 22 percent of the thieves are the parents or stepparents of the victims. They say that in difficult times, parents turn to using their child’s information to create accounts to turn on the heat or cable and this snowballs into creating more accounts to pay bills and keep the household going. This is another reason why it is so hard to gauge the number of child identity theft cases there are in today’s world.

It is when the child becomes of age to apply to credit and they apply for a loan that they find out they have been a victim of identity theft. When they find out that it was their parent(s) using their identity, they often do not want to file a police report to clean up their credit reports. Other people that the child knows that are common culprits are ones who handle the child’s information when used for school, taxes, doctor’s offices, etc.

There are a few things a parent can do to protect their child’s information from identity thieves. First, parents should be careful about handing out their child’s Social Security number. It is acceptable to ask how the information you are giving will be used and who it will be shared amongst. You should also ask how the information you give will be protected. Also, parents should know the warning signs of identity theft. One major warning sign would be getting a call, or calls, from a debt collector when a child hasn’t applied for credit. Another red flag would be if bills arrive in the child’s name to the home.

If any warning signs are shown for your child, you should check to see if there is a credit report open in their name. If there is, all three credit bureaus allow for security freezes on a minor’s credit report. You should also call the credit bureaus and place a fraud alert or identity theft report on the credit file. The difference between these two alerts is that a fraud alert will last 90 days while an identity theft report lasts seven years.

There is a new law going into effect on Sept. 21 called the Economic Growth, Regulatory Relief and Consumer Protection Act which allows parents to combat child identity theft more easily. The law allows parents to freeze their child’s credit report, free of charge, until they are old enough to use credit. Currently, some states allow this, but the new law allows you to freeze credit for your child no matter where you live. This new law also allows adults to freeze their own credit free of charge no matter where you live as well. Also, fraud alerts will last one year instead of the current 90 days; it will still be free and identity theft victims will get an extended fraud alert for seven years. When the new law takes effect in September, the three credit reporting bureaus must set up a webpage for requesting fraud alerts and credit freezes for consumers.

Once a child’s information is stolen, it can be a very long and difficult process to clean up the aftermath from the credit report. I am hopeful that with the new law in effect, parents will not have to go through such a long process to clean up their children’s credit reports. Parents should still be diligent and follow the steps to prevent identity theft of their children. Make sure you keep your child’s information secure, only share their Social Security number with trusted contacts and ask how they will be protecting their information. In addition to protecting your child’s information, don’t forget to protect your own as well. Ask questions and be alert.


 

 



Brittany Cox is a Registered Investment Advisor who works for Nestlerode & Loy, Inc., State College. She serves clients in Centre County and all of Pennsylvania as a fiduciary, fee-based advisor. She is a graduate of the Pennsylvania State University with a BA in business with a focus on financial services. Brittany enjoys working with clients for retirement and college planning. Brittany can be reached at [email protected]
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