Protecting yourself from identity theft seems like common sense. As a parent though, have you considered protecting your children from being victims?
A report from Javelin Strategy & Research found in 2017 that more than 1 million children in the United States were victims of identity theft. This resulted in over $2.6 billion in losses. Families paid an estimated $540 million in out-of-pocket costs because of fraud.
Known as synthetic ID theft, this type of fraud occurs when someone uses a child’s personal data for financial gain. Criminals sometimes combine fake data, such as a fake name, address, or birthdate with a real social security number.
It is a growing problem, but the scope of it is not really known. According to the Federal Trade Commission, about 4% of identity theft complaints involve a victim 19-years-old or younger. This number is probably a conservative estimate because most people do not check credit reports for people who have never used credit.
This means protecting your children’s identities is of utmost importance in this day and age.
Why are children being targeted?
A child’s personal data is a tempting target for identity thieves. Hemu Nigam, the founder of SSP Blue, an Internet security business, concurs that “in the hacker community, children’s data is so much more valuable than adult data when you’re trying to create new identities.” This is because children are more likely to have a flawless credit history. Nigam elaborates that “a hacker can create a credit application using legitimate information without the child or parents finding out until the child becomes of adult age.”
The Government Accountabilities Office states that there are three main reasons people choose to steal children’s identities:
- Identity fraud for nefarious purposes: This type of theft involves thieves using a child’s social security number to steal money or benefits.
- Identity fraud for residency or work: This type of theft involves fraudsters creating a false identity to live or work in the United States.
- Identity fraud for credit repair: This type of theft involves a person—typically someone the child knows such as a parent or relative—combining his or her real name with a child’s social security number to create an alternate credit history.
How are children’s identities being stolen?
In 2011, the US Social Security Administration changed the way social security numbers are issued. Previously, the numbers were generated in association with a person’s date of birth and geographic location. Now, the numbers are randomly selected.
This has made it much easier for thieves to acquire social security numbers from minors. Eva Casey-Velasquez, the CEO of the nonprofit Identity Theft Resource Center, states that thieves have been able to make random, made-up numbers work. Sometimes these made-up numbers become social security numbers that have not even been issued yet and are assigned to newborns later on.
Thieves have also had an easier time accessing children’s data because of the digitalization of our world. Children are beginning to use the internet at earlier and earlier ages, decreasing the safety of their data. This is because children do not know the proper procedures to protect their identities, making them high targets for criminals.
The digitalization of schools and medical records is becoming more standard over time. These places are not as secure as they could be and are subject to data breaches. Toy companies are also susceptible to data breaches, such as the Vtech breach in 2015 which compromised children’s data along with data from parents.
How Parents Can Protect their Children
Parents should follow good habits to safeguard their children’s identity. They should also ask their children, depending on their age, to follow the same practices.
- Minimize disclosure: When asked to provide a child’s Social Security number, do not do so. In many cases, there should not be an issue. If an entity does require it, ask why and how their information will be protected from data breaches.
- Pay attention to the mail: Follow up on any mail that seems unusual or suspicious. If your child receives correspondence from a medical insurance company with information about their benefits, then that is worth investigating further.
- Protect your child’s documents: Documents such as birth certificates or Social Security cards should be stored in a safe place in your home. Keep these documents inaccessible to visitors, family members, or service people.
- Freeze your child’s credit: If this is an option in your state, it is worth considering. Most states require a record to be created for the purpose of freezing a child’s credit. It is not an all-encompassing solution, but it does protect children’s credit.
If you suspect that your child’s identity has been compromised, use the Identity Theft Resource Center as a first place to gather information about fixing the situation. A police report should be filed, and Equifax, Experian, and TransUnion should all be notified about the situation. You can find out more information at the Federal Trade Commission and Consumer Financial Protection Bureau.
Preventative Measures to Protect Child Identities
Credit companies are not aware when they create credit files for minors. The Identity Theft Resource Center claims that most of the time this occurs because they have an outdated system for verifying that a Social Security number belongs to the person using it. This puts families leaving them with a huge financial strain.
The question then becomes, should the pressure to prevent identity fraud be left on individual families, or should credit bureaus take more responsibility to combat identity fraud?
Credit companies could use identity verification solutions as a part of their KYC platform and AML process. As applicants submit information to apply for an account, they could be put through this verification process. With these types of checks, criminals would have a harder time using social security numbers from children to create fraudulent accounts without their knowledge. Identity theft could be caught before it even occurs, protecting both credit companies and individual identities.