Nathan was only 14 years old, but his credit history was already shot, courtesy of a decade of unpaid credit card bills and defaulted home loans.
Of course it wasn’t Nathan who made all those sketchy moves—it was an identity thief who accessed the Kentucky boy’s Social Security number (SSN) nearly 10 years earlier in order to fraudulently finance homes, cars and more.
An isolated case? Hardly. Theft of children’s identities is soaring, according to a groundbreaking study by Carnegie Mellon’s CyLab. That research, which features Nathan’s story, found children’s identities are stolen 51 times more often than adults are.
Experts say kids are easy targets largely because they don’t do things like open bank accounts, apply for jobs or take out loans that would make them aware of problems on their credit report. As a result, thieves can often use a child’s identity for years—or even decades—with impunity.
“Many parents aren't aware that their child’s information is of considerable value,” says Lt. Robert Chappell, a 27-year veteran of the Virginia State Police and author of Child Identity Theft: What Every Parent Needs to Know. “As a society, we need to become more aware of identity theft. If parents don’t become educated about the risks, it’s only going to get worse.”
The CyLab report details how thieves used kids’ identities to purchase homes and cars, open credit card accounts, secure employment, obtain driver’s licenses and receive medical care. Out of the more than 40,000 children examined in the study, more than 4,000 had been victims of identity theft. Many cases had more than one suspect connected to the victim’s identity, and 303 victims were younger than five.
How it happens
Crooks take advantage of kids’ identities in several different ways. Two of the most common include:
- Manipulation. A thief steals a child’s entire identity, but alters the date of birth to reflect an adult age.
- Synthetic identity theft. In this case, a thief uses one child’s name, another child’s social security number and a fake date of birth to commit fraudulent activities.
Studies show that about one-quarter of all cases are “friendly” thefts in which family members abuse the child’s personal information. In other instances, a child’s personal information is accessed through places like a school, a doctor’s office or online.
Undoing the damage
It can take years or even decades to discover a child’s identity was stolen. The realization usually happens when a minor applies to college or for a job, or when the youngster is seeking out his or her first bank loan or credit card.
Besides being creepy, identity theft is also time consuming and expensive. Parents are often left with the dirty work of undoing the damage, which typically involves countless hours working with law enforcement, credit agencies, lawyers and government officials to restore their child’s good name.
What’s more, a poor credit history can lead to significant delays or even cost a victim a loan or a job. Creditors sometimes even seek repayment from the child or the parent for the fraudulent debts.
What’s a parent to do?
Luckily, there are precautions that lower the risks of your child becoming a victim.
- Use extra caution at school. Ask how your child’s personal information will be used before you share it, and verify that sensitive documents are stored in safe, secure locations. Also think twice about having your child listed in a school directory since thieves could very well obtain a copy.
- Keep SSNs under wraps. Keep your child’s Social Security number in a locked safe or safety deposit box. Always ask anyone who requests it how it will be used and whether an alternate form of identification can work. Teach your child to be equally selective about revealing his or her SSN to anyone.
- Monitor the mail. A credit card offer, income tax return or letters from a collection agency in your child’s name are all signs that something’s up.
- Request an annual credit report and a manual search. It’s a good practice to get a credit report for yourself and your child each year. Visit annualcreditreport.com to order a free report.
While a credit report shows whether anyone is illegally using your child’s name, only a manual search will reveal if your child’s Social Security number is being used under another name. The credit bureaus are required to conduct a no-cost manual search when it’s requested, says Chappell.
- Report any problems ASAP. Don’t wait to file a police report if your child’s identity is at risk.
Still worried about identity theft? ERIE can help
You can protect yourself and everyone else in your household with Identity Recovery Coverage from ERIE. Covered costs include lost wages, costs of supervising children or elderly relatives while you sort things out, certain legal fees, fees for refilling applications and more. Available for about $20 a year, Identity Recovery Coverage protects you and anyone else—such as a child living at home or attending college—who’s a part of your household.
The coverage also provides the services of an identity recovery case manager. “If an identity is stolen, the expert assigned to a case will do all the legwork,” says Joe Vahey, ERIE vice present and personal lines product manager. “This coverage provides peace of mind because you know you won’t have to deal with this situation and all the hassle it creates alone.” (A good thing since victims of identity theft face an average out-of-pocket cost of $631. They also devote an average of 33 hours undoing the damage.)