Identity Thieves Are Targeting Our Kids! What Parents Must Know

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Identity theftIt all began with a credit card application.

"My first application came back denied," Olivia McNamara remembers. "I tried another bank, but that one came back denied, too." A recent high school graduate, McNamara was trying to establish a credit history -- and prepare for college -- by getting her first student charge card. Unfortunately, the banks weren't cooperating.

"There was no reason for my applications to be turned down," she recalls. "I called credit bureaus, but they were no help."

Linda McNamara, Olivia's mother, had recently been stung by an information security breach and was working with AllClear ID, an identity-theft protection company. On a hunch, she asked them to look into her daughter's problem. What they discovered came as a shock: For 10 years, other people had been using Olivia's social security number.

"They took out $1.5 million in loans to buy boats and cars," Olivia says. "They had multiple credit cards out in my name, and had defaulted on several loans." In other words, even though she still didn't have her first charge card, Olivia's credit history was already in tatters.

McNamara Family.A Widespread -- and Growing -- Problem

Olivia isn't alone: According to a recent survey by AllClear, of 27,000 records, almost 11% of children have had their personal information compromised -- and the numbers are getting higher. Today, children are 35 times more likely than adults to have their identities stolen. To make matters worse, because children don't generally use their Social Security numbers, the breaches can remain hidden for years, giving identity thieves virtually endless opportunities to manipulate records.

And the problem itself is tremendously complicated. As Jamie May, AllClear's chief investigator, explains, "The tools used by scammers run the gamut, from physical break-ins to highly sophisticated viruses that scan computers for tax returns and school records." Once an identity has been taken, it can be resold dozens of times to multiple criminals. "We've seen identities for sale for as little as $40 in chat rooms," May says. "Fraudulent Social Security cards often show up in flea markets."

There are several different types of identity thieves who use the stolen information for a variety of scams. At one end of the spectrum, May notes, "some identity thieves are illegal immigrants trying to establish lives." In 2011, AllClear found 3,000 children whose records had been breached; some of those victims' Social Security numbers had been used to establish 2,353 utility service records, apply for 214 driver's licenses, and register 345 cars.

For those people simply trying to establish a life, the goal is to use the stolen information in as unobtrusive a manner as possible. But serious thieves use stolen information in elaborate moneymaking schemes. Having your identity fall into the hands of this type of scammer can be much more damaging, both economically and in terms of the difficulties they later create for the children they exploit.

"They follow the same methods we advise young adults to use when building their credit scores," May explains, noting that many identity thieves start by opening cell phone accounts. "They're a great way to establish a fraudulent -- or, for that matter, a real -- credit file. The scammers then move onto small loans, then larger loans, and so on."

In Olivia's case, her stolen identity had been used to open 42 separate accounts, including several credit cards, several car loans, and at least three mortgages. According to AllClear, almost all of the accounts are in default.

A Flaw in the System

But how can multiple scammers use the same Social Security number? The key, May explains, is that they exploit a flaw in the system: "Credit bureaus don't treat Social Security numbers as unique identifiers." In other words, when a credit agency runs a check, it generally hits three data points -- a Social Security number, a birth date, and a name. "This is why we often see the same number used by different identity thieves," May says. "When it's attached to a different name, it doesn't necessarily flag an alarm at credit bureaus or in the government."

This is also why many parents don't find out about identity theft until it's much too late. As May points out, "The usual advice is that parents should run credit reports on their children." But when AllClear, May's company, began investigating identity theft, they found that these breaches almost never show up on traditional credit reports. However, May says, "When we changed our search to simply use social security numbers, the floodgates opened." In one case, AllClear found that a child's Social Security number was being used by six adults, all of whom had paired it with a different name and date of birth.

Making things even easier for identity thieves, young people's Social Security numbers are often left poorly protected. Schools and the organizations associated with a host of children's activities often use them as a basic form of identification. And every group that has access to a child's Social Security number offers another opportunity for a data breach. May takes a hard line: "We advise parents to treat their children's Social Security numbers as top secret, confidential information. When somebody asks you for your child's Social Security number, don't be afraid to question them."

The Cost to Victims

On the bright side, victims of identity theft aren't held responsible for the funds taken out in their name. But the price for victims still can be measured in many long hours of frustration as they work to clean up their records, and also lost opportunities. AllClear's May notes that, in some cases, identity thieves use stolen Social Security numbers when they're arrested, a process that can leave their victims with criminal records -- and unexpected costs: "Cleaning that up requires that they hire an attorney," he says.

Even identity theft victims who don't have to deal with criminal records often end up paying in other ways. As May points out, "Sometimes, a kid with a stolen identity has to wait a semester to start school, or is stuck in the foster system, or misses out on an internship. It can take months or years to fix these problems."

That has certainly been the case with Olivia, who is still struggling with her deeply tainted credit record. Her mother, Linda, has worked hard to resolve the issue. "I have spent many, many hours on this mess," she notes. "I sent at least three letters to each of the credit agencies and tried many times in vain to get someone on the phone to talk to me."

It has even taken a toll on Olivia's financial development. She had hoped to begin building a strong credit history while in college, but she's had to shelve that plan until her identity theft troubles are resolved. For now, she notes, "I'm still financially dependent on my parents, and I still live in the dorms, so it's not a big issue. But if it's not solved by the time I graduate and move into my own apartment, it could be a real problem."

Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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theycallmefrankie

Since my credit and identity has been stolen, I made sure that my children's identity and credit are protected from the day they were born. We did not put their birth announcement in the paper and we did not include their full name or date of birth on any correspondence. I also do not put their full names on social media sites like Facebook either. I also always, always double-check with their school or sports teams to see if they in fact really need SS#'s or middle names and address. There is even a law (hopefully) being passed in Maryland that will allow parents to freeze their children's credit reports in order to protect them from identity thieves. I read about that here: http://resources.identityguard.com/child-identity-theft/new-law-raises-hope-for-child-identity-theft-prevention/. If more states would inact laws like this, people could save thousands of dollars in legal fees as well as keeping their name and credit history intact.

October 02 2012 at 1:07 AM Report abuse rate up rate down Reply
theycallmefrankie

Since my credit and identity has been stolen, I made sure that my children's identity and credit are protected from the day they were born. We did not put their birth announcement in the paper and we did not include their full name or date of birth on any correspondence. I also do not put their full names on social media sites like Facebook either. I also always, always double-check with their school or sports teams to see if they in fact really need SS#'s or middle names and address. There is even a law (hopefully) being passed in Maryland that will allow parents to freeze their children's credit reports in order to protect them from identity thieves. I read about that here: http://resources.identityguard.com/child-identity-theft/new-law-raises-hope-for-child-identity-theft-prevention/. If more states would inact laws like this, people could save thousands of dollars in legal fees as well as keeping their name and credit history intact.

October 02 2012 at 1:06 AM Report abuse rate up rate down Reply
Hailey745

Thieves are targeting everyone nowadays. It's very scary! This is why I use credit monitoring services as well as Facebook monitoring service NetworkClean that alerts me to negative postings and privacy concerns. you can't be too careful anymore.

June 11 2012 at 7:46 PM Report abuse rate up rate down Reply
glevinlevin

I think SS# should have a fingerprint or palm print included....

June 05 2012 at 8:00 PM Report abuse rate up rate down Reply
DEAN KRYSTEK

What is the reason new-borns must have SS numbers? What's the point of having a Social Security number if you are not working? Years ago, you applied for a SS number when you began working. The Federal government created this problem with the requirement of showing an SS number for all dependents, regardless of age, when listing them on the tax return.

June 05 2012 at 7:50 PM Report abuse rate up rate down Reply
2 replies to DEAN KRYSTEK's comment
safetyladyone

I think it is for income tax reasons that newborns have to have a SSN.

June 05 2012 at 7:59 PM Report abuse rate up rate down Reply
hackitoff

you answered your own question. as to why the government requires ssn's for dependents is that too many people were claiming nonexistent people as dependents. the IRS even discovered people were claiming their pets as dependents (i don't know if anyone ever used Rover or Fido). After the governmnet required ssn's, the IRS reported that a huge number of dependents suddenly disappeared from tax returns.

June 05 2012 at 8:28 PM Report abuse rate up rate down Reply
ragtopdaz

Did you know that illegal immigrants all over the United States are using a massive scam to receive tax refunds from the federal government that are often in excess of $10,000? It is estimated that 2 million illegal immigrants are filing fraudulent tax returns each year and that they are pulling in more than 4 billion dollars in tax refunds every year that they are not entitled to. They are doing this by abusing the additional child tax credit and the IRS knows all about it and yet they refuse to do anything to stop it. Illegal immigrants are filing tax returns that sometimes claim 10 or 12 nieces and nephews as dependents, and most of the time those nieces and nephews do not even live in the United States. So while you and I are being taxed into oblivion, many illegal immigrants are often pulling in tax refunds that are well into five figures. At a time when the federal government is absolutely drowning in debt, this is the type of fraud that desperately needs to be cracked down on, and





Last year, the whistleblower alerted the IRS to dozens of examples of illegal immigrants using this scam.

So what happened?

Absolutely nothing.

The IRS took no action.

But they seem to have plenty of time to come after you and I, don't they?

The WTHR investigation mentioned above discovered one instance in which it was claimed that a total of 20 children lived in one trailer in Indiana.

Because of tax credits for those children, a total of $29,608 was paid out to several illegal immigrant workers.

But when a reporter from WTHR went to the trailer, he found that only one girl actually lived there.

June 05 2012 at 7:18 PM Report abuse +3 rate up rate down Reply
1 reply to ragtopdaz's comment
hackitoff

So what is your solution? Complaining doesn't get anyone very far

June 05 2012 at 8:31 PM Report abuse rate up rate down Reply
ragtopdaz

•Illegal immigration and high levels of identity theft go hand-in-hand. States with the most illegal immigration also have high levels of job-related identity theft. In Arizona, 33 percent or all identity theft is job-related (as opposed to identity theft motivated simply by profit). In Texas it is 27 percent; in New Mexico, 23 percent; in Colorado, 22 percent; California, 20 percent; and in Nevada, 16 percent. Eight of the 10 states with the highest percentage of illegal aliens in their total population are among the top 10 states in identity theft (Arizona, California, Florida, Texas, Nevada, New York, Georgia, and Colorado).


•Children are prime targets. In Arizona, it is estimated that over one million children are victims of identity theft. In Utah, 1,626 companies were found to be paying wages to the SSNs of children on public assistance under the age of 13. These individuals suffer very real and very serious consequences in their lives.


•Illegal aliens commit felonies in order to get jobs. Illegal aliens who use fraudulent documents, perjure themselves on I-9 forms, and commit identity theft in order to get jobs are committing serious offenses and are not “law abiding.”


•Illegally employed aliens send billions of dollars annually to their home countries, rather than spending it in the United States and helping stimulate the American economy. In October 2008 alone, $2.4 billion was transferred to Mexico.


•Tolerance of corruption erodes the rule of law. Corruption is a serious problem in most illegal aliens’ home countries. Allowing it to flourish here paves the way for additional criminal activity and increased corruption throughout society.


•Leaders support perpetrators and ignore victims. Political, civic, religious, business, education, and media leaders blame Americans for “forcing” illegal aliens to commit document fraud and identity theft. No similar concern is expressed for the American men, women, and children whose lives are destroyed in the process.


•The Social Security Administration and Internal Revenue Service facilitate illegal immigrant-driven identity theft. Both turn a blind eye to massive SSN fraud and take no action to stop it. The Social Security Administration assigns SSNs to new-born infants that are being used illegally. The IRS demands that victims pay taxes on wages earned by illegal aliens using their stolen SSNs, while taking no action to stop the identity theft.

June 05 2012 at 7:09 PM Report abuse +2 rate up rate down Reply
Coot

Seems to me like all they would have to do is create a childrens social security registry or something and issue anyone under 18 a temporary number with an identification code in it that indicates this is a person under 18,then re-issue a permanent number when the person is of age.

June 05 2012 at 6:58 PM Report abuse rate up rate down Reply
ragtopdaz

(Illegal immigrants the next terrorist threat to the US???? We all know what would happen if the Federal Government in forced the laws on the books regarding them... It would be the worst race riot in US history, and it would be committed by a group of people who are already breaking our laws just being in our country...)

And Calderon has a lot of gall in claiming the Mexican government is trying to discourage the invasion of our country by his unwanted people. The Mexican government has been encouraging illegal immigration for years, issuing official-looking ID cards to illegal aliens in the United States at Mexican consulate offices in this country, and even publishing a guide on how to sneak into the United States without getting caught and milk our system for all its worth.

Even though Mexico has harsher laws against illegal aliens than U.S. law..

June 05 2012 at 6:57 PM Report abuse +2 rate up rate down Reply
whynotreuse

I learned this a while ago. If you can't pay cash, you can"t afford it. Credit cards are all about instant gratification and cost you more than the purchase is worth if you maintain a balance. But people are stupid and fall into the credit trap. Then they want to blame the credit card company for the debt. We live in interesting times.

June 05 2012 at 6:56 PM Report abuse -2 rate up rate down Reply