It's hard to nail down exactly how pervasive the crime really is.
Erik Larson, president and founder of NextAdvisor.com, a company that analyzes identity-theft protection products, says between 2.5 percent and 10 percent of Americans under age 18 have had their identity stolen.
And according to a recent report by AllClear based on a survey of 27,000 financial records between September 2010 and December 2011, nearly 11 percent of kids had their personal information stolen. "The reason the data on this is incomplete is that people often don't know an identity theft has taken place," says Larson. "They don't realize it for years sometimes."
The way most young people find out they have been victimized is that they turn 18 and apply for their first job, first credit card, or a student loan and discover they already have bad credit.
"In the Boston area, a 17-year-old applied for a job and the employer pulled his credit," says Larson. "It turned out someone had used his Social Security number and bought a $47,000 houseboat and then defaulted on the loan. The boat had been purchased when he was just 7 years old."
A Different Sort of Crime Family
Larson says that 27 percent of all identity theft victims know their perpetrator: someone in their family, a co-worker, or a friend. That number may be higher for child victims.
"It happens unfortunately far too often that a parent, stepparent, uncle, or, almost worst of all, a foster parent will steal a Social Security number from a child to open new credit card accounts or to establish a new utility company account," says Larson. "Foster kids are particularly vulnerable because they're in and out of many homes."
In one case in New Jersey, a mother stole the Social Security numbers of each of her five children to open credit card accounts and then didn't pay the bills, says Larson. Someone who knew her tipped off the police and she was arrested for fraud.
Even if you catch the family member, there may be more damage to come.
Larson says that sometimes a Social Security number will be sold to a network of criminals and new problems can crop up over the years, including even a criminal record associated with your child's identity.
According to AllClear, one victim's Social Security number had been used to open more than 40 accounts, in which more than $1 million had been fraudulently charged.
Cleaning Up the Mess
Unfortunately, if your child is the victim of identity theft it can take months or longer to fix. In the meantime, credit problems can make it more difficult to get a job and to obtain student loans for college, much less get a credit card.
"To fix the problem, you have to go to all three credit bureaus with proof that your child didn't default on a credit card or take on other financial obligations," says Larson. "You have to follow up with all the accounts that were opened in your child's name and make sure they are closed and removed from the credit report. It's a messy process that can take hundreds of hours."
What about obtaining a new Social Security number to sever ties from the scammers? That, too, is not an easy route, even according to the Social Security administration, which explains on its website:
"Keep in mind that a new number probably will not solve all your problems. This is because other governmental agencies (such as the IRS and state motor vehicle agencies) and private businesses (such as banks and credit reporting companies) will have records under your old number. Along with other personal information, credit reporting companies use the number to identify your credit record. So using a new number will not guarantee you a fresh start. ... For some victims of identity theft, a new number actually creates new problems. If the old credit information is not associated with your new number, the absence of any credit history under your new number may make it more difficult for you to get credit."
Babysit Your Child's Credit Reputation
Parents can take steps to prevent ID theft and periodically check to make sure there's nothing shady going on.
For example, check to see if there is a credit report in your child's name. "Usually there's not a credit report for someone under 18, so if you find a credit report for your child it may be because of identity theft," says Larson.
Even if no credit report exists, that doesn't mean your child's identity hasn't been compromised. Credit bureaus don't match a Social Security with a name and birth date, says Larson, so there could be a credit report with a different name and birth date that also has your child's Social Security number.
The most important step is to sharply restrict the circumstances under which you give out your child's Social Security number. If you're asked for it at school, the doctor's office, or for your child's soccer team registration, you should ask if it's absolutely necessary to provide that number is an identifier. If it is, ask how the number will be protected from identity theft.
Some other suggestions from Larson include:
- If your child receives a credit card offer, a bill, an IRS notice, or a note from a collection agency, this is a signal that her identity may have been stolen.
- Don't store your child's Social Security number digitally.
- Keep your security software on your computer, smartphone, and tablet up-to-date.
- Shred all documents that include your child's Social Security number.
- Consider adding protection for your child on your identity-theft monitoring program.
Photo Credit: Alamy