Protecting Your Children From Identity Theft

Padlock on laptop computer
PhotoAlto/Alix Minde / Getty Images

Stealing children’s identity is a growing issue. The Federal Trade Commission has estimated that there are more than 500,000 new victims of this each year. Surprisingly, the people that use the child’s Social Security number for evil are often the parents or others who have access to the information. When parents use their children’s names and Social Security number to apply for credit to alleviate their own financial worries, the child’s credit begins to suffer.

Identity thieves can use a child’s Social Security number to obtain government benefits, open credit card or bank accounts, rent a place to live or apply for a new utility or a loan. It can be devastating to the child, however.

Take Jason Truxel, for instance. He applied for a mortgage and found that he was denied due to bad credit. He was shocked that his credit scores were low, so he tried to find out why and pulled his credit reports. He discovered a large amount of debt and several accounts that he had not opened. One account, for example, was open when Jason was 13 years old. In other words, he found out the hard way that he had been the victim of identity theft as a child…and the criminal was his father.

You might find yourself saying, “I would never steal from my child,” but sometimes a custodial parent will discover that his or her former spouse committed the theft, but only when it’s too late and bill collector notices begin to arrive for their child.

If you ever believe that your child’s identity has been compromised, you should file a report with the police immediately. This is often the first step to having the accounts removed from the credit report of a child.

The problem is that creditors will often not verify the age of the applicant, and instead, accept a credit application without it.

Unfortunately, most people do not discover that they are a victim of identity theft until they enter adulthood when they are denied for a loan.

The Warning Signs of Child Identity Theft

The FTC explains that there are some signs that can tip a parent off that someone could be using their child’s identity and committing fraud. For instance, you or your child might:

  • Be turned down for benefits from the government because the Social Security number is already being used elsewhere.
  • Get an IRS notice saying that the child did not pay income tax or that the child’s name was used on a tax return.
  • Get bills or collection calls for a service or product that you did not order.

Limiting the Risk of Child Identity Theft

When it comes to limiting the risk that your child’s identity will be stolen, you may hear that protecting his or her Social Security number is enough. Though this is good advice, it is not practical advice as it is almost impossible to do so.

There are some laws out there that safeguard your child and their personal information. For instance, the Family Educational Rights and Privacy Act, or FERPA, comes from the Department of Education, and it helps to protect student records. This act also allows parents of children in school the right to stop contact or directory information sharing with others.

If you have a school-aged child:

  • Verify that student records are kept in a safe location.
  • Find out who has access to these records.

Pay Attention to All School Forms

There are forms out there that will ask for the personal information of your child. They may come home with your child or be sent through the mail or even via email. Look at these forms and seek out words such as “directory information,” “identifiable information,” or “opt-out.” You should also make sure you know how the information will be used, and if it is shared, find out who will see it.

You should also make sure that you are reading all notices from the school, as these explain the rights you have as a parent when it comes to your child’s information. For instance, with FERPA, you have the right to:

  • Ask for the correction of errors in all records.
  • Inspect and review all school records.
  • Approve the disclosure of personal information in the records.

Prevention Is the Key to Protection

There are steps you can take to protect your child’s identity, too:

  • Never share the child’s Social Security number unless you know the other party. Ask them why it is necessary and what steps will be taken to protect it. Ask if using the last four digits is acceptable.
  • Shred any document that has your child’s identifying information on it before throwing it in the trash.
  • Find a safe place for all records that show a child’s personal information.
  • Know about the events that may put the info at risk. For instance, if you have someone in your household in a dire financial position, if there is a break-in or if you lose something, such as a wallet, that may contain your child’s Social Security number, there is a higher chance of risk.

What to Do if Your Child Becomes a Victim

If you have ever determined that your child’s identity is stolen, you should file a police report as soon as possible. There is also an ​online form from TransUnion that will tell you if your child’s information could be compromised.

After you submit this form, you will receive information about whether or not your child’s credit file is available or not. If there is no file, your child is safe from financial fraud at this point. If there is a hit, and there is a credit file for your child, immediately contact the three credit bureaus – Experian, TransUnion and Equifax – and report the information.

You can also request a free credit report for your child, as long as they are over the age of 14, at AnnualCreditReport.com. If you find a hit here, you should contact your local law enforcement agency and all three credit bureaus. This might mean your child’s identity was stolen.

Repair Your Child’s Finances

To start the repair process, you must contact all three credit reporting companies and ask for the accounts to be removed. You should also ask for all information that is associated with your child’s Social Security number and name on collection notices or account inquiries to be removed.

Credit Freezing for Kids

I took the time to contact all of the credit bureaus to ask about a credit freeze for children, BUT you should know that there are several caveats depending on the state you are in. To find out if your state will allow a child credit freeze, click here. As of this writing, Equifax is the only one that offers all parents in all states the right to put a freeze on the records of their children.

As someone who has worked with victims of child identity theft, I can tell you that this is a very damaging event in the life of the child and for their future. Most children who become victims of identity theft as kids have a very hard time starting their adult life at 18, which is when their credit will make them look like a deadbeat. The reputation of the child is already damaged, and it can affect them getting credit, getting a job or getting into college.

The credit bureaus are the best organizations to prevent identity theft in children, as they can simply tweak their systems to allow for a credit freeze before the child becomes a victim.

As parents, we are not asking a lot. We simply want to do our best to protect our kids from financial disaster before they even become adults.

Identity thieves want a child’s Social Security number, and with this number, a thief can do many things such as opening a credit card account, renting an apartment and much more. The Social Security numbers of kids are so appealing to criminals because:

  • They have an opportunity to obtain new credit lines
  • A child’s financial record is clean
  • They know most kids or parents do not check these reports so that it can go undiscovered for years

A parent should consider a freeze on their child’s credit, as simply using a credit monitoring service does not prevent a criminal from opening an account by using the Social Security number of the child. A freeze ensures that they cannot open this account at all.

Here are the policies of the major credit reporting bureaus:

Experian

  • Does not create a credit file for a child unless they are victimized or required to by state law
  • Will offer a free copy of an existing child’s file, and will freeze it, if requested
  • Small fee is required unless a parent can provide proof that the child’s identity was stolen

TransUnion

  • The site allows parents to check the credit file of their children
  • Credit freezes are only available in states that allow it, and a fee may apply

Equifax

  • The child does not have to be a victim of identity theft to get the freeze
  • The freeze is free, and state requirements do not matter

Innovis

  • Offers credit freezes to parents of all states

No, all states offer protection for the credit file of minors. Make sure to find out the requirements of your state, as they vary greatly. Also, keep the signs that a person is using your child’s Social Security number in mind:

  • You may receive an IRS notice to inform you that your child did not pay tax on their nonexistent income
  • You may receive an IRS notice to inform you that your child’s Social Security number was used on another tax return
  • You may receive bills or collection notices for things you did not purchase
  • Your child might be rejected for government benefits because they are going to another account that is associated with your child’s Social Security number