Child Identity Theft: How to Secure Your Kids Against the #1 Fastest-Growing Identity Theft
by www.SixWise.com

Shiloh Puckett has had 17 credit cards, been approved for a $42,000 loan, and owes thousands of dollars in credit card bills. Shiloh is just 10 years old and has been in debt since she was 5 because her identity was stolen -- in this case by her own mother.

This may sound like an extreme circumstance, but child identity theft -- by family members and strangers alike -- is growing at record speeds in the United States. The number of complaints reported to the FTC increased by more than half from 6,400 cases in 2003 to 9,800 in 2004.

Meanwhile, child identity theft cases made up just 2 percent of all identity theft cases in 2002. That has since doubled to reach 4 percent in 2004 -- the fastest-growing segment. In all, the Federal Trade Commission (FTC) estimates that 500,000 children fall victim to identity theft every year.

Why Children are Easy Targets

Stolen information is most often used for credit card fraud, to obtain government documents like a driver's license, or to assume a new identity after committing a crime. When an adult becomes an identity theft victim, however, thieves use their existing credit (and other) accounts. With children, new accounts must be created, which makes it easier for the thief.

"They [Children] usually have a spotless record and because they aren't using their credit, the crime can go undetected for years," said Linda Foley, executive director of the Identity Theft Resource Center.

On top of that, according to a 2003 FTC survey, victims who have had new accounts fraudulently created spend four times more time and nearly five times more money to clear their records than victims whose theft involved an already existing account. Further, new account fraud victims are more likely to be denied credit, lose utility or phone service or be investigated criminally.

Families are Common Culprits

In more than half of child identity theft cases, according to the Identity Theft Resource Center, relatives are involved in doing the stealing.

"It is a huge problem. We have seen this for years, and it is not going away," said Diane Terry, senior director of the Fraud Victim Assistance Department at TransUnion, a company that produces credit reports. "It is a very devastating crime for a young person starting out."

Typically, a parent may fall behind in a bill, have a utility shut off and then call using their child's name as a "new tenant" to establish new service. Often, children don't realize their identity has been taken by their parents until they turn 18 and try to buy a car, rent an apartment or find a job -- and find their credit history has been ruined.

"They say, 'Well, I needed that and am helping out my child. These are utilities for the house or this is the car to go to school,'" said Terry of many parents' explanations. "They are trying to justify a criminal action."

In Shiloh's case, her mother spent six months in prison after police found credit cards, unpaid bills and loan applications in the child's name.

"I did it because I had to, as a means of necessity," said Shiloh's mother, Cindy Puckett. "I feel bad I did it, and I shouldn't have done it. At the time, I didn't really think it was wrong in the sense I was hurting my child."

Strangers Target Children, Too

Total strangers can also assume children's identities -- all it takes is a social security number.

"Once they have that number, they can go and open up accounts," said Robert Siciliano, an identity theft expert.

One Oklahoma City man, Jeremy Van Winkle, found this out the hard way. When he filed his taxes for the year, the Internal Revenue Service alerted him that he could not claim his children, then 4 and 5 years old, as dependents -- someone else had already done so.

"I feel scared," Van Winkle said. "Somebody out there knows about my kids, their numbers and obviously their birthdates; anything their social security number can bring up."

Protecting Your Child From Identity Theft: Six Tips

Teaching your children to protect themselves from identity theft, and taking measures as a parent, should be just as important as protecting them from physical harm, says Foley.

"I think we have to be as vigilant regarding their information as we are in guarding their physical being," she said.

Arguably, companies that issue credit, as well as utility companies, are incredibly lax when it comes to issuing accounts. Background checks are not done and information is not verified. It may actually cost a credit company less to simply absorb the losses of identity theft than to install precautionary measures. If this were done, many would-be identity thieves would be stopped in their tracks.

As it stands, you simply cannot rely on credit companies or others to notice potential identity scams. But, there are many steps you can take to protect your children from becoming identity theft victims.

• After first applying for your child's social security card, make sure it arrives in the mail.

• Do not carry their social security card (or your own) in your wallet, where it could be stolen.

• Only give out your child's social security number when absolutely necessary. Many forms, from sports team applications to day care registrations, may ask for it, but that doesn't mean you have to give it out.

  "Even if a school asks for your child's social security number," says Foley, "The reality is they have to provide an education for them whether you give it or not."

• Check your child's credit report at least once a year. All three credit-reporting agencies now give you one free copy per year. Your child should have no report on record. Any activity could be an indicator of fraud.

  "It's important that parents not only check their own credit reports every four to six months, but they should also check that of their child, their spouses, even their parents," says Siciliano.

• Teach your child not to give out their social security number without permission, and not to respond to any e-mail offers.

• In the event your child's identity was stolen, ask the credit bureau to print a statement saying so in the child's credit report. You should also file a complaint with the FTC.

Recommended Reading

Paying Your Old Bills Can Actually HURT Your Credit -- What You Need to Know

How to Talk to a Teenager (and Know That They're Listening)

Sources

Federal trade Commission: ID Theft

Kansas City Star December 4, 2005

MSNBC: Main Culprits in Kids' Identity Theft? Family Members

Consumer Alert: Child Identity Theft

Identity Theft Resource Center

UF Experts Caution Parents to be Aware of Child Identity Theft