Identity thieves are becoming more skilled as they focus on stealing dormant social security numbers that belong to children. According to the Identity Theft Resource Center (ITRC) credit issuers do not have the ability to verify a SSN as belonging to an adult or minor which makes detecting fraud against minors more difficult. Experts point out that frequently the parents and children are not aware of the fraud and potential financial damage until the minor applies for his or her first job or student loan. As you can imagine, significant damage to the minor’s credit may have already occurred.
This nascent threat has serious implications for business, lenders, and educational institutions that make decisions based on credit reports and scores. For example, a recent scam was uncovered where thieves sold dormant SSNs to people looking to rebuild their credit rating. People who buy these numbers build their credit score by linking to a dormant credit file, a process called “piggybacking.” Unfortunately, these dormant files most likely belong to minors.
The economic downturn and mortgage crises have resulted in tightened lending policies and a greater focus on credit profiles. Many lending decisions are made simply on a defined credit score threshold. However, with the increase in incidents of “piggybacking” on dormant accounts, a growing number of these scores will be based on fraudulent information.
The ITRC has proposed creating a database that enables businesses to verify if a submitted SSN is that of a minor creating an opportunity to identify fraud. Visit the ITRC to learn more.