You might think you’re pretty savvy when it comes to understanding identity theft.  But what about when identity theft threatens your children?

A recent Federal Trade Commission discussion, “Stolen Futures: A Forum on Child Identity Theft,” presented a valuable opportunity to galvanize industry experts and public leaders around this increasing privacy threat.  Pop quiz: did you know….

• Children are 51 times more likely to become victims of identity theft than adults, with anywhere from 140,000 to 400,000 children affected annually by this crime.
• Criminals can easily establish fraudulent credit files in a child’s name and use them for years without detection.
• Child identity thefts often aren’t discovered until the youngster applies for a driver’s license, summer job or college loans.
• Thieves snatch children’s Social Security numbers and other personal information from day care centers, hospitals, schools, and even sports team applications.
• Stolen identities can result in credit damage for years, resulting in denial of college loans, inability to rent an apartment, difficulty in getting hired for a job, confusion around medical records, and driving records attached to a criminal’s name.

Children make vulnerable prey for identity thieves, with fresh, unused Social Security numbers that can easily be applied to another person’s birth date and name.  The sad truth is that these crimes are often perpetrated by the victim’s own family, making it difficult for the child (when he’s an adult) or non-offending family members to report the incident.  Foster children are particularly vulnerable since their personal information is passed around from family to family.

Whether the theft was committed by strangers or family, identity theft causes financial as well as emotional suffering for children, especially once they become old enough to fully understand how they were victimized.  The Identity Theft Resource Center offers helpful fact sheets that explain the process of reporting and repairing credit damage as well as healing the emotional wounds from these crimes.

What can you do to protect your child?

• Fiercely guard your child’s social security number, only giving it out when absolutely necessary and after you’ve been assured it will be well protected.
• Teach your child to protect himself online by keeping his personal information private.
• Investigate red flags like debt collectors calling for your child or mail addressed to your child from debt consolidators.
• Enroll your child in credit report monitoring that will immediately alert you to suspicious activity.

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.