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Good credit is one of a person’s most valuable assets. And while establishing a history of financial responsibility often begins in early adulthood, an increasing number of school age children are showing up on credit reports even before they have their first bank account. Once considered a crime targeting adults only, with up to 500,000 children affected each year, identity theft has become an equally monumental problem for children, their parents, and countless businesses.
Child identity thieves generally target dormant social security numbers. According to the Identity Theft Resource Center (ITRC) detecting fraud against minors can be especially challenging because credit issuers do not have the ability to verify the true owner of a social security number.
The hidden nature of the crime means that victims and their parents often don’t discover the damage that’s been done for many years. The crime is typically detected when a child first applies for a job, car loan or college financial aid.
One of the ways dormant social security numbers are used is by thieves looking to rebuild an already tarnished credit record. Through a process called “piggy-backing,” people who buy dormant social security numbers link to dormant files often belonging to minors. Undocumented workers represent another group of criminals who tap into dormant social security numbers, often by randomly selecting numbers or purchasing them on the black market.
Other child identity theft criminals include members of organized crimes rings engaging in financial fraud and by friends and family members of the victim who want to evade their bad credit ratings.
Recognizing the early warning signs of child identity theft can save families and businesses a substantial amount of money, time, and frustration. Credit card and bank offers in a child’s name are frequently indicators of child identity theft that should be immediately investigated.
If there are no signs of problems, the ITRC recommends that parents write a letter to the credit reporting agencies requesting information on the child’s name and social security number, and on the child’s social security number alone on the child’s 16th birthday.
With the economy continuing its especially volatile state, solid credit has become even more crucial among lenders. Although many lending decisions are made simply on a defined credit score threshold, the increase in incidents of “piggy-backing” on dormant accounts means that a growing number of these scores will be based on fraudulent information. Businesses may soon have an extra layer of protection through a database proposed by the ITRC that enables businesses to verify if a social security number that has been submitted belongs to a minor.
Experian® Data Breach Resolution offers a proactive solution that offers families and businesses even more protection against child identity theft. Family SecureSM offers peace of mind through constant credit monitoring of your entire family and for a limited time you can get 40% off by using the code FAMILY40 when you sign up.