Child Identity Theft Creates Costly and Time Consuming Problems for Both Families
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.
Who steals the identities of minors?
Dormant social security numbers are sometimes used to fraudulently rebuild an already
tarnished credit record. Through a process called “piggy-backing,” people
buy dormant social security numbers and then link to dormant files often belonging
to minors. Individuals avoiding the immigration process may also tap into dormant
social security numbers, often by randomly selecting numbers, or purchasing them on
the black market.
Another source of child identity theft may be friends and family members of the
victim who want to evade their bad credit ratings.
How can families and businesses defend themselves?
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
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