Kids face some of the same risks as adults when it comes to identity theft with their information being compromised in data breaches or stolen by others, in some cases by a relative or family friend. According to Eva Velasquez, CEO of the Identity Theft Resource Center, too often, kids don’t even know they are victims until they reach adulthood and try to use their legitimate credit.
Kids are targets for synthetic-identity fraud; one the fastest growing forms of identity crime in the U.S., according to the financial industry and United States Department of Justice. Synthetic-identity fraud is when criminals use a mixture of real personal information and made up information to create “synthetic” identities linked to phony credit files. Under these fake identities, they open financial accounts, apply for loans, utility service, government benefits, and jobs, get medical care or rent a place to live.
Perpetrators maintain good credit over time to receive higher credit limits and then do what is called a “bust-out” charging the cards up to their limits, paying nothing and discarding the identity. This fraud harms both consumers and the institutions and government agencies criminals exploit. Reporting the crime challenges traditional fraud detection methods because the persona is not a “real individual.”
Fixing the problem
Clearing a kids name can be just as complicated as it is for adults. Velasquez says, “There is a layer of complexity because a parent or guardian has the extra burden of providing documentation proving they can act on behalf of a minor legally.” If a family member committed the fraud, it could complicate matters even further because a victim might not be willing to make the necessary law-enforcement complaint.
Don’t ignore the warning signs. Take it seriously and act fast if your kid gets a call from a collection agency or mailings like an IRS notice claiming income taxes weren’t paid, a jury summons or preapproved credit card offers. Check with the three major credit-reporting agencies – Equifax, Experian, and TransUnion– to see if a credit report exists for your kid. If it does, freeze it and begin the process of investigating and disputing the information.
A proactive step
You can minimize the risk of identity theft by freezing your kid’s credit report. Thanks to a new federal lawthis fall you will be able to freeze and unfreeze your credit file throughout the country at no cost. You will also be able to get a freecredit freeze for kidsunder the age of 16. When the new law takes effect, Equifax, Experian, and TransUnion must each set up a webpage for requesting credit freezes and fraud alerts.