Finances FYI Presented by JPMorgan Chase
Parents and guardians do everything possible to shield their children from harm. But many may not realize that the hidden danger of child identity theft can (and does) happen to kids of all ages.
In fact, over 915,000 U.S. children were victims of identity theft in 2022, according to Javelin Strategy & Research’s 2022 Child Identity Fraud Study.
Furthermore, a data breach exposed personal information for over 1.7 million children in the U.S.
These large numbers indicate that child identity theft is a huge problem for kids across the country. This guide defines child identity theft, explains how it happens and the warning signs, and offers prevention tips.
What Is Child Identity Theft?
Child identity theft occurs when “a fraudster uses a child’s personal information to get credit,” Experian credit bureau explains. Illegal actions may include:
- Applying for and opening one or more credit card accounts
- Opening a bank account
- Signing up for utilities
- Applying for any type of loan
- Receiving government assistance
The scary thing is that many children and their parents don’t even know when someone steals their identity until they need to apply for credit or a loan themselves, for college, or a car, for example.
At that point, they may discover someone fraudulently opened accounts using their personal information and, in some cases, trashed their credit by failing to pay the creditors.
Obviously, this information is startling to victims and their families. Even worse, a phony credit profile can have negative consequences, such as a financial institution denying someone credit due to poor payment history, collections, and even foreclosures that unwittingly occur and falsely tarnish the identity theft victim’s credit report.
Ways Child Identity Happens
The thought of a criminal illegally obtaining credit using a child’s personal information is disturbing — and it happens a lot.
A report and documentary called “One in Fifty” from LSEG Risk Intelligence reveals that one in 50 children fall victim to identity theft annually.
Renata Galvão, Channel Partner Manager at LSEG Risk Intelligence and subject of the documentary, revealed that criminals stole her identity when she was six years old, and she didn’t know it until years later.
Unfortunately, thieves can target children and steal their identities in multiple ways, including:
- Hacking: Cybercriminals can hack into the data systems of large and small companies, accessing a child’s personal account information to use for nefarious purposes.
- Phishing attack: Phishing scams occur when a thief contacts a victim via a cellphone, landline, or email, and tricks them into giving personal, sensitive information such as a social security number, birthdate, and/or address. Phishing victims can be minors under 18 or even parents, naively passing the information to a cybercriminal.
- Family theft: Sadly, a family member or friend with access to a child’s personal information and documents can open credit accounts, accumulate debt, and default on loans in the child’s name.
Child Identity Theft Warning Signs
Many people are unaware of child identity theft when it happens. Warning signs to watch for include:
- A creditor calls about an account or missed payment in your child’s name.
- A government assistance program denies your request for healthcare coverage or food because someone is already receiving those benefits under your child’s social security number.
- A child receives a letter from the IRS about income taxes they owe, because a thief used their social security number to obtain a job.
- A child gets denied for student loans due to poor credit.
How to Prevent Child Identity Theft
Protecting your child’s personal information from bad actors is vital to help prevent child identity theft. The Federal Trade Commission recommends:
- If a school requests your child’s social security number, ask if they can use the last four digits or generate a different ID number.
- Keep any documents with your child’s personal information, like medical records or their social security card, in a locked file cabinet or safe.
- Shred any documents showing personal information that they don’t need.
- Purge any personal data from old devices, like a cell phone, laptop, or tablet, before you trade them in or dispose of them.
Plus, freezing your child’s credit (if they are under 16) with the three major credit bureaus blocks criminals from accessing their personal data. The freeze holds until you or your child asks to remove it.
You must contact and request a credit freeze separately at all three credit bureaus, Experian, Equifax, and Transunion. Also, ask each of the bureaus for a copy of your child’s credit report to identify any suspicious or fraudulent credit accounts.
What to Do if You Discover Child Identity Theft
If you or your child learns that a thief stole their identity, immediately alert any creditors to report fraud, dispute charges, and close the accounts.
Also, contact the three credit bureaus above to report fraud, ask them to remove the accounts from the child’s credit report, and initiate a credit freeze.
Finally, report the child identity theft to the FTC at IdentityTheft.gov.
Overall, child identity theft is a horrible crime. Following these tips can help prevent it or resolve it if it occurs.
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.
