An eight-year-old with a credit history and a home in foreclosure. A deceased 93-year-old pursued by the IRS for a large tax refund she had wrongfully claimed. What could these two Americans possibly have in common? They’re both victims of consumer identity theft, the fastest growing financial crime in America.
Identity theft was the number one crime reported by Americans in 2010, according to Consumer Sentinel Network Data Book, an online database of consumer complaints from the Federal Trade Commission, the Better Business Bureaus and the U.S. Postal Inspection Service. ID theft accounted for 19% of the 1.3 million complaints filed last year.
Identity Thieves Are Targeting the Young and the Dead
What’s even more shocking is that identity thieves are increasingly targeting two groups that can’t fight back – children and dead people. Why? Because their Social Security numbers and credit are often easier and safer to exploit than those belonging to adults who are still living.
Child Identity Theft, a 2011 report by Richard Power, Distinguished Fellow at Carnegie Mellon CyLab, highlights the danger to children. Using the records of 42,000 minors scanned by the identity theft protection services company Debix, Power found that a whopping 10.2% had their Social Security numbers used by other people. That’s 51 times higher than the attack rate for adults in the same population.
Among the victims in the report discovered by Debix’s AllClear ID: a seventeen year old girl from Arizona who had $725,000 in debt. Eight suspects in border states had used her Social Security number to open 42 different accounts, from mortgages and car loans to bills in collection – including credit cards and utilities. A fourteen year old boy from Kentucky had a credit history that spanned a decade, including credit cards and a foreclosed mortgage. All of his accounts were linked to a single suspect in another state. Over 300 victims cited in the report were five years of age or younger.
The Social Security Loophole That Identity Thieves Exploit
Why are children such tempting targets for identity thieves? After all, the vast majority are too young to have credit. One reason that’s hard to believe: there’s currently no way for an employer or a creditor to check what name and birthdate are associated with a Social Security number. That means a thief who can snatch a Social Security number with a clean credit history can attach any name and birthdate to it and use it or sell it. That’s called synthetic identity theft, a rapidly growing form of ID theft that’s frequently linked to organized crime and undocumented workers.
Another reason that children’s IDs are low hanging fruit for identity thieves: their Social Security numbers are often required by athletic programs and by the IRS on family tax records.
On the home front, parents don’t usually monitor their children’s identities. That creates a huge window of opportunity for criminals to misuse kids’ credit for years. Often, it’s not until young victims apply for a student loan or a job that they discover their identity and their credit have been used by someone else.
Imagine a college student losing an internship after a background check classified her as unemployable or a three year old in collection for unpaid utility bills. There are over 4,300 cases like that in the Debix/ Carnegie Mellon CyLab report on child ID theft.
“When a child’s Social Security number or other personal information is stolen – often before she can even read or write or make choices of her own – her future is in peril,” says Steven Toporoff, an attorney with the Federal Trade Commission’s Division of Privacy and Identity Protection. The growing danger to our youngest citizens prompted the FTC and the Justice Department to host a conference this month on child identity theft called Stolen Futures. The goal was to bring together experts to educate parents and children how to prevent ID theft and help young victims and their families resolve the problems associated with it.
The damage to a child’s credit from identity theft can be staggering. It can take months or even years to clean up. Sometimes, it cannot be repaired, creating a legacy of shame and lost opportunities to secure credit, a job or a home.
Unused Social Security numbers assigned to children are the perfect vehicle for ID thieves to steal young people’s identities and their credit without fear of detection. Don’t let it happen to your child.
How to Protect Your Child’s Identity
The Identity Theft Resource Center recommends asking four questions to people who want your child’s Social Security number: Why do you need it? Who will have access to it? How will you protect it? How will you dispose of it?
- Check any mail that’s in your child’s name. Credit card offers and letters from collection agencies could be a sign that he has an open credit file.
- Educate your child about the dangers of sharing personal information online like the date or year of his birth.
- Order copies of your child’s three free credit reports when he turns sixteen at http://www.annualcreditreport.com to ensure there are no accounts open in his name that you don’t recognize.
- Make sure your child’s computer firewall is turned on, his antivirus software is up to date and he performs frequent scans for viruses and malware.
- Make sure your child turns off the auto login option on his laptop to ensure he only logs in to a wireless network when he’s ready; and when he does, it’s to one that he chooses.
- Make sure your child avoids exposing sensitive information such as his passwords and Social Security number when he’s connected to wifi hotspots or other unsecured wireless networks. Remember that email can be seen by hackers if he’s not on a secured wireless connection.
- Disable file sharing on your child’s computer, especially if his laptop is networked to a storage device or a home computer.
- Make sure your child’s wireless network is disabled when he’s not using it.
- Purchase a virtual private network (VPN) like PRIVATE WiFi™ to ensure that all the data traveling to and from your child’s computer is invisible to hackers.
If you believe that your child is the victim of identity theft, visit the Federal Trade Commission’s site, Fighting Back Against Identity Theft, at http://www.ftc.gov/bcp/edu/microsites/idtheft/consumers/defend.html
Check back with us next week for Part II of How Identity Thieves Steal Our Lives from Cradle to Grave, when we’ll examine how ID thieves prey on the departed.