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Child Identity Theft: Stolen Financial Innocence


By Emily Driscoll

fp_childidtheftThe phone rings as your toddler plays with his toys on the floor. You pick up the phone as usual, only this isn’t a friendly call--it’s a credit card company demanding payment for thousands of dollars.
At first you think that your account has been hacked. Then the collector says that the bill is for your toddler, blissfully unaware of the serious financial and legal consequences ahead for you.

Researchers at Carnegie Mellon recently conducted the most extensive study on child identity theft to date and found that the rate among children in the report who had their Social Security Number used by someone else (10.2%) was 51 times higher than the adult identity theft rate (0.2%).*

Child identity theft is a severe problem for a number of reasons. A child’s age can allow fraud to go unreported for years, even decades. By the time it’s discovered, the damage to their credit history may be difficult to legally dispute or irreparable altogether.

Types of victims

Thieves can easily steal identities from infants, toddlers, and children because credit card companies can’t confirm the age of the applicant through the Social Security Number alone.

As if financially preying on children isn’t horrible enough, it doesn’t always happen at the hands of a stranger.

Approximately half a million children have had their identities stolen by a parent or family member.  With unlimited access to their child’s personal information, a parent or family member can take total advantage of a clean credit slate.

There are three common scenarios involving child identity theft:
  • Child victims who find out as adults: The thief may be someone the child does or doesn’t know and it could go undetected until they are denied a driver’s license, college loans, or credit. Because the crime occurred years ago, it may be hard to prove. If the victim is able to trace it back to the perpetrator, they will spend years contesting the charges and still may end up with a bad rap.
  • Parents find out their child is a victim: Parents can discover fraud by investigating suspicious financial activity (receiving multiple credit card offers and statements addressed to their child, unsuccessfully trying to open a savings account or college fund). If the fraudulent user is identified, parents have to go through the long process of proving that the victim is their child and that he or she is actually a minor and not responsible for the charges. 
  • Family identity theft: A low credit score and money issues can tempt parents or family members into the unthinkable act of stealing a child’s identity. They may justify it with intentions to pay the bills before the kid is old enough to know. If the child finds out about any fraudulent outstanding charges as an adult, they have the choice of turning the relative into authorities or dealing with a tarnished credit history. 

Effects on the victim

Aside from having their financial lives tainted with credit abuse, stolen identities can potentially cause roadblocks in applying to college, getting a job, and qualifying for a place to live.

Filing a police report protects the victim through federal and state law and will help your case in proving fraud to the credit card company or bank. Victims or their guardians should contact a criminal defense attorney, as the legal process in proving fraud can be lengthy and complicated.

FoolProof tips for parents:

  • Don’t carry your children’s social security cards around and risk losing or having them stolen.  Keep all your children’s documents in a secure place, like a safety deposit box or safe.
  • Be cautious when revealing your child’s information to any organization and make sure you understand why it’s needed and how they’ll protect it.
  • Under the Family Educational Rights Privacy Act (FERPA), families have the right to opt out of sharing children’s contact information with third parties—find out about their school’s directory information policy. 
  • If your minor is receiving credit card promotions in the mail, it may just be a marketing tool. To be safe, check all three credit-reporting bureaus when the minor turns 16 for any existing report. That gives you two years to address any issues before the minor reaches adulthood. Don’t pull a child’s credit history more than once a year, or you can create a report and put the child’s credit at risk. 
  • Warn older kids about the dangers of revealing personal information on social media sites. Even revealing their birthday and hometown can be enough info for a hacker. 
  • If your child becomes a victim, immediately file a police report and document it with the Federal Trade Commission. 
  • In extreme cases, a parent can consider changing their child’s Social Security Number, but there are very strict standards to follow if you want to change the number.

Child identity theft is an awful crime against the defenseless.  Kids have enough challenges building credit when they hit their teens without three strikes against them at the beginning of their credit career. The team hopes these tips help!

Be safe!

Have you had an identity theft problem concerning your kids?  Tell us about it.

Helpful links:

Carnegie Mellon study
ID Analytics study 1
ID Analytics study 2
Credit history reporting
Federal Trade Commission
Fact sheet from the ID Theft Center