As many of you know, our friend and Truepoint colleague, Scott Keller, was blessed with his first child in April. We’ve showered the family with gifts and provided Scott with a lot of unsolicited advice: get a diaper Genie for each floor, visit the fire department in order to install the car seat, supplement with rice cereal at six months, and so on. However, we realize now that we overlooked one very important lesson – how to protect his daughter from child identity theft.
It comes as a shock to many people, but children and minors are actually more likely than adults to be victims of identity theft. According to the 2012 Child Identity Fraud Survey, conducted by Javelin Strategy and Research, one in 40 households has had a child suffer from identity theft. It may seem counterintuitive for someone who is not financially active to be victimized. But that is exactly what makes children an attractive target: with little activity comes little tracking, meaning a stolen identity can go undetected for years.
Not long ago, a news station in Indianapolis reported two examples of child identity theft that had occurred there:
- Angie Brackin received an inquiry asking why her son, Adam, had not reported thousands of dollars in income from working in a factory. Adam was in fourth grade at the time. An investigation revealed that Marco Lopez had stolen Adam’s Social Security number just months after he was born and had been using it to rent homes and apartments, secure jobs, purchase cars, and run up thousands of dollars of unpaid bills. Despite the family’s best efforts to reclaim Adam’s identity and repair his credit, Mr. Lopez continues to use Adam’s Social Security number.
- While Axton Betz was in college, she began receiving court summonses from collection agencies. She eventually learned that her identity had been stolen when she was 11 years old, credit cards opened in her name, and huge unpaid balances rung up by the time she was 13 – unbeknownst to her and her family. After years of trying to clean up her credit, she is still plagued by murky credit reports due to the identity theft and the only car loan she could get has an 18% interest rate.
There are steps that parents can take to protect their children from identity theft:
- Properly secure your child’s personal documents – This is especially important for the birth certificate and Social Security card. Do not carry them with you or allow your child to carry them.
- Guard your child’s Social Security number (SSN) – Ask why the Social Security number is needed and whether another personal identifier can be used instead. If the Social Security number is required, ask how it will be used, kept safe and properly discarded. Additionally, educate your child to not give out the number, especially online.
- Communicate your privacy concerns to your child’s school – Some schools share personal, non-public information with third parties. It is your right to respectfully opt out of sharing such information.
- Monitor the mail for pre-approved credit card offers addressed to your minor child – Pre-approved offers should only be sent to applicants with a credit history, so if your child receives one, it could be a sign of identity theft. If you suspect foul play, investigate further by contacting the three credit reporting agencies as detailed below.
As with many other conditions, early detection is important. Periodically request your child’s credit report, hoping to be told that there isn’t one. Jennifer Leuer of Experian said in a recent Chicago Tribune article, “It’s a red flag if your child has an existing credit report…A credit report only kicks in, not at birth, but when you’ve established a credit history.”
However, timing and frequency are important considerations. Checking too frequently can actually lead to the premature creation of a credit file, which can make identity theft easier. Both the Federal Trade Commission (FTC) and the Identity Theft Resource Center (ITRC) recommend against annual checks, but agree that parents should check a child’s credit around the age of 14, to ensure there is time to clear up any issues before applying for college financial aid or a first loan.
- Be sure to request a search of the SSN both in combination with the child’s name and just the SSN by itself to ensure the number is not being used with someone else’s name. This type of identity theft is called SSN-only ID theft and is most commonly associated with undocumented workers.
- For a child age 14 and over, you can request a credit report at AnnualCreditReport.com, the only source for free credit reports authorized by Federal law. This can provide some level of reassurance if it turns up no evidence of a credit report in your child’s name, but will not necessarily detect SSN-only ID theft.
If suspicious circumstances that may indicate ID theft are uncovered prior to age 14, it is necessary to send each credit bureau a written request asking for a manual search of the Social Security number. Copies of certain identifying information must be included with these requests, as indicated in the instructions at each credit bureau’s site. Here are links to the three reporting agencies’ request procedures: Equifax, Experian and TransUnion.
Ultimately, one of the best gifts we can give our children is a clean credit report and uncompromised identity. If you have questions or desire further assistance with these issues, your Truepoint wealth advisor would be happy to help.