Financial Friday: How to protect your kids from identity theft

WAFF's Haley Baker reporting
Published: Jul. 14, 2023 at 12:58 PM CDT
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HUNTSVILLE, Ala. (WAFF) - Identity fraud is nothing new, but child identity fraud is still happening at an alarming rate. A study done by Javelin Strategy and Research shows a slight decline from 2021 to 2022.

But Restone Federal Credit Union’s Denise Cassidy says she’s seen how it impacts a child’s financial future firsthand.

“It’s scary. A lot more kids are exposed to social media. The scary thing is, most teens don’t realize their identity’s been stolen until they apply for a college student loan or a credit card.”

Cassidy broke down the basics of this and what parents can do to prevent it from happening to your child.

What is Child Identity Theft? It is when your child’s private identifying information is stolen and used for financial gain or to commit fraud. It is criminal activity targeting children under the age of 18.

Why do fraudsters steal a child’s ID? Their credit history is untouched. Their social security number and other factors (name, address, date of birth) can be used to open credit. This information can also create a fake ID (synthetic ID) for the fraudster. Due to the child’s age, the damage to their credit can go unnoticed for years.

Examples of Child ID Theft?

  • Applying for government benefits such as unemployment
  • Applying for a car loan
  • Opening bank or credit card accounts or applying for loans
  • Filing fake tax returns with the Internal Revenue Service (IRS)
  • Receiving fraudulent student aid
  • Opening accounts for utilities or water

Parents, there are red flags and signs you need to look for, including:

  • Preapproved credit offers in the child’s name
  • Collection letters addressed to the minor
  • IRS correspondence concerning owed income tax
  • Suspicious phone calls asking to speak with the minor (indicates the possibility of being on a scam list)

What are the long-term effects of Child ID Theft?

  • A low credit score
  • Tax issues
  • Unable to receive student aid
  • Higher insurance rates
  • Criminal record

What steps can be taken to prevent Child ID Theft?

  • Educate your child about the dangers of ID theft.
  • Explain how to use the internet responsibly and protect their private data.
  • Keep the child’s sensitive information in a secure area.
  • Be aware of what services and accounts your child opens online and what information is being shared.
  • Do not give out your child’s social security number unless necessary.

What to do if it happens to your child?

Contact all three credit bureaus: Ask them to remove fraudulent accounts from your child’s credit report.

Contact the businesses where the fraud occurred:

  • Contact the business’ fraud department.
  • Ask to close the accounts and send a letter confirming your child is not liable.

“Freeze” your child’s credit until they are of age: This will restrict access to your child’s credit file, making it more difficult for the fraudsters to open new accounts in your child’s name.

Report it: Report the identity theft to the Federal Trade Commission and make a recovery plan. You may also wish to file a police report with local law enforcement.

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