If your child begins to receive offers for preapproved credit cards, it may strike you as annoying or silly, but don’t throw them in the recycling without a second thought. This could be a sign that your family is the victim of child identity theft. Nearly 3 percent of U.S. households with children under 18—or one in 40 households—have been struck by child identity theft, according to the Identity Theft Assistance Center. The Pennsylvania Institute of Certified Public Accountants explains how to prevent or respond to this crime.
Adults aren’t the only victims
Each year, scammers use confidential financial information stolen from roughly 12 million people to commit crimes. They may, for example, use your Social Security number to apply for a credit card or charge purchases to you after stealing your credit card number. Unfortunately, children can also be victims. What’s worse, they may not find out it has happened until years later, when the bad credit history that the scammers established in the child’s name prevents that child from getting a student loan, apartment lease, or credit card.
Warning signs
In this type of crime, a child’s information may be used to develop an identity for a fictitious adult. Certain warning signs would be notification from the IRS regarding, say, failure to pay taxes when your child has had no income and notice from a financial institution regarding an account your child doesn’t have or a purchase he or she never made.
Keep an eye on accounts
As with any kind of identity theft, prevention requires close monitoring. Regularly review the statements your child may receive from any savings or other financial accounts they have. Ensure that all checks or withdrawals are accurate and that there aren’t any unauthorized charges. When your children are old enough, discuss your reviews with them. Explain the importance of keeping tabs on their money so that they are better able to protect their accounts, manage their money, and stay on budget as an adult.
Protect their privacy
You can safeguard your entire family’s privacy by properly maintaining the confidentiality of all your paper and electronic financial and other records, and shredding documents with personal information before you discard them. Keep Social Security cards in a safe place, not in your child’s wallet. Warn your children to restrict their online purchases to reliable websites that feature online security and privacy protection. In addition, advise them not to divulge information about their financial accounts or Social Security number in response to any e-mail, no matter who sent it or how legitimate it may look. Identity thieves can use a birth date to access a birth certificate and create a phony profile, so discourage them from revealing this information online.
Respond to thefts
If you believe your child has been the victim of identity theft, contact the three major credit agencies—Equifax, Experian, and TransUnion—to see if they have a fraudulent credit history on file. If they do, ask the agencies to remove the incorrect accounts and other information and issue a fraud alert on the account. Follow up with each creditor and let them know that the account in your child’s name is fraudulent. You can also file a fraud report with the Federal Trade Commission and a police report.
