Your 12-year-old child is in foreclosure on a house in his name. The police has questions about numerous large utility bills found in a marijuana grow house belonging to your 8-year-old child. Your 4-year-old child is being sent letters from the IRS, claiming that he owes $200,000 in back taxes.
How can our children, who keep their money in pink piggy banks, buy a house, pay utility bills, or have enough money in that little ceramic coin holder to owe back taxes?
How can you help your child if his identity is stolen, but you only find out about 10 or 15 years later?
“These are not theoretical questions. These are real-life questions that parents and guardians of children in this report have been forced to come to grips with,” said Richard Power, distinguished fellow at the Carnegie Mellon CyLab and researcher and author of the report “Child Identity Theft.”
The Carnegie Mellon Cylab Report
According to the Carnegie Mellon Cylab report released in April, Power, the first person to investigate identity theft involving children, found that the occurrence of child identity theft is 51 times greater than the rate for adults when compared to similar demographics and population counts.
What makes stealing a child’s identity unique is that these identities will most likely sit around unused for years, even decades, giving the thieves uninterrupted use of a “virgin identity.”
The identities of an adult only provide a short-term solution to a thief’s financial goal. They are looking to drain bank accounts, buy electronic equipment to pawn, take expensive vacations. However, nothing long term, and as soon as they exhaust the adult ID, they are on to the next.
However, with a child’s identity, the thief can think long-term, and it will take decades before they are caught, and when the warning signs show up, the thief has a new unused Social Security number. Here, the thief can gain employment, open bank and credit accounts, purchase a home, boats, and other things.
The reason, Power said, is that most parents do not check their child’s credit. In the days before the information age took off, there was no need to worry about your children’s identity. The only way back then to get these numbers was close personal contact. Now a worker at the hospital can get a newborn’s Social Security number before the parents take their infant home. With the computer keeping sensitive records, gone are the days that you don’t have to worry about your child’s financial future. Not the case anymore.
In his study, Power used data from participants up to 18-years-old who were enrolled in the Debix AllClear ID Protection Network. He picked those whose personal information may have been compromised during a data breach.
From this data, he selected 45,000 children and found that more than 10 percent had someone else using their identity. Using the same population demographics for adults, he found that only .2 percent had someone else using their identity. The national average of adults being victims of identity theft is 1 percent.
“New evidence indicates identity thieves are targeting children for unused Social Security numbers,” Power said in his report.
The report found those children’s identities were used to buy houses and automobiles, open credit cards, secure driver’s licenses and obtain employment.
The largest fraud committed found against a child was $750,000, using a 16-year-old girl’s identity, and the youngest victim was 5-months-old. The report also stated that 303 victims were under the age of 5-years-old.
The Federal Trade Commission held discussions days after Power’s report came out. The FTC said it estimated that between 140,000 to 400,000 children have their identity stolen each year.
The most likely places that thieves steal a child’s identity are day care centers, hospitals, schools and even sports team applications, such as locally organized football, baseball, soccer and other programs that are nationally franchised or run by municipalities.
“Parents don’t usually think about the need to protect their children’s identities, but to certain criminals, a child’s identity is even more valuable, and the probability of discovery is low since no one is watching,” said Bo Holland, CEO of Debix.
Power pointed out that a child’s Social Security number has a unique value that does not exist in any other form of identity theft – the numbers have yet to be used.
These are “virgin numbers,” which means a thief can put any name, age and sex to them. And in many cases, it can take more than 15 years before the real owner of the Social Security number discovers the theft.
In addition, credit reporting agencies do not verify that the name, birth date and sex match what’s in the Social Security Administration database. Once the thief uses the number, it belongs to that person, and it is almost impossible for the real owner to get their own number back.
Moreover, Social Security numbers are not treated as unique identification by many commercial and public entities.
“Many commercial and public sector entities do not treat Social Security numbers as unique identifiers,” Power reported. “It is possible for one SSN to appear on more than one credit file, employment report, criminal history – all mapped to different names.”
In the study, Power told the stories of people who experienced the near devastation that happens when a child’s identity is taken. Here are two of them.
Lindsey: A student who (almost) couldn’t get an internship
Lindsey is a college student from Texas who applied for an internship and was accepted. A background check was performed, and it revealed that someone else was using her Social Security number. The person had used it to gain employment and had been using it for many years.
“Lindsey was classified as ‘unemployable’ because she did not own her SSN,” Power said.
During the many months it took Lindsey to correct this, she discovered that the person using her SSN accidentally transposed some of the numbers of his Social Security, and ended up with hers instead.
Lindsey eventually got her identity restored and was able to accept the internship, but months later. She almost lost the opportunity due to her identity being compromised.
“It was like a full-time job,” Lindsay recalled. “I spent hours and hours doing paperwork, standing in line and sitting on the phone. I’m extremely careful now. I check my credit incessantly.”
While there are a few instances in which someone accidentally used someone else’s SSN, most of the cases are thefts, and it sometimes can be a family member, perhaps someone who needs the new number to get the power turned back on or to start fresh with a new credit history, Power reported. When it is time for that child to use his or her identity, however, it is already ruined.
Nathan: A toddler who bought a house
The next case involves a theft by a stranger. At 14 years old, Nathan, from California, already had an extensive credit history. For the last 10 years, he had perfect credit, financed $605,000 for a house (both first and second mortgages), had several credit cards and was employed. The only problem is that Nathan was three years old when he purchased the house worth more than $600,000.
Something happened 10 years later, however, and the thief defaulted on both mortgages. After the bank foreclosed on the home, Nathan had debts of more than $600,000 in his name. The thief also opened credit cards using Nathan’s Social Security number, and the unpaid debt went into collections.
“I was very upset; you just don’t think someone will use your child’s identity,” Nathan’s father said. “He was only three years old when somebody started using it, and the thought of that made me sick to my stomach.”
His father filed criminal fraud charges with the police, and eventually, the $607,000 in debt was removed from his son’s credit report.
What makes discovery difficult?
The data uncovered by Power shows some disturbing evidence of why identity thieves are targeting children.They receive their Social Security numbers shortly after birth and often remain unused for 12 to 18 years. It is becoming more common practice for hospitals, as part of their process, to have the child assigned a Social Security number before the parents take the newborn home.
A big problem in detecting whether a child’s identity has been stolen is that our current systems – Social Security, credit reporting agencies and the financial industry – have no way to verify the applicant’s name, age and sex.
Since there are no checks and balances between these groups when a credit application or a driver’s license is applied for, this information is taken at face value.
For example, if the original identity is that of an 8-year-old girl, and the credit application says the applicant himself is a 25-year-old man, then that becomes the official name, age and sex associated with that number until a dispute is filed and proven.
In addition, with the ability to open accounts on the Internet,there is no way to prove that theperson on the other end is not who they say they are. When face to face with a bank manager, there’s at least some chance that the employee will notice obvious discrepancies.
Power said that the majority of identity thefts are committed by illegal immigrants so they can obtain work. With an untraceable Social Security number, these immigrants become undetectable.
Government attempts to stop the problem
To help combat this issue, a new federal law, still in the house judicial committee, is being considered as part of a larger effort to prevent undocumented workers from taking jobs away from U.S. citizens.
If it passes this session, bill HR2000 will require all employers to participate in E-Verify. The program, started in 2004, with voluntary participation, is designed to catch and prevent undocumented workers.
It does this by requiring the employer to search the Social Security Administration’s database and verify that the information provided by the applicant matches what is returned by the search.
By comparing the applicant’s data directly to the SSA database, it will take away the advantages of an unused Social Security Number, making them useless.
This is just the beginning
Power says there is enough evidence that child identity theft demands further study.
Power said that the data he’s found should be raising questions: How widespread is child identity theft? Is the trend growing and, if so, how quickly? What is the government doing about it? What are companies, such as banks, credit reporting agencies or anyone who comes in contact with information that could be stolen doing? What should families be doing to protect their children?
“This is a non-scientific report. The data does not project or imply any estimate ofthe total numberof child identity theft incidents, or what percent of children’s identities are stolen, or what percent of the total number of identity theft incidents involve children,” Power said.
“It highlights some serious risks and threats and raises some serious questions that should be the subject of a scientific study to determine the scope of the problem and how it is trending,”Power said.
Power also noted the lack of public and private institutions that address the issue of child identity theft. For now, it is up to the parents to monitor their children’s credit reports.
“If it were only one child, it would be one too many,” Power wrote. “But this report documents over 4,000 children, and there are likely many more.”