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Child Identity Theft: How it Happens and How to Protect Your Child

Kelli Grant of CNBC talks about child identity theft.

Over a million children under the age of nine have had their identities stolen in the last year alone. It’s important to know how child identity theft can happen and how to protect your child from becoming a victim of identity theft.


See Identity Theft of Children with Kelli Grant for a complete transcript of the Easy Prey podcast episode.

Kelli Grant is a senior editor at CNBC, a former senior consumer reporter at Market Watch and Smart Money, and a personal finance reporter for over fifteen years. She’s one of the few working journalists who has a Certified Financial Planner designation. Her work has appeared in the Wall Street Journal, the New York Times, Good Housekeeping, and Real Simple, among others.

I know a lot about money and I know how to track it down.

Kelli Grant

Child Identity Theft: The Facts

Kelli has written about child identity theft a number of times over the years. It’s a scary trend. New research from Javelin estimates over 1.25 million kids have fallen victim to identity theft and fraud. In the past year, they estimate over $918 million dollars lost to child identity theft and fraud, with the average family losing $1,100. More than half the cases involved children ages nine or younger. About 70% of the victims knew the perpetrator – their identity was stolen by someone in their lives.

This report lumps fraud and identity theft together because for children, it can be hard to differentiate the two. With an adult, fraud compromises something existing, such as putting a new charge on an existing credit card. Identity theft takes personal info and creates something new. This can include opening a new line of credit, filing fraudulent tax returns, creating employment records, and more. Since children’s credit histories are often completely blank, it’s easier to report on the numbers for both than try to untangle what’s fraud and what’s child identity theft.

How Child Identity Theft Happens

Most people think of identity theft is something that happens digitally. You have the image of the faceless hacker breaking in and stealing your info. But Kelli has found that with child identity theft, it usually happens on paper. You may leave papers with your child’s info on a table or counter where anyone can see them. A friend or relative may know which filing cabinet has the documents. Someone might steal mail that has information. It might not even be something you think of as essential information, but any information someone has on your child is a foot in the door to steal their identity.

We fill information out by rote … we don’t see the harm in it. The problem is for a lot of identity theft, these thieves take bits of information and use it to crack open other things.

Kelli Grant

You may have given your child’s information to a business where it isn’t stored or disposed of properly. Some businesses don’t know the value of the information they collect or how to store it safely. Many small businesses are experts in what they do, and not necessarily in data security, and they may leave your child’s information vulnerable.

Child identity theft can happen because a business that has your child's information didn't keep it secure.

Why Children Make Great Targets for Identity Theft

Kids are clean slates when it comes to credit. Someone stealing another person’s identity wants to get the money from their credit and leave the other person with the bill. Child identity theft is great for them because children don’t have bad credit. The thief won’t risk their fraudulent applications being denied due to the victim having a poor credit history.

Stealing a child’s identity is also less likely to be noticed. An adult would notice fraudulent charges on their credit card and is likely checking their credit report regularly. But you probably aren’t thinking about protecting your child from identity theft, and so you’re probably not watching your child’s credit. Child identity theft can go unnoticed for years. Axton Betz-Hamilton had her identity stolen as a child, but she didn’t find out until she applied to rent her first apartment at age nineteen and discovered years and years of debt on her credit report. (She later wrote a book about the experience, The Less People Know About Us.)

Child identity theft also offers a great opportunity for synthetic identity theft. With synthetic identity theft, thieves compile information from multiple sources. Some of it is real, some of it is made up, and some of it is stolen from other people. They use your child’s social security number to build up a brand new identity with your child’s clean credit history. That way they can steal your five-year-old’s identity without looking like a five-year-old is applying for a mortgage.

You have to be thinking about all the different pieces of information and ways they might be used.

Kelli Grant

Finally, if the child identity theft was perpetrated by a family member, it is difficult to fight. This is called “familiar fraud.” Lenders, courts, and law enforcement have a hard time disentangling this fraudulent activity from genuine activity since the individuals involved are close family members. It can also be difficult to fight emotionally. Even if the child is frustrated or upset, very few kids want to be the one who put mom in jail.

Signs that Your Child Might be a Victim of Child Identity Theft

Since most child identity theft is done by paper, several signs that your child’s identity has been stolen can come through the mail. Getting pre-approved credit offers in your child’s name is a big red flag. Some people laugh about their five-year-old being approved for a credit card, but that’s an indication that your child’s social security number may be compromised.

Missing mail is also something to be concerned about. If the mail thief stole anything with your child’s information, they could potentially use that information for child identity theft.

When you get indications of tax fraud, you probably aren’t immediately thinking about child identity theft. But your children’s social security numbers are on your tax returns. Tax fraud could let an identity thief get their hands on your child’s social security number and steal their identity.

Also be aware of data breach notifications. Even if it’s not a site you are on, a data breach on a site your child uses could expose their information to people looking to steal identities.

First Steps If You Think Your Child’s Identity was Stolen

If you notice any signs of child identity theft, the first thing to do is pull your child’s credit report. A child shouldn’t have anything on a credit report to pull. If there is something there, look and see what it is and if it’s legitimate. Mostly likely, it won’t be.

If there’s something on the credit report that shouldn’t be there, freeze your child’s credit. When credit is frozen, no one can apply for new credit or amend existing credit. This includes the real person the credit belongs to – your child – so the credit will need to be un-frozen before your child can do anything requiring credit.

Now that the thief can’t open any more credit in your child’s name, take steps to undo the damage and secure your child’s information. Nonprofits like the Identity Theft Resource Center and other services can help.

Kelli’s #1 Tip to Protect Your Child from Identity Theft

Kelli can’t emphasize this enough: Just don’t give out the information. We’re asked for information much more often than we actually need to give it. Lots of places, like summer camps and after-school programs, may ask for your child’s social security number but don’t actually need them. In many cases, the blank is just on the form and nobody knows why.

My biggest tip is to really think about where you might be giving out this access and try to keep that information out of circulation.

Kelli Grant

As a parent filling out forms, Kelli often leaves the spot for her child’s social security number blank. She figures if they really need that information, they will ask. When they ask, she can find out what they need it for and how they’re going to protect it. Most of the time, they won’t ask you for it. In all her time of filling out forms, no one has ever come back and told Kelli that they actually do need her child’s social security number.

Proactively Prevent Child Identity Theft

A lot of ways to protect your child your child from identity theft involve keeping data safe and monitoring for issues. Pay attention to data breaches and what information was compromised. Monitor your child’s credit so you can catch anything that pops up. See what protections you have available before you need them – some homeowner’s insurance policies include identity theft protections, some employers offer employee benefits to deal with identity theft and fraud, and some credit cards have extra protections that help with more than you would think.

Some people recommend proactively freezing your child’s credit, but Kelli doesn’t recommend that. When your child needs to apply for student loans, financial aid, or an apartment, you’ll have to unfreeze the credit. You get a PIN when you freeze it that you’ll need to unfreeze it. If you’re freezing credit for your six-year-old, you’ll have to keep that PIN secure and not lose it for ten to twelve years. Freezing credit also doesn’t prevent your child’s social security number from being used for employment or to file a fraudulent tax return.

Include your child in these conversations. Kids are on the internet younger and younger these days. Social media quizzes are popular – kids don’t see the harm in putting in their pet’s name, their street name, or their initials to see the funny quiz results. But if you look at these quizzes, a lot of the questions are answers to security questions. Teach your child what you’re learning about child identity theft, keeping their information safe, and how to spot a scam. It doesn’t matter how safe you’re keeping their info if they’re giving it out online. They need to have an understanding of what information needs to be hidden and why people asking about some information can be bad.

Getting your child involved in protecting their own information can help prevent child identity theft.

Prevent Familiar Fraud

Keep everything that has sensitive information secure. Take steps for password security for your bank accounts, accounts that can access your tax documents, and anything else that might be at risk. Make sure all documents with sensitive information are secure. You wouldn’t leave $1,000 in cash laying around, but too many of us are comfortable leaving bills, tax returns, and other documents on a table or counter where anyone could easily take or photograph it.

Don’t assume it’s safe to leave documents out if it’s only close and trusted people who visit. Most child identity theft is familiar fraud. And it isn’t always malicious. There are higher rates of familiar fraud when the economy is bad. A parent might steal their child’s identity so they can keep the lights on or buy groceries. But it’s not the thief who is ultimately hurt – it’s the child. Even if a friend or relative asks for your child’s social security number to start a college savings plan or put them as a life insurance beneficiary, be cautious. In most cases, they don’t need it to achieve their kind objective.

Anybody that’s coming into your home, even briefly, think about what they might have access to – it’s really the friends and family members that you need to watch out for.

Kelli Grant

You can find Kelli Grant on Twitter @kelligrant or on her website, cnbc.com and grow.acorns.com.

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