SALT LAKE CITY — When the young man applied for a small loan to help with college costs and was turned down, the reason surprised him: He'd purchased a home, it seemed, when he was just 7 years old and he hadn't made all the payments. He had other debt, too, that made him a poor credit risk.
Identity theft is like that, torpedoing plans and shaking financial futures. In the case of kids — a demographic that's increasingly targeted by thieves — it could be more than a decade before the crime comes to light. That's a lot of time to do damage, experts say.
Some sources say the numbers are relatively small — about 2.4 percent of U.S. households where children under age 18 are victims of identity fraud, according to the Identity Theft Assistance Center, which is supported by financial services companies that offer the help as a benefit to their customers. Other experts put the number even higher, including CBS Baltimore, which said one in 10 kids have had their Social Security numbers compromised, compared to one in 500 adults.
For a couple of reasons, the numbers are to some degree guesstimates, experts say. First, the crime often goes undetected. It is also an unhappy fact, says ITAC, that those taking advantage of a child's personal information may be a close relative or friend — even, in many cases, a parent. Researchers call it "friendly fraud" and it accounts for 27 percent of cases.
If adults are not looking out for a child, identity theft may not be discovered until after he turns 18. It is a crime that is disproportionately hard on children from lower-income households, who are more often targeted than more wealthy peers.
Virginia State Police Lt. Robert P. Chappell Jr. of Roanoke, Va., literally wrote the book on the topic. As an officer, he'd seen a growing problem with child identity theft and he'd read articles about thousands of children in foster care who had been victimized by child ID theft. They are especially vulnerable because their personal information moves with them from home to home. When he went looking for more information, Chappell couldn't find much written on the subject at that time.
His "Child Identity Theft: What Every Parent Needs to Know" includes the facts from a law enforcement perspective, as well as recommendations.
"It's a predatory crime that affects families and I know how to recognize it and the steps to prevent it, as well as how to deal with the emotional aspects of it," Chappell said in a phone interview. His website, childidtheft.org, offers tips.
Adding 'em up
Chappell's astonished by the sheer number of people and places that have been entrusted with key identifying information about children, from schools to clinics. A Social Security number and date of birth are the most-sought bits of data. Military families move every few years and may leave a trail of schools, doctors and others who have collected information an identity thief craves. People sitting idly in a doctor's waiting room or near the pharmacy may glean some of the information by simply listening.
He tells people in those settings to write down their information, instead of speaking it. And whether you're sharing data with others, it's appropriate to ask how they secure data. Is it cross-cut shredded? Put into a secure computer system and the paper trail burned?
While he was researching his book, he came across the story of a hospital worker in Louisiana who stole 400 people's identities. And he's often a resource to parents trying to help older teens or young adults straighten out the wreckage of identity theft, some of it old news that was never reported.
Kids don't routinely check their credit history; parents should do so once a year, he said, through the annualcreditreport.com site. That is the only site authorized to provide the free yearly report. What you want to hear about your child is simple: no credit history.
Chappell warns parents about signs of possible trouble. A child getting more mail or any credit card offers is a definite red flag.
There are low-cost and no-cost fixes, usually — as long as you're not tallying up the time it takes. Chappell recently helped a family in which the son had been turned down for a job because, it turned out, for years his identity had been abused, primarily for employment purposes.
The longer the problem has existed, the more damage can be racked up. Most adults find out fairly quickly, but a kid's identity could be used for years without detection, according to the Federal Trade Commission. For either, it may be a complex mess to undo.
Whether the theft was for financial, criminal, medical or employment purposes, Chappell said getting organized is a must. Keep a journal. He suggests keeping everything in a file and maintaining a journal of all contacts you make trying to fix it. "On such and such a day, I talked to so and so. Had a bill collector contact me today." Document contacts and the action you take. Most banks and financial institutions won't help you without a police report, so provide the police with every document you have on it. Also, report it to the FTC at www.ftc.gov.
The FTC provides a step-by-step guide to unraveling identity theft's harm, as well as preventive steps such as opting-out of sharing your child's personal information whenever possible. It's important to know how shared information is used. Be aware, it said, that something as innocuous as a school directory may place a child at risk, depending on the information gathered.
ITAC's Ann Wallace emphasizes three questions to ask: Why do you need it, is there another way to identify my child and how will you protect the information?
The worst cases typically involve criminal acts committed in the child's name. To fix that may require hiring an attorney, Chappell said. "I've had families come to me that the first inkling they had was a debt warrant or a civil warrant showing up at the door. That can be traumatic. And cleaning up ruined credit's not fun, either."
Parents should contact credit issuers and plead the case, with documenting evidence. Go through the dispute process. "Then you're at the mercy of trying to get them to clean it up," he said.
If the parent or close relative committed fraud, it's that much worse. Kids are usually reluctant to file a report on their parents, no matter how egregious the act. It's one reason the number of cases turned over to police is small.
Placing a fraud alert on a child's credit can head off some future problems. Call up any of the three big credit agencies, Experian, TransUnion and Equifax, and do that, then reapply it every three months. Those credit reporting agencies allow all consumers in the United States to freeze their credit.
Besides letting adults freeze their credit, Maryland allows parents to freeze a child's credit until he or she reaches legal age. The law, the first of its kind in the nation, also allows those with legal guardianship of incapacitated adults to apply a freeze, which could help seniors and those with disabilities, according to the legislator who sponsored the bill, Craig Zucker.
EMAIL: email@example.com, Twitter: Loisco