How to Protect Children from Identity Theft

According to research from Carnegie Mellon University, kids could be up to 51 times more likely than adults to be the victims of identity theft. The reason isn’t personal; it’s simply opportunistic. Kids have something few adults have – pristine credit.

Criminals know if they can get ahold of a child’s Social Security number, there’s a good chance they can open credit in that child’s name for the first time. They can then rack up purchases for themselves – leading to growing debt for the unknowing victim. In most cases, the child will only discover this many years later, when they apply for their first loan or credit card. By that point, unwinding the damage can be a time-consuming, frustrating and expensive mess.

To ensure your child begins their adult life with an unscathed credit score, here are the top three measures you can take to protect your child from identity theft.

1. Watch for signs that your child’s identity has been stolen.

There are a few surefire signs to watch for that indicate your child’s credit may be breached:

• If you begin receiving pre-approved credit card offers in the mail for your child, it may seem like a silly mistake: How did two-year-old Billy get his first credit card offer? This is a sign that a criminal has opened credit in Billy’s name, which triggers other lenders to send more offers.
• You start receiving debt collection calls for accounts in your kid’s name that were never opened.
• After including your child as a dependent on your tax return, you receive a notice from the IRS that they have already been part of or filed a tax return.
  

2. Start taking precautionary steps to protect your child’s identity.

Below are actions you can take now to safeguard your child’s identity.

• Request a credit report for your child from the three major bureaus – Experian, Equifax and TransUnion. As part of this process, you’ll need to provide proof of your own identity and that you are the minor’s parent or guardian.
• When requesting a credit report for a child, there should be no report to provide because the child should not have any active credit. If you do get a report back, that is a sign someone has opened credit in your child’s name. Typically, only someone over age 18 will have a credit score.
• Keep the blue Social Security card issued in their name securely locked up. Do not store it in your wallet or purse. If it is stolen, the thief would have what they need to open credit in your kid’s name.
• Don’t provide your child’s Social Security number to others, including their school, doctor’s office, registration for youth sports team, among other reasons. While they may not plan on doing something nefarious with it, they simply don’t need it and should not be using it as a form of identification. By providing it, you are now dependent on them to ensure their systems are never breached.
• As your kid becomes older, ensure they understand what their Social Security number is used for, that you only get one, and that they should not be sharing it with others. Cybercriminals use fake apps geared toward kids and teenagers that ask them to provide personal information, including Social Security numbers, to claim falsely promised rewards.

3. Set up a credit freeze, the ultimate defense against child identity theft.

While it may not be as memorable as a PlayStation 5, the best gift parents can provide their children is a credit freeze. Freezing your child’s credit will prevent identity thieves from being able to open credit in their name. That’s because lenders will deny the attempt because they themselves cannot access the credit file to determine if they want to issue credit.

It does not cost to freeze a child’s credit, but it is more involved than requesting one for yourself, which is also highly recommended. Unlike a credit freeze for an adult, the request for a child cannot be done completely online. You will need to mail certain forms and documentation to prove you are the child’s parent or guardian. Given the potential risks and resulting damage for your child, the extra 30 minutes it takes to set up the credit freeze is well worth it.

Click here for detailed instructions on freezing credit for a child.

When the identity theft of a child goes undetected, it follows them through their adult life, at which point it can have major detrimental impacts. When they apply for their first credit card or loan, they will be denied. They may also be denied job offers or rental applications and mortgages for their first home – without being told why. While there is no all-encompassing way to stop identity theft of a child, taking a few preventative steps can greatly reduce their risks.

If you have additional questions about safeguarding your family’s finances from identity theft, reach out to your financial advisor. If you are not working with a Buckingham advisor, we would love to help you. Please schedule a phone call or virtual conversation with our Client Development team.

For educational and informational purposes only. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. R-24-6736