January 13, 2016 Personal Finance

How ID theft threatens the financial lives of kids and teens

iStock.com/skynesher

What’s 9 digits in length, unique to your son or daughter and is often seen by thieves as “the key to the kingdom”?

It’s your child’s Social Security number. For kids and teens, identity theft strikes when a criminal uses the minor’s Social Security number to open a new account, such as a credit card, car loan or personal loan.

“There is a growing trend among identity thieves to steal the identities of children,” says Robert Siciliano, an identity theft expert. Since the credit of children is not usually monitored, thieves see their records as a clean slate.

ID theft of kids and teens can go undetected

Further complicating the problem is the fact that ID theft for kids and teens can go undetected for years.

“Often, the 1st time victims discover that their identity was stolen is when they engage in their 1st financial transaction and try to establish credit,” Siciliano says.

They might try to buy a cellphone, qualify for a student loan or rent an apartment, only to find their credit is in poor standing, or that they have piles of debt in their name.

To protect youths, keep their Social Security numbers in a safe place at home. Also, talk to your son or daughter about the importance of not sharing personal information with others.

Keep cellphones updated with the latest security

Make sure mobile phones in the family are password-protected, and keep all devices updated with the latest operating system and security measures. Share Social Security numbers only when necessary.

Be aware that the threat of ID theft may lurk nearby. “Children and teens are especially vulnerable to ‘friendly’ theft — the type of ID theft which occurs when someone you know is the perpetrator of the theft,” says Michelle Black, president of Hope 4 USA, a credit education program in South Carolina.

If you suspect your child is a victim of ID theft, Black says to take these 4 steps:

  1. Contact each credit bureau (Equifax, Experian, and TransUnion) and request a copy of your child’s credit report. You’ll need to fill out a form, available at AnnualCreditReport.com, and send along identifying information with the request. When you get the reports, look at them and make a note of all damaging information.

    You can get your credit report for free at myBankrate.

  2. Report the theft

     to the Federal Trade Commission. This will allow you to state the disputes you have with credit-reporting agencies and creditors about the identity theft-related items.
  3. Consider placing a freeze on your child’s credit reports to prevent future ID theft from occurring. The laws on credit freezes vary by state, so check what the options are in yours.
  4. Request the credit report for your child from the 3 credit bureaus once more. You’ll want to make sure that fraudulent accounts have been removed from the reports, and the child’s credit is clean again.