President and CEO, Identity Theft Resource Center
To say child identity theft is a lucrative market would be an understatement. More than 1 million children were victims of identity fraud in 2017, resulting in a loss of $2.6 billion dollars, according to Javelin Strategy and Research’s Child Identity Fraud Study. So, why does that matter to you as a fraud examiner?
Children’s identities can be stolen in a variety of ways. One of which is by that of a parent, legal guardian or relative. In some situations, a parent might use their child’s credentials in order to keep the power on or buy groceries with the thought that it’s in the best interest of the child that these things happen. Other times it might be malicious, with the parent, legal guardian or relative never having the intent of righting their wrong. It is easy for these adults to use a child’s credentials because they have access to their personal identifying information or PII. A trusted friend could also easily come across the needed information to commit identity theft. Children in the foster care system are uniquely vulnerable to identity theft since their files are shared with so many different people and can easily fall into the wrong hands.
In addition to known perpetrators, identity criminals and hackers have started targeting databases that contain children’s PII – like pediatrician’s offices and daycare centers. Children are targeted because they often do not have a credit history, are not trying to obtain credit nor are they actively monitoring it, which means a thief can use their PII for years without anyone discovering it. Often a child finds out about the theft when they are applying to colleges or for their first credit card or apartment. By this time, their credit might be severely damaged causing serious repercussions like delayed educational goals or being rejected from housing opportunities.
Since children do not often find out their identity has been stolen until later in life, criminals will also use their Social Security number to commit synthetic identity theft. This type of theft occurs when an identity thief takes bits of personal information from many different people, or fake information altogether, to create an identity to use in theft. Oftentimes, the criminal will use a child’s stolen SSN in combination with a synthetic name, birthdate and address.
As an anti-fraud professional, you have most likely seen children’s identities used fraudulently in the course of your work. If you do come across a child’s compromised PII, there should be a set standard of bringing this issue to your supervisor or client. Since this is such a sensitive matter, and has potential for substantial negative risk for both the organization and the child, it is imperative that the issue be treated with urgency. Beyond the internal process for your organization, additional steps should include ensuring that a notification is made to make the parent or guardian aware of the issue and potentially what to do if the parent or guardian is the culprit. If these types of processes are not in place, starting the conversation on how to manage this scenario is imperative to ensuring not just one child but many children can resolve the issue before it gets out of control.