We all know the devastation ID theft causes victims and we also know it can take years for the damage to be reversed and often, victims find themselves struggling with their finances once a thief gains access to social security numbers, birthdays and other personal information. But what happens when the victim has no idea of what a credit report is and is too young to qualify for a credit card, a car loan or a mortgage? A new report unveils disturbing new trends in identity theft and the worse part is who is targeted.
That’s right – 140,000 children are targeted each year by adults whose own credit ratings prevent them from gaining approval for their cell phones, credit cards and other material things. One woman we’ll call Liz had this to say:
My son is five years old! Five! How can this happen? My husband and I have always taken great pains to keep our own credit ratings sterling and looked forward to teaching our children the importance of on time payments and the benefits of responsible financial management and then this happens. Hopefully, we can get this resolved before our son reaches the age of consent, but the truth is, some of the bankers we’ve spoken to say it can take many years.
The fear and frustration in Liz’s voice is clear. They have yet to locate the criminal who stole their son’s identity and social security number (they had applied for and received it shortly after he was born). So far, they’ve received collection letters from a cellular company and two credit card companies demanding full payment. While they’re working closely with these companies to help locate the thief, they’re also worried about what’s next.
I dread going to the mailbox anymore since I never know when an envelope is going to be addressed to my five year old son.
Call Me and Charge It
The two most vulnerable industries, according to ID Analytics, are the credit card and wireless industries. In fact, they account for more than half of the fraudulent activity and in fact, Liz’s story is a testament to that statistic. Both of these specific industries make it easy to apply for and receive approval online, negating the need for an in-person application submission process. This, too, adds to the risk. Running a close third are checking accounts. Again, these are easily obtained online with no need to show up at a branch.
The report goes on to say that a younger child’s identity is preferable over an adult because their personal information is “untainted, legitimate and less likely to be monitored for misuse”. In Washington, DC last month, these findings were presented to the Federal Trade Commission and the Office for Victims of Crime (a division of the U.S. Department of Justice). The goal is to find solutions that better protect those most vulnerable in the credit and banking sector.
This week, a Rhode Island congressman, Representative Jim Langevin, introduced legislation that would protect children in foster care. The Langevin Bill would require states to run routine credit checks on foster children in an effort to identify fraudulent activity. Also, he wants states to find another way of identifying these children instead of using their social security numbers.
Their records are easily obtained by foster parents, other relatives and state officials. Often, and unlike Liz’s story, these children have no one looking out for their credit ratings and it’s not until they “age out” of the system and begin applying for apartments and car loans that they realize their credit is not only considered limited because it’s new, but that’s ruined due to fraudulent activity they might have known about.
In California, it’s believed half of the state’s foster children have been victims of identity theft. Clearly, the problem is growing. Rep. Langevin met with his state’s child welfare officials ahead of introducing the bill.
We just want to be sure these kids have a shot at a fair interest rate on their credit cards, student loans and mortgage,
said Rep. Langevin, “There has to be a better way”; sentiments that parents like Liz can completely relate to.