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Protecting Your Kids Identity & Credit

How to Protect Your Children from Identity Theft and Credit Fraud

In previous blog posts, we’ve advised that it is a worthwhile practice to check your credit report once per year in order to minimize potential damage if you are the unfortunate victim of identity fraud. This blog post, however, likely contains advice that you have never even considered. Credit reporting agency, Experian, recently conducted a study which found that one in four children will likely be affected by identity theft before adulthood, and given these recent findings, we wanted to offer steps for parents to consider taking to help mitigate this risk.

Economic Growth, Regulatory Relief, and Consumer Protection Act

If you think about all the various places that hold your child’s social security number and date of birth – such as school, insurance providers and the doctor’s offices – Experian’s findings can be cause for concern. However, the new federal law that went into effect in September attempts to make it easier for families to combat the growing problem of identity theft of minors by allowing parents to make inquiries about credit files in their child’s name and to freeze a file at no cost.

The ability to check your child’s credit reports is part of a broader banking law that also allows unlimited, free credit freezes for adults, a response to a massive data breach at Equifax back in September of 2017.

Last year, the Federal Trade Commission received 14,000 complaints involving identity theft that targeted people age 19 and younger, about 3.7% of complaints for all age groups. These numbers may sound relatively small, but most experts say those numbers may understate the problem because parents are often unaware of children being targeted.

Most children have no credit histories and their Social Security numbers have not yet been flagged in any fraud prevention database. Unmarked and untested, children’s stolen identities often go unnoticed until after they reach age 18 or until they apply for that first car loan or credit card, only to be denied because of a bad credit rating. 

Know the Warning Signs

If you have seen any of these warning signs, it’s possible ID theft of your child has already occurred:

  1. A family receives calls from collection agencies, bills from credit card companies or medical providers, or offers for credit cards or bank account checks in a child’s name, even if the child has never applied for or used these services.
  2. A child or a family is denied government benefits because another account using that Social Security number is already receiving benefits.
  3. The Social Security Administration, Internal Revenue Service or some other government agency asks to confirm that a child is employed, even though the child has never had a job.
  4. The IRS notifies a parent that the same information he or she filed for a dependent child is listed on another tax return.
  5. A child receives a notice from the IRS saying he or she failed to pay taxes on income the child has never received.

Once the provision in the new law goes into effect on September 21, 2018, parents should contact the three main credit-reporting companies—Experian, Equifax and TransUnion —to check on their children’s credit files. Most children under age 16 shouldn’t have credit files. If that is confirmed, parents should either check back with the companies on a regular basis, or better yet, create a new credit file and freeze it.

Steps to Take to Protect Your Children from Identity Theft and Credit Fraud

  • Go to the FTC’s site at https://identitytheft.gov/Steps, scroll to the very bottom and click on the Child Identity Theft section, under Special Forms of Identity Theft.

    • That section will have instructions on how to find out if your child has a credit file.
    • That section will also have contact information for the three credit agencies and how to freeze your child’s credit. 
  • Keep the credit report in a safe place, like your secure Vault, supplied by Gap Financial, so you can access the data when needed to unfreeze.

This material was created for education and informational purposes only, and is not intended to be legal, tax, or investment advice. All expresses of opinion are subject to change. If you are seeking advice specific to your needs, such advice services should be obtained from an independent fiduciary advisor on your own and separate from this material.