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By Andrew Housser
Identity theft is terrible when it happens to anyone. The consequences range from hassle to financial disaster. But what if someone stole your identity, and you had no idea, perhaps for years while the thief opened credit cards or secured vehicle loans, filed taxes and pocketed the refunds, or even took government benefits?
It is possible, particularly with children the group most at risk for this type of unrecognized theft. A 2011 study found that more than 10 percent of victims of identity theft were children. This makes children 51 times more likely to be victimized than adults. The tips below can help you protect the children in your life.
1. Know the warning signs.
Possible identity theft has warning signs. The most obvious is if a child begins to receive credit card or loan offers in the mail, or collection calls. Sometimes, a child receives a notice from the Internal Revenue Service about unpaid taxes. Others may be denied government benefits such as Medicaid because the Social Security number has been used. Sometimes, the theft goes undetected until a child applies for a driveR s license or bank account. A fraud victim may be denied because his or her Social Security number has been used with another name.
2. Check the child s credit reports.
Adults and minors older than age 14 can request free credit reports once per year from AnnualCreditReport.com or by calling 877-322-8228. Check your child s credit reports using his or her Social Security number. If no reports exist, the child s credit has never been used. This is an indicator that all is likely well.
3. Understand when a child might have a credit report.
Some minors legitimately have a credit report. In many cases, this is because parents have added a teen as an authorized user on a credit card account. Other minors may be joint account holders or have a small bill, such as a cell phone, in their names. In these cases, having credit reports is valid. Still, parents or guardians and teens should review the reports together to make sure they do not contain inaccurate information or errors. If you do spot an error, report it to the credit bureau in writing and request a correction.
4. Keep Social Security numbers secret.
Do not share your child s Social Security number, even with family members. If you receive information that any relevant data such as tax return, school or health insurance information has been exposed in a security breach, take necessary precautions with your child s information as well as your own. If you are asked for a Social Security number for identification purposes, ask if you can use only the last four digits, or see if you can identify the child in some other way.
5. Be especially careful regarding foster children.
Foster children are especially at risk of identity theft. This is because their information passes through many hands. Sadly, these children face even greater challenges if their identities are stolen. Fortunately, in 2011 Congress passed legislation requiring child welfare agencies to help foster kids check and repair their credit when they turn 16.
6. Handle fraud or identity theft quickly.
If you believe your child is a victim of identity theft, respond quickly. Contact each of the credit bureaus to report the fraud. Tell at least one of the credit bureaus to place a fraud alert on the account (one company will contact the others). You also should file a fraud report with the Federal Trade Commission (FTC) online or by calling 877-438-4338.
7. If a child already is a victim, consider a credit or security freeze.
A credit freeze shuts access to an existing credit file, making it impossible for anyone to open a credit card or loan using a Social Security number. If a child is a fraud victim, parents may opt to do this. You need to arrange the freeze individually with each credit bureau. See more details from the Identity Theft Network .
In addition, it s possible in some states for parents to proactively do a credit freeze for any child. If the child has no credit file, in these states, the credit bureau would create a file in order to place a freeze on it. Currently, legislatures have made these credit freezes available to parents or guardians in about 20 states. Be aware, however, that there is a downside to this option. Should someone try to apply for a loan using a child s stolen (but unfrozen) information, the lender will be informed that there is no credit history, and the applicant is a minor. This could result in the fraud being reported, and perhaps the thief s capture. With a freeze on the account, the lender would never be informed of attempts to use the number.
Fortunately, most children will avoid identity theft. For those who are victimized, the best defense is catching the situation early. By reporting the fraud, you can help salvage the child s credit profile in time for grown-up responsibilities such as a job application, student loan or car loan.
Andrew Housser is a co-founder and CEO of Bills.com. a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.