Child Identity Theft

17-year-old Zach Friesen was shocked when he was turned down for both a student loan and a job due to bad credit history. He didn’t know he had any credit in his name, let alone bad credit. As it turns out, someone had used his personal information to buy a $40,000 houseboat when Zach was only 7 years old. Of course, the identity thief never paid back the loan, and Zach’s credit has been in ruins for the past ten years without his knowledge. It took Zach and his mom weeks on the phone trying to explain his innocence to creditors and credit bureaus. They never learned who had misused his personal information – it could have been anyone who had access to his files at school, a medical or dental office, or any number of other businesses.

Who steals a child’s identity?

This is just one child identity theft case of the 20,000 reported each year to the FTC. And that number doesn’t even include the many cases in which parents and relatives are the perpetrators. Family members, sadly, are most often responsible for stealing their children’s spotless credit report, usually in order to turn on water, electricity, or other utilities in the home.

Undocumented workers who need a valid Social Security number to obtain a job are also often responsible for a child’s stolen identity. The recent Flores-Figueroa Supreme Court case, for instance, involved an illegal immigrant who offered (albeit unknowingly) an American minor’s SSN as his own to his employer.

What are the consequences for victims of child identity theft?

Child identity theft can have serious consequences for the victims and their families. Parents of victims may be unable to file their children as dependants or as exemptions with the IRS if someone else has already used the child’s Social Security number, like when the perpetrator gives the child’s SSN to an employer. The employer reports the worker’s earnings to the IRS and the worker may even file a return with that SSN. Cases like this are becoming so prevalent that the IRS has actually set up an Identity Protection Specialized Unit.

Children who have been targeted by an ID thief will most likely encounter problems when they grow up. They may find that their ruined credit means they are unable to apply for a credit card, lease an apartment, or sign up for utilities. But this delayed discovery is exactly why many identity thieves target children: Their crime will go unpunished, and usually unnoticed, for years. By the time the theft is realized, it becomes nearly impossible to track down the thief.

To find ways to keep your child safe from this threat, visit our guide on How to Prevent Child Identity Theft.