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School is back in session and there are plenty of things about which parents are concerned, but is identity theft one of them? Most adults are well aware of the dangers of identity theft and often take steps to protect themselves from this crime. But what about their children? According to a study byCarnegie Mellon University’s CyLab, children are 51 times more likely to be a victim of identity theft than adults.
But why would someone want to steal the identity of a child? Children don’t have credit cards to be exploited or bank accounts to raid, but they do have Social Security numbers because their parents had to obtain one for the child in order to claim the child as a dependent on the parents’ income tax returns. Children also do not have debt or even credit reports at the three major credit reporting agencies, Equifax,Experian and Equifax. Armed with a child’s Social Security number, an identity thief can file a phony income tax return or establish credit and then exploit that credit without ever making payments, leaving the child with huge debt in his or her name. Often a child does not find out that he or she has become a victim of identity theft until he or she reaches the age of 18 and first applies for credit, a scholarship or an educational loan.
The credit reporting agencies do not intentionally create credit reports for children under the age of 18. When they receive information from a lender or some other company to be incorporated into a credit report, the credit reporting agencies do not cross-check the name and age associated with the person’s Social Security number with the Social Security Administration or anyone else to confirm either the age of the person or even whether the Social Security number matches the name of the person using it.
Adults can protect themselves from identity theft by putting a credit freeze on their credit report at each of the three credit reporting agencies. A credit freeze allows you to effectively freeze access to your credit report by requiring the use of a PIN that you choose in order for someone to see your credit report. This makes it all but impossible for an identity thief to open new accounts or take out a loan using your Social Security number because creditors generally review an applicant’s credit report before extending credit or opening a new account. However, because a child will not have a credit report to freeze, this option is not generally available to children. However 19 states — Arizona, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Maryland, Michigan, Montana, Nebraska, New York, Oregon, South Carolina, Texas, Utah, Virginia and Wisconsin — have passed legislation that requires the credit reporting agencies to create a credit report for minor children and then allow those accounts to be frozen. It should be noted that although Experian and TransUnion do not permit credit reports to be established and frozen for minors in the 31 states that do not have this type of legislation, Equifax has indicated that it will do so.
But how do you protect your child’s Social Security number in the first place?
Many school forms require you to provide personal information about your child. If this information is not properly secured, identity theft can follow. Fortunately, the Family Educational Rights Privacy Act (FERPA) helps protect the privacy of student records and provides parents with the right to opt out of sharing contact information with third parties. Annually, all schools are required to provide an annual notice to parents explaining your rights under FERPA including your right to inspect and review your child’s personal educational records, to approve the disclosure of personal information in your child’s records and to correct errors in the school’s records.
Many schools have student directories that may contain your child’s name, address, birth date, telephone number, email address and photograph. FERPA requires that parents be informed about the school’s policy as to its student directory, and, most importantly, the school must inform you of your right to opt out of the release of that information to third parties.
However, your child may also participate at school in extracurricular activities such as sports or music programs that may not be actually sponsored by the school. It is important for parents to learn the privacy policies of the sponsors of these programs in order to best protect their children’s privacy
An unfortunate fact is that approximately 30% of child identity theft is done by the child’s own family members. Responsible parents should make sure that any records containing their children’s personal information such as their Social Security numbers be locked away and secure from the inquiring eyes of other family members. TransUnion is experimenting in Utah with a program that puts the Social Security numbers of minor children into a database that could be checked by credit reporting bureaus, the IRS and others before doing business with someone using that Social Security number.
The price of protecting yourself from identity theft is eternal vigilance and that applies to your children as well.