A few years ago our daughters, Allison and Amanda, then ages 12 and 13, began receiving credit offers in the mail. At first I laughed, thinking it was absurd that a middle school child would be receiving such offers. Then I started to wonder why.
When I started asking the parents of other middle schoolers, I came up with a theory. Many of us had recently applied for frequent flyer numbers for our kids. Soon after, the credit offers started jamming the mailbox. Those frequent flyers miles came with strings attached.
Certainly, the experience of a handful of middle schoolers is not conclusive evidence that airline and credit card companies are in cahoots to get our kids into the credit card world. But it was enough to convince me to take a hard look at all the mail that comes in for the girls and to be much more careful about giving out their personal information.
The credit offers the girls received were just part of some misguided marketing effort. That was the good news-our girls' identities hadn't been stolen.
When someone-it can be a stranger, but it's much more likely to be someone your child knows and is close to, such as a parent or guardian-steals your child's name, address, Social Security number or other personal information and uses it for their own financial gain, the first signs that something is wrong often comes through the mail.
Signs of possible trouble
Monica, who did not want her real name to be used, didn't discover her identity had been stolen as a child until she was adult. She had just become engaged and went to the bank to open a savings account with her fiancé. Their application was rejected, the bank told her, because she had bad credit.
"I assumed it was my college loans," says Monica.
To confirm it, she ordered a copy of her credit report and discovered, to her horror, that she owed more than $40,000 in credit card debt.
Fortunately for Monica, she discovered that the credit cards were opened before she turned 18. "Because I was a minor, clearing up this mess was relatively easy."
Monica spent one year, tons of paperwork and many hours assembling legal documents to prove it was not her debt.
Monica had one more hurdle to overcome after getting her credit cleared: the emotional hurdle of realizing it was her father who stole her identity and used it for his own personal gain.
Today, tuned-in parents can help their child avoid what happened to Monica as a young adult.
Start by getting a current credit report if any of the following takes place in your child's name (only get a credit report if you suspect a problem):
n Pre-approved credit offers
n Collection notices for unpaid bills
n Denied application for a driver's license
n Denied applications for student loans, apartment or credit card
n Lots of telemarketers call asking to speak to your child
Fixing the problem
Cleaning up financial identity theft involves the same laborious process, regardless of whether the victim is a child or an adult. First, contact one of the three credit reporting agencies, Experion, TransUnion or Equifax-there's no need to call all three, one call activates the other two-to file a fraud alert. Next, report the crime to the police. Finally, start to contact credit issuers to begin the long process of clearing your child's records.
Laura Foley, founder of the nonprofit Identity Theft Resource Center, has written a step-by-step tutorial to help you navigate this process. It is available online at IDTheftCenter.org. Go to "victim resources" and select solution 5, "How do I order a credit report for my child?" IDTheftCenter.org and the three credit reporting agencies do not recommend that you automatically check your child's credit report annually unless you suspect a problem. Ordering reports unnecessarily can confuse the computerized systems of the credit reporting agencies and open a door to thieves because it could establish a credit report, according to IDTheftCenter.org.
Remember, it is much easier to avoid the problem of identify theft than to fix it. Do not give your child's personal information out to anyone.
Child identity theft is easy to prevent. It's hard to fix, but easier to fix if caught early. Each year when you make your child's annual physical appointment, do one more thing: make a fiscal appointment to check for fraud.
Susan Beacham is the founder and CEO of Money Savvy Generation, a financial education company that provides innovative products and services to help parents and educators teach children the basic skills of personal finance, www.MoneySavvy Generation.com. E-mail her at susan@MSGEN.com.