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States Working to Combat Child Identity Theft

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Child identity theft is a serious problem that can lead to major roadblocks when a teen applies for financial aid or a job and discovers that someone has already ruined his or her credit. Children are a prime target for identity thieves because they’re a blank slate and the crime can go undetected for years, because parents often don’t check their children’s credit report (presumably, they don’t have a credit report just yet).

Adults can freeze their credit as a precaution against identity theft, but until recently parents couldn’t use this same safeguard to protect their children’s credit because the credit bureaus wouldn’t allow it. Several states are working to change that.

Wisconsin signed the Child Credit Protection Act in December, which allows parents to freeze their children’s credit or the accounts of other vulnerable people such as relatives with dementia. In Wisconsin, children’s accounts remain frozen until they turn 16, although parents can choose to unfreeze their credit sooner. Maryland began allowing parents to place security freezes in January 2013, but the freeze may only work if the child has an existing credit report.

The state of Utah takes a different approach to child identity theft. Through a partnership with TransUnion, one of the three major credit bureaus, the Child Identity Protection program allows parents to add their minor children’s  Social Security numbers to a fraud-alert database. When TransUnion receives a request for a credit report that matches a minor’s Social Security number, it alerts the creditor of potential fraud.

If your state does not yet allow parents to freeze their children’s credit and you feel that it should, consider contacting lawmakers in your area to encourage the passage of similar legislation. Until then, the Federal Trade Commission has suggestions for parents who want to prevent child identity theft or minimize the damage. Here are a few highlights:

  • Avoid giving out your child’s personal identifiable information unless absolutely necessary. Ask your children’s school how their files are stored and protected. Do not carry around your child’s Social Security card or your own in your wallet.
  • Check your children’s credit reports with all three credit bureaus. Hopefully they will not have a credit report at all. But if they do and it contains misinformation, you’ll need time to repair the damage. The FTC recommends checking around the time your child turns 16, giving yourself time before financial aid applications are due.
  • Create an Identity Theft Report and notify businesses where your child’s information has been misused if you discover issues with your child’s credit.

More on Identity Theft:

 Image: Dinkel

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