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American Bar Association


The Crisis of Child Identity Theft

By Cathy Krebs and Amy Harfeld – November 21, 2011


Children are targeted for identity theft 51 times more frequently than adults. An average family with two kids has about a 20 percent chance of running into identity theft for one of their children. Children are often targeted for identity theft because social security numbers for youth are unused and children are not expected to have credit.


Identities are generally stolen in two ways: They can be stolen by organized crime for purposes of fraud or immigration, or it can happen at the hands of friends or family of the child, often to circumvent bad credit or as a result of poverty. Children in foster care have their social security numbers and personal information passed around on a regular basis without safeguards. As a result, they are at a unique risk of theft by personnel in the foster care system, foster parents, and family members. Children are sometimes issued a social security number that has already been compromised at birth. Other times, social security numbers can be stolen from schools, doctors, churches, or other places because these agencies do not always adequately secure this information.


Because of their status as children, the significance of stolen identities may go undiscovered for years. However, the danger of a stolen identity cannot be overemphasized. Someone whose identity is stolen as a child can feel the effects, such as problems securing a student loan or the denial of a first credit card, apartment, and/or utilities, as a young adult. Additionally, if DMV records are tied to criminal activity, then a minor traffic violation could result in an arrest, and a medical emergency could be muddied with incorrect information about health history or unpaid bills. In other words, the impact can be severe. Further, because it often takes more than a year to clear up identity theft, fixing the problem may mean that a victim of identity theft might have life plans such as entering college or purchasing a car canceled or put on hold, or he or she could face other severe consequences.


Identity theft is an even more severe problem in the foster care system. Because foster children are primarily identified in the system by their social security numbers, and because so many people have access to their information, they are even more susceptible to victimization. Parents, extended family members, foster parents, social workers, group home personnel, and many other people regularly have access to a foster youth’s social security number, birth date, birth certificate, and other identifying information.


There is conflicting data about how many foster youth are impacted by this problem, but estimates run as high as 50 percent. The state or county government in charge of foster care serves as the child’s parent—it has an obligation to protect the child, including preventing the misuse of this sensitive identifying information. Unfortunately, foster youth often do not learn of the identity theft until they exit foster care and apply for credit or a loan. At this point, they will not receive any assistance from the state or foster care agency in redressing the problem because they have been discharged from care. The youth themselves are often poorly equipped to deal with the administrative complexities of sorting the matter out.


Poor credit has a particularly serious impact on this population. In many cases, these young people find out that they have defaulted on cable bills, utilities, car loans, and even mortgages. They may be unable to establish phone service or electricity in their first apartment. They can be rejected when they apply for a loan for their first apartment security deposit due to bad credit. They can be found ineligible for their first student loan, leading to deferral or cancellation of plans for higher education. They are unable to get a loan for a car, sometimes preventing them from getting to a job. These issues can present insurmountable obstacles to a vulnerable young person first achieving self-sufficiency.


Most youth can turn to their parents or other family members for backup financial support if confronted by one of the financial hardships created by identity theft. Indeed, it is estimated that, on average, families spend more than $40,000 on their children between the ages of 18 and 24, but former foster youth do not have a financial cushion to help them get through this important transitional period and minimize the impact of identity theft.


Repairing credit damaged by identity theft is a complex, time-consuming, and often expensive prospect for anyone. For a foster child to be faced with this when exiting care with their often limited life skills and lack of a familial safety net is a terrible burden. Justice demands that this special population receive support when victimized by identity theft while in foster care. The state, as custodian, should be obligated to conduct credit checks on foster youth and to assist in repairing it if it has been compromised prior to the youth exiting care. Former foster youth are already underprepared to confront the challenges and hardships of young adulthood; we owe it to them to set them on their own with a clean financial slate.


Thankfully, Congress agrees. The Child and Family Services Improvement and Innovation Act [PDF] was signed into law on September 30, 2011. The law requires that, for any youth in foster care at age 16 or older, the state must annually obtain the child’s credit report, provide it to the youth at no cost, and provide the youth with an explanation of what is in the report and appropriate guidance. Some advocates believe this act does not go far enough, and, indeed, the Foster Youth Financial Security Act (formerly H.R. 6193), which was introduced previously and is pending reintroduction in the House of Representatives, would go further in assisting foster youth in protecting their identify. Still, this act is a good first step.


Identifying Identity Theft
It is crucial to verify that a child’s identity has not been stolen while he or she is still a minor. This is true for foster children, but also for all children. Checking a child’s credit is a good first step, but a simple credit check will only alert you to financial identity theft, so it can often miss other aspects of identity theft. A credit check does not account for fraud related to government benefits and services, medical coverage, or the existence of a criminal record. There are other ways to catch identity theft. One is a “manual” search of the child’s credit so that the credit reporting agency searches not only the child’s social security number in conjunction with his or her name, but also the child’s social security number alone. Many credit-monitoring services will monitor more than just financial records. A simple commercial background check can reveal criminal and job history, which could reveal identity theft. The state Department of Motor Vehicles can give you up-to-date information related to the driving history connected to a social security number. A quick call to a medical insurance provider can update you on any and all medical procedures and payments, and a call to the social security administration can allow you to secure a job history report. All of these can be used as tools to check for identity theft. It is true that these steps can seem time-consuming and onerous, but the consequences to the child and family if it is not caught early could be even worse. A youth or family can go through these steps on their own, or there are credit- or identity-monitoring services that can assist in these types of searches, such as www.allclearid.com/child or Identity Theft 911.


Whether you are a parent or a lawyer representing children, verifying the security of a child’s identity is crucial. For information on how to secure your child’s identity in the school setting, see the Federal Trade Commission’s Back to School Alert. For more information on identity theft generally, visit www.idtheft.gov/


To order a free annual credit report, visit annualcreditreport.com or call 877-322-8228. Note that this is the only website authorized to fill orders for the free annual credit report.


Keywords: litigation, children’s rights, identity theft, foster care


Cathy Krebs is the committee director of the Section of Litigation’s Children’s Rights Litigation Committee in Washington, D.C. Amy Harfeld serves as the national policy director and senior staff attorney for the Children’s Advocacy Institute at the University of San Diego School of Law. The authors would like to thank Lisa Schifferle from the Federal Trade Commission for her assistance with this article.


 
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