Scammers leave trail of debt, bad credit for kids

Imagine your child applies for a college loan but is turned down.

It seems he's got a long trail of debt and bad credit history.

Credit cards, auto loans, maybe even a mortgage.

The problem is, he's got nothing to show for it, because the debt may be in his name, but it isn't his.

He's been a victim of identity theft.

While identity theft is nothing new, one group of victims is growing steadily: children.

More people are stealing children's identities and using the information to establish, and ruin, the child's credit.

Of the more than 255,000 identity-theft complaints received in 2005, 5 percent involved people 18 or younger, an increase from 3 percent in 2003, according to the Federal Trade Commission.

In more than half the cases, the theft took place before the child was 6 years old, according to a recent study by the nonprofit Identity Theft Resource Center (www.idtheftcenter.org).

And because many cases are undetected, the numbers are believed to be even higher.

"A couple of years ago, we hired an accountant and when she went to file our taxes, we discovered that someone else had used our son's Social Security number," says Jack Crump of Charleston. "Our son was only 4 at the time, but somebody had been using his identity for two years. We never would have found out if we hadn't hired that accountant."

Children have become targets because, like the Crumps, most parents do not use or check their children's credit, so a thief could get away with the crime for years until the child applies for credit, a mortgage or a student loan.

"There have been cases where a child applies for a loan for college and finds out somebody's racked up a mountain of debt in his name," says Lt. James Walley of the North Charleston Police Department Special Investigations Division. "You can eventually get those taken off, but it takes time."

Crump says it took nearly a year to clear up the situation.

"I had to convince the credit-card company that my son didn't buy a flat-screen TV when he was 3," Crump says. "It was extremely frustrating."

The result can be a nightmare for the victim and his parents, who must prove that the child's identity has been stolen. Pointing out that the credit belongs to a minor usually involves collecting records and alibis, such as school attendance records and doctor's appointments.

"It can go on for 10 or 15 years, and that can make it a real mess," Walley says. "One side of identity theft people don't look at is the frustration, headaches and even the expense it can cause. We have even had cases where warrants have been issued for a person's arrest for an activity they never committed."

The most common form of child identity theft is using a Social Security number to open new accounts.

Children's Social Security numbers are often available on records at places, such as schools, athletic departments and physicians' offices.

That single piece of information is all the identity thief needs to establish lines of credit.

Credit issuers do not typically verify the age of the applicant, particularly on phone or Internet applications, and few even ask for proof of identity in person.

A person's age is established when he or she first applies for credit, so if the first application says the person is 21, credit agencies will use that number until a dispute is filed and proven.

Many cases involve strangers, but just as many times, the thief is someone close to the child.

Parents, step-parents and other relatives who have bad credit or bad driving records begin using the child's information to get additional credit.

"Unfortunately, a lot of times, it's parents doing it," Walley says. "They may use their kid's Social Security number to get credit with intentions of paying the bill, but it doesn't get paid."

How can you protect your child from identity theft?

Unfortunately, you may not be able to completely. There are some steps you can take to lessen the chances of becoming a victim, though.

"You can only take precautions," Walley says. "Try your best to protect your information, but if somebody wants that information bad enough, they'll figure out a way to get it."

When asked to provide your child's Social Security number, ask where it will be stored and who will have access to it.

"Be careful who you give information to," Walley says. "In cases where you have to give it, all you have to do is ask so you make sure they are keeping that information secure."

Make sure the information will be kept somewhere inaccessible.

In South Carolina, a law passed earlier this year that charges businesses with keeping information secure and protecting customers will soon go into effect.

You also can protect your child's Social Security number by keeping it at home instead of in your wallet.

Also, you should shred all papers with personal information that you throw away. Thieves often find information in trash cans.

If your child starts getting junk mail for credit-card offers or collection notices, don't ignore them. They could be a signal that your child's identity has already been stolen.

Contact the credit agencies to check their reports. If you find there isn't one, that's good, since credit reports are started only after an application is made.

If you find that your child's information has been compromised, call your local police department and make a report.

"Even if it's been 10 or 15 years, people need to contact the police," Walley says. "Hopefully, we can help them get things straightened out."

Also contact the three credit-reporting agencies (see box) and dispute everything. You may need to provide copies of the police report, birth certificate or other records to prove that your child is a minor and legally unable to obtain credit.

"The faster you react, the better," Walley says.

Reach Brenda Rindge at 937-5713 or brindge@postandcourier.com.