According to the Federal Reserve, synthetic identity theft is one of the fastest growing forms of identity theft in the country. Synthetic identity theft occurs when a criminal uses a combination of real and falsified data to create a fictional identity for financial gain and other fraud.
Children are particularly appealing victims for synthetic identity thieves. Here’s how synthetic identity theft targets children, and how you can help protect your kids.
How Synthetic Identity Theft Works
Synthetic identity thieves use a combination of real and false information to create a fake person, or synthetic identity. These false identities can be used for financial gain, to create fake accounts, to commit medical identity theft and more.
All criminals need is access to a legitimate Social Security number (SSN), which can be gained from a data breach, phishing attempt or other scam. The SSN, combined with falsified information, such as a fake name and address, can be used to commit fraud.
Criminals may even spend time building the credit of the fictional person, so they can commit greater financial fraud in the future.
Why Children are Vulnerable
Anyone can be a victim of identity theft, but children are especially appealing to synthetic identity thieves for a few reasons.
- Children have no credit history, so criminals can work with a blank slate.
- Many families may not become aware of identity theft until the child turns 18 and tries to open a line of credit.
- Starting in 2011, the process of creating SSNs was randomized instead of based on geography and age. While this randomization makes it more difficult for criminals to reconstruct a person’s SSN based on public records, it makes it impossible for financial institutions to verify a person’s SSN using his or her location or date of birth.
The Cost of Synthetic Identity Theft
Luckily, the victims of synthetic identity theft are not responsible for any losses if they can prove they weren’t involved. Financial institutions typically bear the brunt of the cost of synthetic identity theft.
But children who have had their identities stolen have an uphill battle reclaiming their SSNs, especially if the fraud occurred over a number of years or the criminal racked up a lot of debt. This is because credit bureaus and financial institutions usually assume that the first person to establish credit under an SSN is the legitimate owner.
This means that the victim has to prove his or her identity and take steps to clean up his or her credit. While financial liability is limited, these efforts can involve out-of-pocket expenses.
How to Protect Your Child
While there’s no way you can guarantee your child’s identity can never be stolen, you can take some steps to help prevent that from happening.
- Enroll in credit monitoring services and sign up for identity theft insurance, which can help cover out-of-pocket costs incurred due to identity theft and help restore stolen identities. Some plans can include family protection with identity theft insurance.
- Check with the credit bureaus to see if your child has a credit report in his or her name. This is a possible red flag of identity theft.
- Keep sensitive documents, such as SSN cards and birth certificates, safe and locked away.
- Avoid sharing too much information about your child online and in person. When your children are old enough, teach them how to guard their information as well.