Protecting Your Child from Identity Theft

In September 2017, about a year ago, a massive Equifax security breach became public knowledge. If there was a silver lining to this infamous event, it likely spurred more consumers to take more measures to protect their identities. Perhaps you’ve frozen your lines of credit, or you’re at least checking your credit reports more regularly these days.

 

All well and good. But what about your kids? As distasteful as the idea may be, child identity theft is a serious and growing concern, for several reasons:

 

It happens more often than you might think. In a 2018 Child Identity Fraud report, Javelin Strategy & Research found more than a million children were identity fraud victims in 2017, costing families more than $540 million in out-of-pocket expenses.

 

Your kid’s identity is a tempting target. Identity thieves especially love your child’s Social Security Number, since it usually offers them a clean slate, devoid of credit history. If they can get ahold of it, they can create all sorts of havoc, such as racking up debt, filing bogus tax returns or applying for public aid – all under your child’s identity.

 

It’s easy pickings. Kids may not be as careful with their identity, and new technologies expose them to added risks. Javelin’s report also connected kids’ susceptibility to being bullied with a higher likelihood they’ll end up giving out personal information – online or to people they know.

The theft often goes undetected. While we may be vigilant about monitoring our own credit reports, many parents don’t realize they should be doing the same for their children. As described in this Wall Street Journal piece, lax oversight “often allows theft to go unnoticed for years, until the victims reach college age and start applying for credit cards and student loans.”

Fortunately, a few basic steps can go a long way toward protecting your child from identity theft.

 

Know the early warning signs, and take them seriously. Is your seven-year-old receiving credit card offers in the mail? Has a collection agency called and asked to speak to your toddler? Don’t laugh it off. It could mean your child’s identity has been compromised.

 

Check your child’s credit history regularly. Use AnnualCreditReport.com to check in with the three major credit agencies, to see if your child has a credit history. Unless you’ve opened a file in your child’s name, they shouldn’t have one; if they do, this is a big red flag.

 

Consider establishing and freezing your child’s credit file. For added protection, you may choose to create credit files for your children, and then freeze them until needed. This makes it much harder for an identity thief to successfully use any stolen information to establish a fake line of credit. Note: Effective September 21, 2018, a new Federal law makes it easier to freeze your own and your minor children’s credit files.

 

Educate your child. As soon as your children are old enough to understand, recruit them to assist. The Federal Trade Commission offers this handy information on how to talk to your children about computer security. Also assure them, they should never be afraid to tell you if they feel they’re being bullied by anyone – under any circumstances.

 

Just as it is second nature to help your children apply sunscreen when the sun is shining or to bundle them up on a winter day, protecting them from identity theft should be part of your regular, all-weather routine these days. A few sensible and regularly applied defenses could ward off years of damage done from an “overexposure” to identity theft.  If you have questions or concerns about identity theft for yourself or your child, or if you’d like guidance on implementing any of these recommendations, the team at PLC Wealth Management is ready to help.

What does the Equifax data breach mean for you?

Financial monitoring…this is part of financial planning that gets often overlooked.  Like a crack in the foundation of a house, it is hard to see unless you are looking for it, but it can have catastrophic consequences if left unattended.  As you may have heard, Equifax (which is one of the 3 main credit reporting agencies) admitted to a historic data breach which occurred earlier this year.  If you haven’t heard the details, you need to read about it here.  This explanation and suggested action steps from the Federal Trade Commission is excellent.  Supposedly 143 million people had their personal information potentially comprised.  I say ‘potentially’ because Equifax has not disclosed the exact details of the breach, so we really don’t know the extent of what occurred.  I find it pretty disappointing that the breach occurred earlier this year, they knew about it several weeks, if not months ago, and yet we are just now hearing about it.  That said, I wanted to take the opportunity to highlight a few different points.

What should you do?

First, do not get lax about these data breaches.  Just because they seem to happen all the time, and the numbers of people affected seem so large that it is hard to fathom as real, do not take a laissez faire approach, thinking it will never happen to you.  This is exactly the attitude these criminals look to exploit.  And make no mistake about it…the days of the disgruntled teenager hacking away in his parents basement is long past.  Most of these hacks and the subsequent identity thefts are undertaken by world wide organized crime rings.

Next, check your credit report.  Note, this is different than requesting your credit score.  By government mandate, everyone is allowed one free credit report every year.  You can go through the process here.  It only takes a few minutes.  If you are married, do this separately for both spouses.  This will give you a detailed listing of all credit accounts that are open, or were previously opened, in your name.  I suggest that you download and review this every year.  I have done this fairly consistently, and have found error accounts, or accounts that I thought were closed out but were actually still open.  Closing a credit account (like an old Gap card that you never use or the credit card you opened that one time to get a free plane ticket) may drop your credit score temporarily, but I think it is worth the short term hit so as not to have accounts open that you never use or check.  These dormant credit accounts can also be great opportunities for criminals to hack and use.

Finally, you can be your own best protection against identity theft by just being aware and diligent.  I suggest you read through the FTC’s post (link above) and review your annual credit report.  But don’t stop there…these institutional hacks open the door for more and more identity theft, the fastest growing crime in the world.  At PLC Wealth, we have several procedures in place to do our part to make sure our clients money is protected and secure.  Additionally, TD Ameritrade has even more built-in procedures to ensure money does not move to anyone other than the account owner.  But we can not protect your bank accounts or credit accounts, which seem to be where much of this white collar crime occurs.  It starts with personal information being stolen, then moves to the criminals (usually through computer programs) trying to probe to see where they can get in.  If you think your bank account has been compromised, let the bank know immediately.  They will change your account number and give you new bank cards.   If you see a strange transaction on a credit card, let the credit card company know right away.  It’s likely that you won’t be held responsible for that charge, and they will send you new cards immediately, sometimes overnight.

The main point of all of this is that you need to be diligent.  With 143 million people exposed as part of this latest breach, it is likely that some of your personal information was part of it.  I checked Equifax’s alert site and found that both my and my wife’s information was part of the breach.  That being said, I will most likely not take part in the free credit monitoring service that Equifax is offering, primarily because the service will automatically start billing at their normal monitoring rate after the first year, unless you proactively cancel.  That just seems like a slick way to get more people paying for their services rather than being a true pro bono offering.  I will, however, be watching transactions diligently and checking my own credit report for anything that looks off…and I think you should too.