Stolen innocence: Child identity theft

By Bankrate.com

Identity thieves have moved beyond adults in their quest for more victims. Now they're targeting children.

Law-enforcement officials and consumer advocates say criminals are stealing the Social Security numbers of children and using them to usurp the children's identities. Because the crimes usually aren't uncovered until the victims try to establish credit, they can go undetected for years.

Above 5% of the complaints the Federal Trade Commission, or FTC, received in 2005 regarding identity theft were from individuals younger than 18.

"In terms of consumers who've contacted us, the number is growing," says Joanna Crane, an FTC spokeswoman.

The children's identities are used to obtain credit cards, get driver's licenses or open accounts. Often the information is sold for use by illegal immigrants or individuals attempting to restart their lives and avoid arrest.

Steve Frasher, a spokesman for Riverside, Calif., police, calls the thieves "phantoms." He says most don't use their real names, their addresses are fictitious or they live in abandoned residences, and they often order products by phone or online.

"Typically, we catch identity thieves through unrelated search warrants or traffic stops -- an officer may see large amounts of mail that do not belong to the suspect," Frasher says. "In some cases, the thief will have over 50 persons' identifying information."

Frasher suggests the best defense is vigilance. (Click here for seven steps you can take to protect your child.)

The key to credit

Consumer advocates attribute the escalation to the early issuing of Social Security numbers and the overuse of these numbers.

A combination of names, addresses and other personal information is useful, but a Social Security number is the key that thieves use to provide themselves with unlimited access to credit.

Parents who want to claim their child for a tax deduction are required to have a Social Security number for a child older than 1. They can acquire the number for a newborn by applying at a Social Security office or by mail, or they can receive the child's number through the Enumeration at Birth program. This process, which began in 1989, enables parents simply to fill out the required information at a hospital.

Children receive numerous requests for their Social Security numbers as proof of identity from schools, medical and insurance companies, financial institutions and cell phone providers.

No federal law forbids a vendor or organization from asking for a Social Security number.

Access granted

Contrary to common belief, credit agencies don't begin a credit history on an individual until the individual's identifying information is used to open a credit account. This information can include name, age, address and Social Security number.

Thieves bank on this and the fact that neither children nor their parents check to see whether credit reports already exist. This gives a thief an ample amount of time to create a new life using a victim's information.

Armed with the necessary information, the thief can fraudulently open bank, credit card and utility accounts, falsely obtain a job and file taxes.

Continued: How big a problem?

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