If you want to make sure your personal information isn’t at risk from identity thieves, you can ask to have a security freeze placed on your credit file at the three major credit bureaus — Experian, Equifax and TransUnion. That prevents lenders or credit card companies (that you aren’t already doing business with) from gaining access to the information and in effect shuts down the chance of unauthorized credit being issued.
Typically, parents have not been able to exercise the freeze option for their children — because they usually don’t have credit in the first place. But now, several states have passed laws giving parents the right to request similar credit protections for minors. In effect, parents can ask to have a credit record created, and then have it frozen.
Why would you want to do that? Children’s personal information, like their Social Security number, is valued by identity thieves because there typically isn’t a credit file associated with the data. That means they can pair the information with any name and date of birth and create a false identity — with clean credit. Thieves can open credit cards and borrow money, and the damage isn’t discovered for years — because parents typically don’t check a child’s credit report.
“It’s a persistent problem,” although it is hard assess its magnitude, said Steven Toporoff, a lawyer with the Federal Trade Commission. That’s because parents are often unaware anything has happened until the child becomes a young adult and applies for a car loan or a student loan and is rejected. But in 2012, he said, 8 percent of 280,000 identity theft complaints received by the F.T.C. concerned child victims.
Children’s information can be at risk at schools and medical offices but also from family members who may be in financial straits and have ruined their own credit. “A lot of the time, it’s extended family members who obtain the information and use it, knowing a child’s credit record is pristine, and that usually nobody is checking it,” said Diane Childs, financial information and identity theft outreach coordinator for the Oregon Division of Finance and Corporate Securities.
As of Sept. 13, residents of Oregon can contact the three major credit bureaus and ask that they create a “protected” record in their child’s name — a sort of empty credit file — which is then frozen. The enactment of the law was prompted by a data breach in a state school district. Maryland and Delaware have similar laws. Child identity protection laws take effect next year in Texas and Illinois, and measures are also under consideration in other states, including Wisconsin and Florida.
Utah created a somewhat different program in consultation with TransUnion, which lets parents register their children’s information in the credit bureau’s “high risk” database. TransUnion searches its files for records with the child’s information and notifies the parents if anything is found, said Scott Morrill, program manager for the Child Identity Protection Program at the Utah attorney general’s office. And any company seeking to issue credit based on the information gets a warning that the application is likely to be fraudulent. When the child turns 17, the information is automatically removed from the system, he said. The program isn’t foolproof, he conceded, since the two other major credit bureaus don’t participate.
Eva Velasquez, chief executive of the Identity Theft Resource Center, said the state laws were a step in the right direction, but she tends to prefer Utah’s approach because it doesn’t require formal establishment of a record for a minor. Once a file is established, it could be subject to errors, she said, and once the file is frozen, consumers generally have to remember to unfreeze it when the child is ready to apply for credit. She advises creating a file to freeze only if you suspect there is a problem. “Without a red flag,” she said, “it’s best not to muddy the water.”
Here are some questions to consider:
■ When should I suspect that my child may be the victim of identity theft?
You should be suspicious if your child begins to receive unusual mail, like collection notices or bills in your child’s name.
■ Is there any legitimate reason for a child to have a credit file?
Yes, said Maxine Sweet, vice president for public education at Experian. For instance, parents may add an older child to their credit-card account as a joint holder, if the card company allows it, or as an “authorized user,” to help the child learn how to manage credit. Experian, however, doesn’t make the file accessible for credit inquiries until the child turns 18: “If Experian has a file on a minor child, we protect those minors in every state in that we do not disclose the information to a third party,” she said.
■ Is there a charge for enacting a security freeze?
The service is typically free to fraud victims, but the credit bureaus may charge a fee for enacting a freeze proactively; fees vary by state. Under Oregon’s law for minors, for instance, there is no charge to create the child’s record, but each credit bureau charges $10 to freeze the record. Enrolling in Utah’s program is free.
Originally published by Ann Carrns in the New York Times.
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