Children are targets for ID theft. Here's what parents need to know

Axton Betz-Hamilton remembers the moment she decided to become an identity theft expert. She was 11 years old and watching her parents deal with a string of increasingly invasive identity crimes they couldn't seem to shake, no matter how closely they guarded their personal information.

Her commitment only grew when she applied for her first apartment as an undergraduate and learned that the thief had stolen her credentials and ruined her credit, she said.

Six months after earning her doctorate, Betz-Hamilton got a call from her father. Her mother had recently passed away, and inside an old filing folder he'd found an over-drafted credit card statement along with a copy of Betz-Hamilton's birth certificate. Together, the father and daughter pieced together decades of identity crimes. The perpetrator had been inside the family all along - her mother.

"I went through this little period of thinking, 'Maybe Iowa State needs to take that Ph.D. back.' I wrote a dissertation on child identity theft and I couldn't even see that my mom was the one doing it," she said. "Then I decided: Something needs to be done."

Betz-Hamilton, now an assistant professor of consumer affairs at South Dakota State University, went on to write a book on her experience and continues to study child identity theft as its impact grows. As early as 2011, research from Carnegie Mellon University suggested kids could be up to 51 times more likely to experience identity theft than adults. Now identity theft affects 1.25 million kids - or about 1 out of 50 children - every year, according to the research firm Javelin.

Most of the time, child identity theft victims know the perpetrators personally, Javelin's data shows. But social media and the data economy play a growing role. Kids have a hard time distinguishing between good and bad intentions when they meet people on the internet, says Kelly Merryman, president and chief operating officer of digital safety company Aura. Sometimes they disclose information that's useful to identity thieves. It doesn't help that schools, camps and other caregivers still ask for kids' sensitive data like Social Security numbers and home addresses - information that, once digitized, can fall into the wrong hands.

Worse, kids usually don't find out they've been victims of identity theft until they take a big life step like applying for federal student aid or buying their first car, says Eva Velasquez, CEO of California-based Identity Threat Resource Center, which helps people minimize risk and respond to identity theft. The impact of ID theft on young adults can be devastating: credit scores trashed, financial aid withheld and even employment denied. Fixing child identity theft takes longer than fraud against adults, according to Javelin, and costs the average U.S. family $372 out-of-pocket on top of any fraudulent charges.

If someone opens a credit card or buys a home using your child's Social Security number, odds are good you won't get an alert. Your child's credit history is presumably a blank slate, and fraudulent lines of credit won't set off alarm bells.

"No one's going to call you and say, 'Hey, I thought you already have a house. Why are you buying another one?' There's just no checks against it," Aura's Merryman said.

Government agencies are looking for ways to cross-check identity without compromising people's privacy. One new tool will let credit-granters run a check on a birthdate-Social Security number combination to make sure there's a match. That way, bad actors couldn't pair your child's number with a false birth date that makes it look like they're older than 18.

Sometimes parents find out someone has stolen their baby's identity when they list the baby as a dependent on a tax return and are told the baby already reported income, ITRC's Velasquez said. More commonly, teenagers apply for federal student aid using their SSNs only to be denied for having terrible credit the family knew nothing about.

At best, the fraud happened recently and the family resolves it quickly. At worst, the crime started years before, and the teen's identity is already tied to a web of fraudulent accounts. Some students have to delay college while they untangle the mess, Velasquez said. Betz-Hamilton described years of high security deposits and interest rates: Her first credit card had a $300 limit, $69 annual fee and 29.99% APR, she noted.

"With identity theft, you're guilty until proven innocent," she said.

Signs of child identity theft include credit card offers in your child's name, as well as notice of new accounts and attempts to open accounts in their name, according to ITRC - so keep an eye on your mailbox.

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Child identity theft happens so often that Velasquez said she considers it an "epidemic." But many guardians don't take steps to prevent it. Here's what you can do to guard your child's financial future online and off:

• Freeze your child's credit Freezing your child's credit is free and doesn't affect their score. To do so, you'll need to send freeze requests to each of the major credit agencies - Equifax, Experian and TransUnion - as well as copies of official documents to prove your identity, your child's identity and your relationship to the child.

All three agencies require you to send the requests by mail.

• Keep your child's information safe About 3 out of 4 victims of child identity theft know the perpetrator personally, Javelin found. Caregivers are frequently implicated in child identity theft cases, and Betz-Hamilton said her conversations with victims suggest that identity theft often co-occurs with other forms of abuse.

That means protecting your child's foundational identity documents - including their birth certificate, Social Security card and insurance cards - from people in your circle is incredibly important, Velasquez said. Keep your child's documents in a lockbox, especially if your home has lots of people going in and out.

Avoid sharing sensitive information when it isn't necessary. After-school care and activity organizers likely don't need your child's Social Security number, so push back when sign-up forms ask for too much information - or leave fields blank and work with organizers to provide the information they actually need.

You may decide to invest in an identity protection service that monitors the internet and "Dark Web" for personal information. But keep in mind - these services can't prevent identity theft, and Consumer Reports found some companies may rely on this misunderstanding to make a sell.

Get involved in your child's online activity

The earlier kids get online, the earlier their information is exposed to the data economy. Javelin found that the younger parents think it's appropriate to give kids unrestricted internet access, the more likely their kids are to experience identity theft or data breaches.

Kids also may overshare with bad actors posing as online friends, Merryman said. As you talk to your kid about boundaries with people they meet online, let them know never to share identifying information like home addresses and Social Security numbers.

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