Child Identity Theft

Child identity theft is identity theft in which the victim is a minor. The Federal Trade Commission defines it as what "happens when someone uses a child's sensitive personal information to get services or benefits, or to commit fraud," and lists the uses: applying for government benefits such as health coverage or nutrition assistance, opening a bank or credit card account, applying for a loan, signing up for a utility service, and renting somewhere to live. The information taken is usually the Social Security number, sometimes with the child's name, address or date of birth. What makes it a distinct problem rather than a subset of ordinary identity theft is the detection gap. An adult notices a fraudulent account because they look at their own credit; a child does not look, and no one looks on their behalf unless they have been given a reason to.

A minor's Social Security number is valuable precisely because it is unused. It carries no payment history, no addresses, no employment record and no defaults. To a lender's automated check it looks like a person with no history rather than a person with a bad one, and it will stay that way for years because the real owner is not applying for anything. The same characteristic makes the number attractive for uses that are not obviously credit at all: a utility connection, a rental application, employment, or a claim for benefits. The FTC's own list of warning signs follows those uses rather than the credit file. A collection call about an account nobody opened, a denial of health coverage or nutrition assistance because the number is already in use, an IRS letter about unpaid income tax in a child's name, or a student loan refused on credit grounds are each the first moment the fraud becomes visible.

Checking is deliberately different from an adult credit check, because there is usually nothing to check. The FTC's guidance is that a child under 18 generally will not have a credit report, and that the way to find out is to ask each of the three nationwide bureaus for a manual search against the child's Social Security number. That request has to be documented: a copy of the parent's government identification, proof of address such as a utility or card statement, the child's birth certificate and the child's Social Security card, and for someone who is not the parent, documents proving legal guardianship. The answer that no file exists is the good answer. A file that does exist is not a report to be read for accuracy; it is evidence that someone has used the number.

The freeze written for minors is a separate statutory regime, and the differences are in the proof rather than the clock. 15 U.S.C. 1681c-1(j), added to the Fair Credit Reporting Act by a 2018 amendment, defines a "protected consumer" as a person under 16 at the time of the request, or an incapacitated person or protected person with a guardian or conservator. A representative asking for the freeze must supply both "sufficient proof of identification" and "sufficient proof of authority," each defined in the statute. Proof of identification means the child's Social Security number or card, a certified birth certificate, or a government-issued identification document. Proof of authority means a court order, a valid power of attorney, a government document showing parentage such as a birth certificate, or, for a child in foster care, a written certification from the county welfare or probation department. Once those arrive, the bureau must place the freeze free of charge within one business day for a request made by toll-free telephone or secure electronic means, or three business days by mail, and must confirm within five business days along with instructions for removing it later.

The record-creation duty is the part that makes the freeze work at all. Ordinarily a freeze restricts an existing file. A child usually has none, so 1681c-1(j)(2)(C) requires the bureau to create a record for the protected consumer, and (j)(1)(D) confines that record to compliance with the subsection: it may not be created or used to consider the child's credit worthiness, credit standing, capacity, character, reputation, personal characteristics or mode of living. Removal runs one hour for an electronic or toll-free request and three business days by mail, and the freeze otherwise stays until someone asks. Two details are worth holding on to. A minor who is 16 or 17 may have the freeze removed on their own direct request under (j)(4)(A)(ii), and the Federal Trade Commission says such a minor may request one as well as remove it, which matters when a teenager needs credit checked for a first apartment or a job. And a bureau may remove a freeze on its own initiative in exactly one case, where it was placed on a material misrepresentation of fact by the representative, and must give written notice before doing so.

1. The number is obtained, from a data breach, a stolen document, a household member, or a form that collected it and did not protect it.

2. It is used to open something, most often an account that does not involve handing over cash: a utility connection, a store card, a rental application, a benefits claim or a job.

3. A credit file comes into existence in the child's name, or the number is simply attached to an account and a debt.

4. Years pass. Nothing prompts anyone to look, and the balances go unpaid and are sold to collectors.

5. The first application reveals it, typically a student loan, a first card, an apartment or a utility connection in the young adult's own name.

6. The remedy runs in order: contact each company where an account was opened and ask for it to be closed with written confirmation that the child is not responsible, tell each credit bureau to remove the fraudulent accounts, place the protected-consumer freeze, and report the theft to the Federal Trade Commission at IdentityTheft.gov.

Consider an example. A family requests a manual search at each of the three nationwide bureaus for their fourteen-year-old daughter's Social Security number, expecting the usual answer that no file exists. Two of the three return a file. It shows an electricity account opened four years earlier with an unpaid balance of $2,480, and a store card with $1,190 outstanding, so $3,670 is in collections against a child who has never held an account. The freeze they then place at all three bureaus costs nothing, and it prevents a fifth account rather than undoing the first four. Those come off through the identity-theft block process, which is a separate procedure with its own evidence requirements.

This is a crime rather than a product, so what follows is what the available protections do, and where they stop.

What the protections do

• The protected-consumer freeze is free, has statutory deadlines, and lasts until someone asks for it to be removed rather than expiring.
• The bureau must create a record where the child has no file, so the freeze is available before any fraud has occurred.
• That record is walled off by statute from any use in assessing the child's credit, so freezing cannot itself create a credit history.
• A manual search at each bureau gives a definite answer to the only question that matters, which is whether a file exists.
• A 16- or 17-year-old can place and lift the freeze without a parent, which keeps it workable as the child starts applying for things.

Where they stop

• A freeze is preventive. It does nothing about accounts already opened, which have to be closed and blocked through the identity-theft process.
• It has to be requested at each of the three nationwide bureaus separately, and a gap at one bureau is a gap.
• Documentation is required each time, and a family without a birth certificate or Social Security card to hand faces a real delay.
• Nothing prompts anyone to check, so the protection depends entirely on a parent deciding to look.
• Uses of the number that never touch a credit file, such as employment or a benefits claim, are not blocked by a credit freeze at all.