In Financial Armageddon, I devote a whole chapter to the topic of relationships. Not only those involving banks, brokers, accountants, investment advisors, and other financial intermediaries, but the sorts of personal ties that people normally take for granted, especially when times are good. My point is that when circumstances take a major turn for the worse, even those who are close can feel pressure to cross the line and engage in reprehensible or even criminal behavior. In "Family Betrayal," The Dallas Morning News (via The Morning Call) details one such example.
Identity thieves targeting relatives, including their own kids.
Financial educator Cynthia Nevels would rather not see one subject that's been appearing in some of her students' essays: theft of their identity by a parent.
And sadly, it's been appearing with regularity, said Nevels, executive director of the Jr. Finance Literacy Academy in Irving, Texas, which teaches money management skills to kids from kindergarten through high school.
"I can guarantee either one or two students out of any (financial education) camp will say Â… that they have experienced that by a parent or a family member," she said.
Children are especially enticing targets for identity thieves because it can take years before the crime is discovered. And they're easy prey for unscrupulous family members who have ruined their own credit and use the child's Social Security number to obtain credit fraudulently.
"It's underreported," said Linda Foley, co-executive director of the Identity Theft Resource Center in San Diego. "If it happens to a child by a family member, we're not going to hear about until they reach 18, 19 years old, and start to apply for credit themselves."
What most people don't understand, Foley said, is that credit issuers may not have a way to verify the age of an applicant.
"The information on the application is typically taken at face value," she said.
Even in person, few credit issuers request proof of identity, such as a driver's license, Foley said.
"For these reasons and others, issuers often will not know the true age of the applicant," she said. "This is a fault within our system that needs to be rectified."
The Federal Trade Commission doesn't specifically track child identity theft, but it collects data from complaints reported to the agency, said spokeswoman Claudia Bourne Farrell.
In 2003, 3 percent of identity theft complaints were about people under 18, FTC officials said.
In 2004, it was 4 percent, and in 2005 through 2007, it was 5 percent of about 250,000 complaints.
A child whose identity has been stolen has the same rights as any adult victim to resolve accounts that have been fraudulently opened, said Joanna Crane, identity theft program manager in the FTC's Division of Privacy and Identity Protection.
"The fact that a family member or relative was the identity thief does not deny them any rights," Crane said.
The first step is for the child's legal representative to obtain a copy of his or her credit report.
"If someone has stolen and misused the child's identity, there will likely be a credit report related to their Social Security number," she said. A minor without credit should not otherwise have a report.
The Fair Credit Reporting Act gives identity-theft victims the right to block inaccurate information from appearing on their credit report, stop creditors from reporting that inaccurate information to the credit bureaus and stop creditors from selling any debts related to the identity theft to any other party for collection.
"The adult/child or the child's representative needs to obtain an identity-theft report from the police, describing the identity theft and listing the inaccurate information on their credit report," Crane said.
"The adult/child or child's representative should follow the procedures for disputing identity theft information by filing an identity theft report with the consumer reporting agencies (credit bureaus)."
If the identity thief has committed fraud in a number of areas -- such as using their identity for financial, criminal, governmental and employment purposes -- and the adult/child or child's representative hasn't been able to contain the damage, the Social Security Administration may grant the victim a new Social Security number, Crane said.
However, she said, the government agency has strict standards about when it will change a person's Social Security number so the individual or the child's representative should contact their local Social Security office for information.
If the thief was a family member, Crane said, "the adult/child or child's representative should contact local law enforcement to obtain information about the child's rights to file criminal charges against their family member, if they wish to do so."
Unfortunately, that doesn't happen in many cases, experts said.
A Houston student in one of Nevels' classes discovered her mother had stolen her identity when she was denied credit for a laptop for college.
"She said she'll just deal with it later," Nevels said. "She didn't want to deal with the conflict that she would have with her mother, who doesn't know that she knows."
Foley said her center has been getting "a lot of calls" on child identity theft," adding: "We're getting them from older teens, college-age students and from parents that someone in the immediate family is stealing a child's identity."
The fears of young victims are very real if they report the crime, Foley said.
"There may be physical repercussions to the person," she said.
Foley said she knows of three victims of identity theft by their parents who waited until they turned 18 to move out and report the crime to the police.
"They were afraid of the physical repercussions because they were still in the house," she said.
Young people need to learn early what identity theft is, Foley said.
"We need to start educating kids at the middle school and high school level about what is identity theft and that it's not right for somebody other than you to be using your Social Security number," she said.
The impact on young people can be far-reaching.
"You graduate from high school, and you're about to be on your own, and you are now faced with a mountain load of financial problems," Nevels said. "You're starting from behind the eight ball."
I think shortage of money create many worst conditions which can not be handle easily. If this situation will occur in childhood many children turn into criminal and earn money through illegal work.
Posted by: Financial Service India | February 16, 2009 at 12:55 AM
This may be another of those topics where it would be enlightening to distinguish parents from step-parents.
Posted by: dearieme | February 16, 2009 at 03:51 PM
This has to be THE best way for the PEOPLE who are in debt/default to get THEIR bailout.
Why on earth kids would rat out their parents is beyond me. Don't they BENEFIT from the extra cash and "stuff"?
Not to mention that the kids have NO damages. They only need to provide a sworn affidavit to the creditors and credit bureaus stating that they didn't open the accounts.
Big freaking deal ...
Posted by: Christine Baker | February 21, 2009 at 01:02 AM