Credit fraudulently taken out in a child’s name is a growing problem that puts families in an emotional and financial vise. Here’s what to do about it.
By Liz Pulliam Weston
Angie got a shock when she checked her credit report last year. The Kansas State University student discovered one of the credit cards listed hadn’t been paid in more than two months -- and it wasn’t an account she recognized.
“I called my mother to talk to her about it and how I was worried I was a victim of identity fraud,” Angie said. “My mother confessed that she was the one that had used the card when she got in a bind.”
The mother had intercepted a preapproved credit card application intended for Angie, forged Angie’s signature and added herself as an authorized user. “She (got the card) thinking she would have it under control, but it went delinquent over Christmas time when money was short,” Angie explained.
A small problem that’s growing Identity theft experts say a small but growing proportion of identity fraud is perpetrated by parents. Some, like Angie’s mother, victimize children who are old enough to establish credit in their own right. Others use the Social Security numbers of their minor children to set up fraudulent accounts that the victims might not discover for years.
“When we first started hearing about it, we were shocked and horrified,” said Beth Givens, head of the Privacy Rights Clearinghouse in San Diego. “It turns out it is more common than you might think.”
Linda Foley, founder of the Identity Theft Resource Center, also in San Diego, said she almost never heard about parent perpetrators two years ago but now gets “several complaints a week” from victims or from other adults who have uncovered the crimes.
Among her most recent sufferers: five children, all under age 9, whose Social Security numbers were used by their mother to open fraudulent credit cards and other accounts. Their grandmother and the woman’s first two husbands are helping police prosecute the case, Foley said.
“She is a user, pure and simple,” Foley fumes. “The children are nothing more than an opportunity to gain money she has not earned.”
Unique opportunities to steal
Normally, minors can’t get credit cards, since you can’t be held to a contract until you’re 18. But thieves can get away with using minors’ Social Security numbers because credit issuers may not demand proof of age or may be fooled by forged documents.
“The credit file begins with the first application, and the information given is taken as truth,” Foley said.
The Federal Trade Commission, which broke the news earlier this year that nearly 10 million Americans were victims of identity theft in the last year, found that 9% of victims identified the thief as a family member or other relative. The agency didn’t publish statistics about how many of the credit hijackers were the victims’ parents. (Actually knowing the thief is something of a rarity. Only 26% of victims have any idea who committed the crime, and nearly half don’t know exactly how their personal information was compromised.)
But parents, especially those of minor children, have unique opportunities to steal. Not only do they know their children’s Social Security numbers -- the key piece of information needed to open bogus accounts -- but they usually can intercept any mail that could tip off other family members to the crime. Even if their transgressions are uncovered, many can rely on family loyalty to protect them from prosecution.
I can’t do that to my parents
Angie, for one, simply couldn’t file the police report that the credit card company demanded before it would remove the account from her credit file. “It’s my mom!” she said. “I know it's wrong of her, but I can't do that to my mom.”
Some parental thieves refuse to believe they’ve done anything immoral or illegal. Like other cases of parental theft -- such as raiding custodial accounts, swiping money from trust funds or selling off savings bonds given as birthday presents -- the parents may justify their behavior as ultimately benefiting, or at least not hurting, the victim.
“The rationale is, ‘I’ll pay it off. They’ll never be harmed,’” Foley said. If some of the ill-gotten gain is spent on the kids, this attitude is reinforced. “But if you didn’t pay your own bills, what makes you think you’re going to do the right thing now? You still have the same poor money management skills that caused you the problem in the first place.”And such identity theft is far from a victimless crime. Parental ID thieves:
Put long-lasting black marks on their children’s credit. Many ID theft victims learn of the crime when they’ve been turned down for credit, denied an apartment, quoted higher-than-normal insurance rates or contacted by a collections agency threatening to take them to court. The average ID theft victim spends many hours trying to clean up the mess, and the problems can persist for years. Sometimes, it’s not possible to get the messes fixed.
Put their children in an impossible position. To prove the accounts were opened fraudulently, most lenders demand the victims file a police report, which could result in the parent being arrested and prosecuted. While probation is possible for first-time offenders, Foley said, jail time can’t be ruled out.
Since Angie couldn’t face that possibility, she decided to take responsibility for the account, paying it off and changing the account’s password and address. The late payments, however, will remain on her credit report for seven years. The delinquencies have driven Angie’s credit score into the low 600s -- an embarrassment for the finance major, who worries future employers will see the black marks and deny her jobs.
Damage their children emotionally by using them for personal gain. Like victims of sexual abuse, these identity theft victims were betrayed by people who are supposed to be protecting them, said Charles Nelson, a San Diego psychologist who has studied the issue for the Identity Theft Center. The victims can wind up having real trouble trusting others and forming relationships, Nelson said.
Like Foley, Nelson strongly recommends therapy for victims to mitigate, but not erase, the violation they feel.
The victims “will deal with the consequences forever,” Foley said.
The need for some tough loveThe issue of parental identity theft has become something of a holy war for Foley, herself a victim of identity theft (although the perpetrator wasn’t a relative). Foley would like to see a national registry created so credit issuers, credit bureaus and federal law enforcement officials could check out the name and age associated with a Social Security number.
Foley also has a guide on her Web site for those whose parents have stolen their identities. Among her suggestions:
Consider filing that police report. Taking what seems like a drastic step may be the only way to get your credit cleared -- and to drive home to the perpetrator the seriousness of what he or she has done. “I’m a believer in tough love,” Foley said.Try mediation. A few victims who were unwilling to file crime reports but who had remorseful parents have been able to get their names removed from credit accounts those parents established. Using an attorney mediator, they had their parents draw up an agreement acknowledging sole responsibility for the account, Foley said.
An attorney mediator “is an additional cost, but you show good intent that way,” Foley said. A local bar association can provide referrals to mediators.
But credit issuers typically won’t accept such agreements without a significant payment toward the debt. And this assumes the account hasn’t been charged off or sent to collections, which significantly reduces the creditors’ interest in cooperating.
Consider changing your Social Security number. This is a drastic and difficult step, one that the Social Security Administration typically discourages. It’s not a good solution if you have a significant work or credit history that you could lose in the change-over. But if you’re young and just starting out and you can keep the new number a secret from your parent, it could be one solution. The Social Security Administration’s Web site has information about getting a new number.
Be vigilant about your credit reports. Here’s one case where investing in credit monitoring might be a smart idea. At the very least, have fraud alerts put on your credit reports at all three major bureaus: Equifax, Experian and TransUnion. Unfortunately, lenders often ignore fraud alerts, but they’re still worth trying.
If you’re a California resident, you currently have the right to “freeze” your credit, which should prohibit anyone from opening an account in your name. (It takes a secret personal identification number, which only you know, to unlock your report so that credit can be granted.)
Expect some emotional fallout. Common reactions to identity theft include feelings of rage, betrayal, isolation and financial insecurity -- emotions that are often amplified when the thief is a parent. Getting therapy can be helpful, as can talking to supportive friends, a clergy member or a support group.
“The emotional toll is very deep,” Foley said. “It can be permanently scarring.” |
