Bankrupt at Birth: Why Child Identity Theft Is On The Rise & How It's Happening Under Parents' Noses

Mission Statement

Our mission is simple. We want to End Child Identity Theft. And we won’t settle for less. There are no gimmicks, no Social Security numbers scrawled on city busses, no hype. Just the sincere hope that this Virginia dad can make a difference in this crazy world. We have seen, the devastation child identity theft can cause and to it we say – NO MORE.

We can end child ID theft. It may take an act of Congress, but by raising awareness about this issue, it can happen. In the meantime, we are committed to spreading information and technology that protects kids’ from this growing crime. This book, the education program we have created which the book supports and our Kid Sure℠ child identity theft service are some of the ways we are fighting for kids.

We can do more to protect our kids–as parents and as a nation. This book is a call to arms for both. We hope you will join us.

Bankrupt at Birth

Why Child ID Theft Is On The Rise and

How It’s Happening Under Parents’ Noses

Table of Contents

Dedication

Acknowledgements

Mission Statement

Foreword by: Mary Lou Retton

Introduction

Chapter One: The Hidden Epidemic

Chapter Two: A Brief History of the Social Security Number

Chapter Three: The Naked Public

Chapter Four: Friends, Foes and Total Strangers

Chapter Five: Our Childs’ Most Valuable Possession

Chapter Six: Igniting the Epidemic

Chapter Seven: Exposed at Play

Chapter Eight: The Birds & The Bees 2.0

Chapter Nine: The Problem with Most Child ID Theft Advice

Chapter Tem: A Parents’ Guide to Child ID Theft Recovery

Final Thoughts

Afterword

About the Author

Sources

Foreword

You probably remember me from gymnastics and the Olympics and my various television appearances since. Even though at times it seems like only yesterday, 1984 in Los Angeles was a long time ago, and today my life revolves around my four daughters, and my husband, Shannon. I come from a large family, and now I have my own large family. Needless to say, my life has long revolved around children, and I am a mother first and a personality second—a distant second.

My interest in children, and particularly sick children, drew me to the Children’s Miracle Network Hospitals more than 20 years ago. I have watched CMNH grow into one of North America’s leading children’s charities, and supporter of children’s hospitals nationwide. Did you know that CMNH has raised more than $4.3 billion with that money going to local children’s hospitals?

My regard for children, and my concern for my four daughters, is what drew me to this book. The growth of child identity theft is nothing short of shocking. As you will read, there is a danger to children—my children and your children—one that could ruin their reputations and their abilities to start a happy economic life. Child identity theft is endangering children all across America.

The statistics are already overwhelming and they just continue to grow. The Justice Department’s Bureau of Justice Statistics is reporting that millions of young persons, representing five percent of all Americans age 16 or older, have already become the victims of identity theft. The U.S. Federal Trade Commission expects to receive upward of 18,000 formal complaints of child identity theft in 2012. One well-regarded study estimates that 10 percent of children have or will become victims of identity theft.

That is why I am happy to lend my name to an effort to first educating the parents of America to this growing plague that so many parents might not even know is endangering their children, and then to begin a campaign to protect all kids from child identity theft.

As a mother, my life has always been dedicated to my children. When I see some of the frightening stories you will read in the coming pages, I am naturally concerned, and I am concerned for your children also.

I believe that Steve Schwartz and Joe Mason are taking a leadership role in starting a national movement to enlist other parents like us to fight against this growing tide.

I hope you too will listen to what follows and that you too will join this crusade to wipe out identity theft just as you would to end any sort of diseases that afflict children.

Olympic Champion &

Children’s Miracle Network Hospitals Board Member,

Mary Lou Retton

Introduction

If you’re reading this book, chances are that you’re a parent. And, as a parent, worrying about the well-being of your child comes naturally.

You are always looking out for your child’s safety and wellness. And, depending on their age, you worry about more specific things—if they will be injured playing outside, as they go off to school and spend the day out of your sight going to class and interacting with other children. Then you worry about their driving or being driven by a friend. Finally, when they go off to college, you have a whole new world of worries.

We know this, because we are parents, too. We share these same concerns and constant struggles to ensure our children are safe and protected.

Amid all this, many of us have not been looking at whether our children’s identities might be stolen, and what the ramifications of identity theft can be on their futures. If you’re like the hundreds of other parents we’ve talked to about this, you’ve probably never even heard of child identity theft.

We are both fathers of school-aged children and often find ourselves in a social setting with other parents or at a school function and are asked what we do for a living. The answer—and the following conversation—inevitably turns to the growing epidemic of child identity theft. And, almost without exception, we are met with blank looks, and with a range of responses that all come down to no former knowledge of the subject.

You’re probably aware of identity theft—the fraudulent use of another person’s private information—is usually for financial gain. You may have worried about someone stealing your identity to use your credit cards or withdraw money from your bank account. You might even have gone the next step to set up safeguards to prevent your becoming a victim. If you have, then good for you.

But have you worried about your child’s identity? Most parents never do because, after all, what on earth could a thief do with your child’s information? You may think because your child has never applied for credit or opened a bank account that their information has no value to an identity thief.

In very simple terms, a child’s identity—e.g. their name, Social Security number, and date of birth—can easily wind up in the wrong hands. Just think about how much information you’ve provided about your child to their schools, hospitals, pharmacies, or sports teams. On the surface, this is all very common and, in most cases, very legitimate. But, if this information winds up in the wrong hands, it can lead to unauthorized bank accounts, credit files, and synthetic identities—all using your child’s information for someone else’s gain.

If the statistics coming out are accurate—and we will look at some data from the Federal Trade Commission and private research companies such as Javelin—you probably have not taken the subject as seriously as you should. This is precisely why I’ve written this book: To help educate you to the problem and provide guidance and tools to protect your kids from identity theft.

Late in the summer of 2011, the Federal Trade Commission held a first-of-its-kind, full-day forum on child identity theft, which it aptly called Stolen Futures. The statistics presented were shocking, especially when recognizing that government statistics typically lag several calendar years behind the present. For example, the Justice Department’s Bureau of Justice Statistics reported that 11.7 million young persons, representing five percent of all Americans age 16 or older, were victims of identity theft during a two-year period ending in 2008. The Federal Trade Commission itself reported that in 2006, there were more than 10,000 identity-theft complaints filed involving victims who were under the age of 18. This is up from 6,500 cases in 2003. Based on the rate of increase, the Federal Trade Commission expects to receive upward of 18,000 formal complaints of child identity theft in 2012.

A well-regarded recent academic study, from Carnegie Mellon’s CyLab, estimates that 10 percent of children have or will become victims of identity theft.

The CyLab study involved examining the records of 42,232 children (age 18 and under) in the U.S during 2009–2010. It found 4,311 (10.2 percent) of the children studied had their Social Security numbers used by other people. Of those, 76 percent involved malicious fraud, 24 percent were cases of accidental mixed credit file information. The study found that Child IDs were used to purchase homes and automobiles, open credit card accounts, secure employment and obtain driver’s licenses. The largest fraud ($725,000) was committed against a 16-year-old girl. The youngest victim was five months old; 303 victims were under the age of five.

I came to learn about this problem through my work as an executive at Intersections Inc., a company that has protected the identities of over 34 million Americans from theft. The disconnect between the explosive growth of child identity theft and the general public’s awareness has become increasingly apparent to us and with the help of my colleague Steve Schwartz, I wanted to do something. I run the IdentityGuard.com brand for Intersections and it’s there we get to test our new products. About a year ago, we were able to take our concerns and the recent research to create Kid Sure℠. Kid Sure℠ provides helps parents protect their child becoming a victim of identity theft.

As a parent, I didn’t want Kid Sure℠ to be just another product. We realized child identity theft was a problem that needed a voice. For us, ending child identity theft is a passion—whether it’s through education, advocacy, or our technology. As a company, we are committed to going far beyond the limits of traditional marketing to empower parents to protect their kid’s most valuable asset—their identity.

In early 2012, two things crossed our desks that had a profound impact on our thinking about child identity theft. The first is Javelin Strategy and Research’s 2012 Identity Fraud Survey Report. Each year since 2005, Javelin has conducted an in-depth look at identity theft, and this latest report issued in February found that identity fraud jumped 13 percent in 2011, affecting 11.6 million adults and costing victims untold millions of dollars.

The second item is from the Federal Trade Commission, specifically their annual compilation of the complaints it receives from consumers. In 2011, and for an amazing 12th year in a row, identity theft complaints topped the list. Of more than 1.8 million consumer complaints filed with the Federal Trade Commission in 2011, 15 percent were identity theft complaints.

These two reports are only the latest evidence as to the how insidious the problem of identity theft has become. Day in and day out, we are dedicated to helping people avoid identity theft and, all too often, to recover their identities, credit ratings, and overall peace of mind.

In the pages that follow, I’ll describe the problem of identity theft and more specifically how it affects children. I’ll tell you what to look for and help your family avoid the pitfalls, as well as provide guidance on how to recover should you find yourself on the wrong side of these statistics.

Additionally, I’ll provide resources for what to do and how to recover should this happen to you.

Every day at Intersections, we deal with identity theft and its aftermath and how it can change and shatter lives. Hopefully, by sharing our experience, we can help you to recognize the dangers your children face and guard against those dangers or recover if it’s happened to you.

My intent is that this book will educate and provide support for parents as well as have a positive impact toward ending child identity theft. I’ll share what I have learned about child identity theft, and later about how I go about protecting my own kids. It is not my intent to scare parents. Instead, my aim is to accomplish three things:

to alert you to a very real danger that you may not have previously considered,

to assure you that there is something you can and should do about it; and

to enlist your support, along with other parents, to help stamp out this very real danger to our kids.

Joe Mason

Chantilly, VA

July 2012

Chapter One:

The Hidden Epidemic

When I was growing up, things were different, very different. I’m sure you can say the same. And, like any other parent, I’ve tried to instill strong values in my children, sometimes even wanting to remind them that I used to walk to school, uphill, both ways! Well, that’s not really true. I rode a school bus. But, things were different back when we were growing up. Forty years ago, I don’t think our parents thought much about car seat safety or texting or the Internet or social media or cyber-bullying. In fact, I’m sure of it.

Contrasting back then to today, the differences are extreme. Today, we spend a fortune on child safety seats and athletic gear, and woe is the parent whose child is not buckled in properly or whose child doesn’t have the right protective gear. When I was a kid, the age that my kids are now, my parents didn’t think much about this stuff, and thought it was just fine to be toted around in the back of my great uncle’s pickup truck. You probably have similar memories. No one thought much about safety and security—other than the school’s favorite Stop, drop, and roll drill—which was just fun to do.

In those days, everything was so literal and visual, but today things have changed so much, and so many of the dangers faced by our kids are hidden. If all we had to tell our children is don’t talk to strangers, life would still be simple. But now they are growing up in a world of cyber-crime, of almost previously unimagined technology and now exploding social media.

Many parents don’t yet realize that a great danger their children face today is child identity theft. That is why Steve and I have undertaken this book, to make parents more aware of the danger and to tell them what they can do to protect their kids from this very modern danger.

So first let’s look at exactly what child identity theft is. You can then begin to see how vulnerable our kids are. The times have changed, but the instinct and passion to protect our kids have not.

You are not alone if you have never considered the threat child identity theft poses to your children; instead, you are among the vast majority. When I bring up the subject with any group of parents, I usually get blank stares in return. It appears that a high percentage of parents have never considered identity theft as it might relate to their own children.

Despite growing at an almost exponential rate, child identity theft was not widely recognized until about 2005 when comprehensive data on it first began to be compiled. What follows is a reality we are exposed to daily in our work with those who’ve been victims of identity theft.

Types of Identity Theft

The Identity Theft Resource Center, a non-profit organization based in San Diego, sub-divides identity theft into five categories (1):

Criminal Identity Theft—Posing as another person when apprehended for a crime.

Financial Identity Theft—Using another’s identity to obtain credit, goods, and services.

Identity Cloning—Using another’s information to assume his or her identity in daily life.

Medical Identity—Theft using another’s identity and insurance information to obtain medical care or drugs.

Child Identity Theft—Using a child’s Social Security number or whole identity for financial gain.

It is this last category that frightens us the most. According to the Federal Trade Commission, child identity theft appears to be the fastest-growing type of identity theft.

Long-Term Repercussions

Often, the first time a child or parent becomes aware that the child’s identity has been stolen occurs when the child attempts their first credit transaction—perhaps purchasing a cell phone or setting up an online account in their own name, applying for college financial aid, or getting that