The way it usually works is that the criminals use the child’s Social Security number to open lines of credit; after all, that number is all that’s needed to steal an identity. The crooks eventually leave the child’s credit history in shambles. The child probably won’t know any of this, however, until he or she decides to open his or her own credit line as an adult, at which point the credit report will already show the damage (which might have accumulated over 10 or 15 years). In short, the child begins his or her adult life with lots of debt that they had nothing to do with acquiring. Not a great way for a child-turned-adult to start experiencing grown-up finances! Other ways that this problem can materialize before adulthood include collection agencies calling or sending letters regarding accounts that the child allegedly opened, or even a 16-year-old being told at the Driver’s License office that another license already exists with their Social Security number.   

It’s hard to tell how widespread this problem is, since most identity theft reports don’t track it. “We don’t ask for age in our identity-theft surveys,” said Claudia Bourne Farrell, spokeswoman for the Federal Trade Commission (as quoted in the Dallas Morning News). “Our self-reported, anecdotal data indicates that about 5 percent of the complaints last year were for people 18 and under.” It’s possible that the actual number of identity thefts involving children is higher, since many victims don’t learn about and report the theft until they are no longer minors.

Shouldn’t the credit card company know not to give credit to someone who is using a minor’s Social Security number? Not necessarily. Credit issuers don’t usually check the age of applicants for accuracy. It’s difficult to verify things like age on a credit application, so much of the information given on those applications is simply assumed to be correct.

So how can we protect kids from identity theft? The responsibility lies, of course, with the parents. First, parents need to make sure that all sensitive documents concerning their children (such as Social Security cards) are filed away safely and securely. Parents should never carry those numbers around with them. If anyone asks for the child’s Social Security number, the parents must ask why it is needed and whether another piece of information can be substituted.

Second, parents need to be vigilant in protecting the child’s information; for example, if they open a bank account or college fund for their child, they must tell the bank to remove the child’s name from any mailing lists. 

Third, the parents must be observant and watch for the possible signs of identity theft, such as the child receiving credit card offers in the mail (some of these offers are just age-unaware marketing, but they can also be indicative of something far more sinister). If the child does receive such offers, or if parents simply want to be thorough in their protection, they should check their child’s credit report to make sure there’s nothing on it. This doesn’t apply if, for example, a parent puts a teenage child on their credit card for spending purposes, but in general, minors don’t have a credit history because they don’t have any activity on their record.

If a parent looks into the child’s credit history and actually FINDS activity, what should he or she do? First, ask to have all of those fraudulent accounts removed from the report. This may mean going through the dispute process with the credit companies. Once the credit issuer learns that the account is in a minor’s name, they will usually cooperate with fixing the problem. Also, report the identity theft to all three of the credit reporting bureaus: Experian, TransUnion and Equifax (for Equifax, you can write directly to their Minor Child Department at P.O. Box 105139, Atlanta, Georgia 30348).

The ideal situation, of course, is to prevent any problems before they arise. Aside from the need for parents to be vigilant in protecting their children’s information, parents must also teach children not to give out sensitive information online or over the phone. Children frequently don’t grasp the importance of maintaining privacy and security, especially when it comes to information that they don’t entirely understand. When I was 13, I knew my Social Security number, but I also probably would have told anyone who asked me what it was. I didn’t know how important it was to my financial future. I’m just lucky that no one ever asked.

Side note: Sometimes, the parents are the ones who steal the child’s identity. Contrary to popular belief, this is not a case of family law. If you know or suspect that someone is using their child’s identity for credit purposes, report the case to the police immediately. A police report is necessary for credit companies to take the case seriously. Cooperate with any investigation, as well.

Sources for this article: The Dallas Morning News, FraudGuides.com, ConsumerAffairs.com, Identity Theft Resource Center

Experian, one of the three main credit bureaus, says no. They filed a lawsuit against LifeLock in February, claiming deception and fraud in the attention-grabbing advertising campaign. Davis calls the lawsuit groundless. Some of the details of Experian’s claims:

1. Fraud alerts, which notify companies that check credit to be on the lookout for imposters, are LifeLock’s main fraud prevention tool. Under the Fair Credit Reporting Act, fraud alerts be requested only by an individual, either the consumer or someone acting on the consumer’s behalf, not by a corporation. They can also be requested only when there is a strong suspicion of impending fraud or identity theft (say, when your credit card goes missing). LifeLock, however, has placed continuous fraud alerts on the credit files of its approximately 1,000,000 customers, which is against federal law, Experian claims. They say that LifeLock pretends to be the consumer and actively avoids detection as a corporation. They also maintain that this constant “crying wolf” ties up the Experian systems and slows the process down for legitimate fraud alerts.

2. Experian also claims that LifeLock uses deceptive advertising because credit reporting is free under the Fair Credit Reporting Act, but LifeLock does not make it clear to consumers that the credit reports (and many of the other services, such as junk mail reduction) are free to obtain through other means. Experian also charges that the advertising is deceptive because the service does not afford all of the protection it claims; it cannot prevent an identity theft in progress or the unauthorized use of a credit card, and is not always effective in preventing undocumented workers from using stolen Social Security numbers to get a job.

Davis counters the first claim by saying that placing fraud alerts is legal and “in the spirit of the Fair Credit Reporting Act.” He notes that LifeLock customers are happy and satisfied with the service, and that he had received no complaints of deceptive practices. He addresses the second claim by saying that his service makes it “virtually” impossible for someone to steal a client’s identity (the word “virtually,” he says, keeps the ads from being deceptive).

It should be noted that the fraud alerts do cost the credit bureaus time and money to run, which they don’t appreciate, obviously, but may not be as illegal as they claim. Experian is also under investigation by the FTC for running www.freecreditreport.com, a site that charges customers for credit monitoring and could be considered a competitor to LifeLock. Davis suggests that Experian simply wants to make more money and sees LifeLock as a threat.

As to the reports that Davis’s identity WAS stolen, the reality is that it was not. One man got a $500 payday loan using Davis’s Social Security number, but the clerk who took his information did not run the number through any of the credit bureaus for verification before handing over the money. Once the fraud was discovered, LifeLock fixed it, and Davis’s credit is just fine, even after 87 other, failed attempts to steal his identity.

LifeLock is not the only company that offers its services to consumers (see also Debix, LoudSiren and TrustedID). But as of this month, LifeLock had become the target of several class-action lawsuits from competitors, credit bureaus and lawyers in several states. LifeLock an easy target, thanks to its memorable and slightly scary advertising. But many experts doubt that the lawsuits have any merit, and interpreting the Fair Credit Reporting Act might easily go in favor of LifeLock (especially since many people have been potentially compromised when their personal information has gone missing from the computers of companies, banks and other agencies, so they’d have reason to put fraud alerts on their accounts).

Wired Columnist Bruce Schneier makes the point that LifeLock does what the government should do anyway: make stolen personal information harder to use. That said, though, he is not a customer of LifeLock because, as he puts it, dealing with identity theft is routine and not nearly as damaging as it used to be. Also, it’s hard to tell how effective LifeLock is, since it gains customers more from the fear of identity theft than the theft itself.

In the end, LifeLock can be a very useful and reassuring service if you choose to pay for it, but you can keep track of your own credit and identity yourself, for free. You can put your own fraud alerts on your account if you remember to renew them every 90 days (since fraud alerts expire). You can request free credit reports at one per year (visit www.annualcreditreport.com, for example). And of course, above all, you should be careful with your personal information. Shred credit card offers and other documents that come to you in the mail; don’t give out your personal info over the phone or in email; and investigate unknown charges to your accounts. Being a conscientious consumer may be all it takes to protect yourself from identity theft and fraud.

Sources for this article: MSNBC, LifeLock Reviews, WIRED