Working on a story about familiar fraud helped me develop a good understanding of just how damaging identity theft can be, especially if it begins when a victim is young. Child identity theft in particular isn’t the easiest thing to resolve, so when I caught wind of what state governments are doing to help stop this type of fraud before it begins, I was immediately interested.
For adults, freezing your credit can be an effective way to prevent the addition of fraudulent lines of credit on your record if you suspect your identity has been compromised. However, because most children don’t have credit, unless they are victims of fraud or authorized users on lines of credit, parents would not be able to successfully place security freezes on their child’s credit, let alone regularly check his or her credit reports as they would their own. After all, how do you protect something that doesn’t technically exist?
To bridge that child-security gap, states such as South Carolina are making it easier for parents to protect their children’s credit, even if there isn’t a fraud threat or established credit history for them.
South Carolina’s House of Representatives approved a bill March 19 allowing parents to call each of the three major credit bureaus (Experian, TransUnion and Equifax), create protected credit records for their child and then freeze their credit. That would eliminate the risk of a fraudulent credit record being established before the child has a chance to build a credit record themselves.
Creating a protected record for a child with each of the bureaus is free and only requires the use of a child’s name and Social Security number. Once a record is created with each bureau, a security freeze can be placed on each one for $10 per credit bureau. So for a one-time cost of $30, a parent can freeze their child’s protected credit record across all three bureaus until the child turns 18.
South Carolina isn’t the only state to make this type of parent-child fraud prevention available. Maryland became the first state to give parents a preventive way to protect their children’s credit when the governor signed the Maryland Child Identity Lock Bill in 2012. Prior to this legislation, credit freezes were available only to those with credit histories.
Since then, Florida, New York, Texas, Delaware, Michigan, Illinois, Iowa, Hawaii, Wisconsin and Oregon have followed suit and have either passed, or are in the process of passing, similar fraud prevention laws.
Utah has taken a slightly different approach. Instead of allowing parents to freeze their child’s credit, they can register their child’s information in TransUnion’s “high risk” database. TransUnion can then search these files and will notify parents if anything out of the ordinary is found, according to a statement made by Scott Morrill, child identity protection program manager at the Utah attorney general’s office. The child’s information will be automatically removed from the system when he or she turns 17 and any requests for credit made using their Social Security number before that time will be flagged as fraudulent.
As the overall number of identity thefts cases increase, it will be interesting to see what other states take action to prevent child identity theft before it occurs and if those measures are effective in the long run. After all, children are 35 times more likely than adults in the same population to become a victim of identity fraud, according to AllClear ID, so all this legislation has merit.