Identity theft is far too common for youngsters. It’s often not discovered until years after the theft occurs. It can be tough to help your child recover from a case of stolen identity, but your state’s laws on the statute of limitations can help.
Researchers at Carnegie Mellon in 2011 documented that children were 50 times more likely than their parents to experience identity theft. One reason is that their credit records are clean. Also, kids are unlikely to check their credit reports regularly.
Consider the case of Scott Calder. He was just five or six when his Social Security number was first used illegally. While the Colorado youngster explored interests in fishing, dinosaurs and youth soccer, a scammer used his stolen Social Security number (SSN) to set up a Bank of America (BoA) credit card account.
In Calder’s case, the fraud continued undiscovered until he opened a checking account and credit card at age 18. That’s how a collection agency put his name and phone number together with his compromised SSN. Then the collection calls began.
A third party collection agency had purchased from BoA the right to collect the bad debt for pennies on the dollar. Callers began hounding the new college student and his parents to collect the bad debt. Agents accused the family of deliberate, illegal acts pointing out (correctly) that the parents could have opened the account with their son’s data.
With child ID theft, it is sometimes a parent or relative who creates the fraudulent account, and that’s still ID theft. However, that’s not what triggered Calder’s case.
Calder asked us not to use his real name for this article. Records of the fraud connected it to an East Coast recording company that worked with former felons. Calder told ID Watchdog he had no clue how or where his SSN was snatched. The hospital where he was born did give his parents a Social Security card application so he was assigned a number shortly after birth. Babysitters, home construction workers, school officials and even movers might have stolen or leaked his data.
Asset Acceptance LLC based in Warren MI, the debt collector in this story, demanded that Calder file a police report or complete a 6-page FTC affidavit that required a huge amount of personal data. He refused and demanded instead that they provide evidence of the debt. That never happened. Eventually, the calls stopped.
A recent check of Calder’s credit report showed no mention of the problem but his SSN may still be for sale on the dark web. The statute of limitations in Colorado for bad debt collection is six years and that term had expired long before the calls—a fact that Asset repeatedly neglected to mention.
The Federal Trade Commission in 2012 settled an investigation into Asset’s business practices alleging violations of federal law. The case included failure to disclose the statute of limitations in aggressive calls. Asset agreed to pay a $2.5 million dollar fine.
For parents, there are some important measures you can take:
- Know the time limits for collecting debt in your state before you start to correct the record. Credit card debt rules can be found
- Demand that any debt collector provides you with proof of the debt. Documents should include a date and name.
- Dispute the negative data on all of the Big 3 credit bureaus—Experian, Equifax, and Transunion. These massive companies are supposed to share dispute data, but yours can slip through the cracks.
- Check your child’s credit report (or determine if one even exists) once a year if possible. Don’t wait until that child needs to apply for college loans or rent an apartment. Check in advance of any job application and no later than age 16 if your child isn’t working.
The 2011 Carnegie Mellon CyLabs report—the largest study on this subject to date—documented that over 10% of children studied had had their SSN used fraudulently.
CyLab’s investigation revealed vehicle registrations, utility bills, driver’s licenses and even mortgages and foreclosures linked to kids’ SSNs. Sometimes multiple crimes were perpetrated with data that had been shared amongst criminals using a concept called synthesized identity theft.
Thieves can link a child’s unused SSN to any name and birth date; it’s a common practice for undocumented workers and credit thieves. Synthesis appeared to explain Calder’s case; only his SSN was exploited so there were no warning signs like overdue bills arriving at his address. Once the parents learned that their state limited debt collectors to a six-year time frame, the calls ceased. This case never even made it into his credit files because the statute of limitations had expired.
Many kids are not as lucky as Calder. Some scams continue for a decade or more. The statute of limitations in your state—usually between 3 and 8 years—can help you defuse any late claims against your child and guarantee a pristine credit history when your child needs it.