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In Financial Armageddon, I devote a whole chapter to
the topic of relationships. Not only those involving banks, brokers,
accountants, investment advisors, and other financial intermediaries, but the
sorts of personal ties that people normally take for granted, especially when
times are good. My point is that when circumstances take a major turn for the
worse, even those who are close can feel pressure to cross the line and engage
in reprehensible or even criminal behavior. In "Family Betrayal," The Dallas Morning News (via The Morning Call)
details one such example.
Identity thieves
targeting relatives, including their own kids.
Financial educator
Cynthia Nevels would rather not see one subject that's been appearing in some
of her students' essays: theft of their identity by a parent.
And sadly, it's been
appearing with regularity, said Nevels, executive director of the Jr. Finance
Literacy Academy in Irving, Texas, which teaches money management skills to
kids from kindergarten through high school.
"I can guarantee
either one or two students out of any (financial education) camp will say
Â… that they have experienced that by a parent or a family
member," she said.
Children are
especially enticing targets for identity thieves because it can take years
before the crime is discovered. And they're easy prey for unscrupulous family
members who have ruined their own credit and use the child's Social Security
number to obtain credit fraudulently.
"It's
underreported," said Linda Foley, co-executive director of the Identity Theft Resource Center in San Diego. "If it happens to a child by a family member,
we're not going to hear about until they reach 18, 19 years old, and start to
apply for credit themselves."
What most people
don't understand, Foley said, is that credit issuers may not have a way to
verify the age of an applicant.
"The information
on the application is typically taken at face value," she said.
Even in person, few
credit issuers request proof of identity, such as a driver's license, Foley
said.
"For these
reasons and others, issuers often will not know the true age of the applicant,"
she said. "This is a fault within our system that needs to be
rectified."
The Federal Trade
Commission doesn't specifically track child identity theft, but it collects
data from complaints reported to the agency, said spokeswoman Claudia Bourne
Farrell.
In 2003, 3 percent of
identity theft complaints were about people under 18, FTC officials said.
In 2004, it was 4
percent, and in 2005 through 2007, it was 5 percent of about 250,000
complaints.
A child whose
identity has been stolen has the same rights as any adult victim to resolve
accounts that have been fraudulently opened, said Joanna Crane, identity
theft program manager in the FTC's Division of Privacy and Identity
Protection.
"The fact that a
family member or relative was the identity thief does not deny them any
rights," Crane said.
The first step is for
the child's legal representative to obtain a copy of his or her credit
report.
"If someone has
stolen and misused the child's identity, there will likely be a credit report
related to their Social Security number," she said. A minor without
credit should not otherwise have a report.
The Fair Credit
Reporting Act gives identity-theft victims the right to block inaccurate
information from appearing on their credit report, stop creditors from
reporting that inaccurate information to the credit bureaus and stop
creditors from selling any debts related to the identity theft to any other
party for collection.
"The adult/child
or the child's representative needs to obtain an identity-theft report from
the police, describing the identity theft and listing the inaccurate
information on their credit report," Crane said.
"The adult/child
or child's representative should follow the procedures for disputing identity
theft information by filing an identity theft report with the consumer
reporting agencies (credit bureaus)."
If the identity thief
has committed fraud in a number of areas -- such as using their identity for
financial, criminal, governmental and employment purposes -- and the
adult/child or child's representative hasn't been able to contain the damage,
the Social Security Administration may grant the victim a new Social Security
number, Crane said.
However, she said,
the government agency has strict standards about when it will change a
person's Social Security number so the individual or the child's
representative should contact their local Social Security office for
information.
If the thief was a
family member, Crane said, "the adult/child or child's representative
should contact local law enforcement to obtain information about the child's
rights to file criminal charges against their family member, if they wish to
do so."
Unfortunately, that
doesn't happen in many cases, experts said.
A Houston student in
one of Nevels' classes discovered her mother had stolen her identity when she
was denied credit for a laptop for college.
"She said she'll
just deal with it later," Nevels said. "She didn't want to deal
with the conflict that she would have with her mother, who doesn't know that
she knows."
Foley said her center
has been getting "a lot of calls" on child identity theft,"
adding: "We're getting them from older teens, college-age students and
from parents that someone in the immediate family is stealing a child's
identity."
The fears of young
victims are very real if they report the crime, Foley said.
"There may be
physical repercussions to the person," she said.
Foley said she knows
of three victims of identity theft by their parents who waited until they
turned 18 to move out and report the crime to the police.
"They were
afraid of the physical repercussions because they were still in the
house," she said.
Young people need to
learn early what identity theft is, Foley said.
"We need to
start educating kids at the middle school and high school level about what is
identity theft and that it's not right for somebody other than you to be
using your Social Security number," she said.
The impact on young
people can be far-reaching.
"You graduate
from high school, and you're about to be on your own, and you are now faced
with a mountain load of financial problems," Nevels said. "You're
starting from behind the eight ball."
Michael J. Panzner
Editor, Financialarmageddon.com
Michael J. Panzner is a
25-year veteran of the global stock, bond, and currency markets and the
author of Financial Armageddon: Protecting Your Future from Four Impending
Catastrophes, published by Kaplan Publishing.
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