Child Identity Theft Is a Huge Problem. The Solutions Are Simple.
By: Shoshana Weissmann (The Dispatch)
Now the criminals are preying on children. Identity fraud, mostly by foreigners, really is threatening the foundation of our credit dependent economy.
S E E D E D C O N T E N T
Children in the United States can't take out loans or get credit cards on their own, but they can end up with poor credit ratings and even criminal records over unpaid debts. How does this happen? Identity theft.
Minors are appealing targets for identity thieves: Since they can't access credit, their parents understandably don't think to check their credit reports, ensuring ample time before crimes are noticed. The problem is so extensive that research by Experian suggests that 25 percent of children will be victims of identity fraud or theft by the time they are 18.
More than half of minors who were victims of identity theft report being denied access to credit at least once because of it, and some deal with the consequences for a decade or more. Some have even acquired a lifelong criminal record for an offense committed by the thief that stole their identity.
Children in these cases are victimized not only by thieves, but by the negligence of the federal government, which is duty-bound to protect them from identity theft. Consider the Social Security Administration (SSA). Because more than half of all available Social Security numbers (SSNs) have already been assigned to people, a bad actor who makes up an SSN for fraudulent purposes has better than even odds that the number used already belongs to someone or is in line to be issued to a newborn or immigrant. And because the SSA does not check SSNs for histories of fraud before issuing them, the agency is regularly assigning babies numbers that have histories of fraud and crime, damaging their credit from infancy.
It's not just the SSA. The Internal Revenue Service (IRS) is legally required to alert parents when their children's identities are being used for tax fraud, but the agency constantly refuses—despite pressure from the Treasury inspector general for tax administration—because the minors don't have active tax accounts. The IRS even stopped alerting heirs of deceased individuals whose identities were being used in a fraudulent manner because it upset the heirs. And for those who come to the IRS for help resolving identity theft? The National Taxpayer Advocate reports "unconscionable" delays.
States are also failing children in foster care, who are especially vulnerable to identity theft in part because so many more adults have access to their most sensitive information. Federal law already requires states to conduct credit checks for youth in the foster care system if they are at least 14 years old. However, enforcement here is severely lacking. In 2021, a majority of foster children who were supposed to receive credit checks did not, and 78 percent did not receive a credit check with all three credit agencies as required. Even those who received any or all reports received little help understanding them. And few children facing identity fraud receive any help resolving it.
The solutions to these problems are relatively simple. Congress, for example, can and should require the SSA to check SSNs before issuing them, and to make sure the agency does not not issue numbers with a record of fraud. The agency could work with credit agencies or other federal agencies such as the FBI to accomplish this.
The IRS also needs to be reminded, with a bit more forcefulness, that it's legally obligated to alert parents when their children's identities have been stolen. The agency's continued abdication of this duty even in the face of valuable reports from its inspector general warrants Congress stepping in to pass a law to make sure the IRS does its duty or conduct oversight to make sure it does.
Another option is to lock minors' credit files at the time SSNs are issued, or at least offer the option. At a minimum, the federal government should work with credit agencies to streamline how guardians can lock their children's credit files. The major credit agencies have the capability and offer this service, but the current process is fairly burdensome.
Reforms are necessary to protect foster youth, too. Thankfully, the Department of Health and Human Services Office of Inspector General has authored a valuable report explaining the problems with states performing credit checks for foster youth. The IG recommends that the Administration for Children and Families monitor states to make sure they're giving credit checks to foster youth and help states build the capacity to do so. Legislators should pay attention to the specifics of the report's recommendations. A lot of this work can be done by federal agencies rather than by Congress.
Identity theft can ruin lives. Given that our credit histories are tied to an ID number issued by a government agency, the federal government has an important role to play in fixing the problem—by enforcing existing policies and building on earlier work by previous administrations. Children should not have to face a future of financial and emotional strain because of government inaction and negligence.
Shoshana Weissman is the digital director for the R Street Institute.
Tags
Who is online
282 visitors
In today's interconnected world, an infant can have a job, a mortgage, and a criminal record.