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| The Basics | The newest identity thieves: parents
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Credit fraudulently taken out in a childs name is a growing problem that puts families in an emotional and financial vise. Heres what to do about it.
By Liz Pulliam Weston
Angie got a shock when she checked her credit report last year. The Kansas State University student discovered one of the credit cards listed hadnt been paid in more than two months -- and it wasnt an account she recognized.
I called my mother to talk to her about it and how I was worried I was a victim of identity fraud, Angie said. My mother confessed that she was the one that had used the card when she got in a bind.
The mother had intercepted a preapproved credit card application intended for Angie, forged Angies signature and added herself as an authorized user. She (got the card) thinking she would have it under control, but it went delinquent over Christmas time when money was short, Angie explained.
A small problem thats growing
Identity theft experts say a small but growing proportion of identity fraud is perpetrated by parents. Some, like Angies mother, victimize children who are old enough to establish credit in their own right. Others use the Social Security numbers of their minor children to set up fraudulent accounts that the victims might not discover for years.
When we first started hearing about it, we were shocked and horrified, said Beth Givens, head of the Privacy Rights Clearinghouse in San Diego. It turns out it is more common than you might think.
Linda Foley, founder of the Identity Theft Resource Center, also in San Diego, said she almost never heard about parent perpetrators two years ago but now gets several complaints a week from victims or from other adults who have uncovered the crimes.
Among her most recent sufferers: five children, all under age 9, whose Social Security numbers were used by their mother to open fraudulent credit cards and other accounts. Their grandmother and the womans first two husbands are helping police prosecute the case, Foley said.
She is a user, pure and simple, Foley fumes. The children are nothing more than an opportunity to gain money she has not earned.
Unique opportunities to steal
Normally, minors cant get credit cards, since you cant be held to a contract until youre 18. But thieves can get away with using minors Social Security numbers because credit issuers may not demand proof of age or may be fooled by forged documents.
The credit file begins with the first application, and the information given is taken as truth, Foley said.
The Federal Trade Commission, which broke the news earlier this year that nearly 10 million Americans were victims of identity theft in the last year, found that 9% of victims identified the thief as a family member or other relative. The agency didnt publish statistics about how many of the credit hijackers were the victims parents. (Actually knowing the thief is something of a rarity. Only 26% of victims have any idea who committed the crime, and nearly half dont know exactly how their personal information was compromised.)
But parents, especially those of minor children, have unique opportunities to steal. Not only do they know their childrens Social Security numbers -- the key piece of information needed to open bogus accounts -- but they usually can intercept any mail that could tip off other family members to the crime. Even if their transgressions are uncovered, many can rely on family loyalty to protect them from prosecution.
I cant do that to my parents
Angie, for one, simply couldnt file the police report that the credit card company demanded before it would remove the account from her credit file. Its my mom! she said. I know it's wrong of her, but I can't do that to my mom.
Some parental thieves refuse to believe theyve done anything immoral or illegal. Like other cases of parental theft -- such as raiding custodial accounts, swiping money from trust funds or selling off savings bonds given as birthday presents -- the parents may justify their behavior as ultimately benefiting, or at least not hurting, the victim.
The rationale is, Ill pay it off. Theyll never be harmed, Foley said. If some of the ill-gotten gain is spent on the kids, this attitude is reinforced. But if you didnt pay your own bills, what makes you think youre going to do the right thing now? You still have the same poor money management skills that caused you the problem in the first place.
And such identity theft is far from a victimless crime. Parental ID thieves:
Put long-lasting black marks on their childrens credit. Many ID theft victims learn of the crime when theyve been turned down for credit, denied an apartment, quoted higher-than-normal insurance rates or contacted by a collections agency threatening to take them to court. The average ID theft victim spends many hours trying to clean up the mess, and the problems can persist for years. Sometimes, its not possible to get the messes fixed.
Put their children in an impossible position. To prove the accounts were opened fraudulently, most lenders demand the victims file a police report, which could result in the parent being arrested and prosecuted. While probation is possible for first-time offenders, Foley said, jail time cant be ruled out.
Since Angie couldnt face that possibility, she decided to take responsibility for the account, paying it off and changing the accounts password and address. The late payments, however, will remain on her credit report for seven years. The delinquencies have driven Angies credit score into the low 600s -- an embarrassment for the finance major, who worries future employers will see the black marks and deny her jobs.
Damage their children emotionally by using them for personal gain. Like victims of sexual abuse, these identity theft victims were betrayed by people who are supposed to be protecting them, said Charles Nelson, a San Diego psychologist who has studied the issue for the Identity Theft Center. The victims can wind up having real trouble trusting others and forming relationships, Nelson said.
Like Foley, Nelson strongly recommends therapy for victims to mitigate, but not erase, the violation they feel.
The victims will deal with the consequences forever, Foley said.
The need for some tough love
The issue of parental identity theft has become something of a holy war for Foley, herself a victim of identity theft (although the perpetrator wasnt a relative). Foley would like to see a national registry created so credit issuers, credit bureaus and federal law enforcement officials could check out the name and age associated with a Social Security number.
Foley also has a guide on her Web site for those whose parents have stolen their identities. Among her suggestions:
Consider filing that police report. Taking what seems like a drastic step may be the only way to get your credit cleared -- and to drive home to the perpetrator the seriousness of what he or she has done. Im a believer in tough love, Foley said.
Try mediation. A few victims who were unwilling to file crime reports but who had remorseful parents have been able to get their names removed from credit accounts those parents established. Using an attorney mediator, they had their parents draw up an agreement acknowledging sole responsibility for the account, Foley said.
An attorney mediator is an additional cost, but you show good intent that way, Foley said. A local bar association can provide referrals to mediators.
But credit issuers typically wont accept such agreements without a significant payment toward the debt. And this assumes the account hasnt been charged off or sent to collections, which significantly reduces the creditors interest in cooperating.
Consider changing your Social Security number. This is a drastic and difficult step, one that the Social Security Administration typically discourages. Its not a good solution if you have a significant work or credit history that you could lose in the change-over. But if youre young and just starting out and you can keep the new number a secret from your parent, it could be one solution. The Social Security Administrations Web site has information about getting a new number.
Be vigilant about your credit reports. Heres one case where investing in credit monitoring might be a smart idea. At the very least, have fraud alerts put on your credit reports at all three major bureaus: Equifax, Experian and TransUnion. Unfortunately, lenders often ignore fraud alerts, but theyre still worth trying.
If youre a California resident, you currently have the right to freeze your credit, which should prohibit anyone from opening an account in your name. (It takes a secret personal identification number, which only you know, to unlock your report so that credit can be granted.)
Expect some emotional fallout. Common reactions to identity theft include feelings of rage, betrayal, isolation and financial insecurity -- emotions that are often amplified when the thief is a parent. Getting therapy can be helpful, as can talking to supportive friends, a clergy member or a support group.
The emotional toll is very deep, Foley said. It can be permanently scarring.
Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.
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