Intersections’ Consumer Security Adviser, Neal O’Farrell shares his thoughts today about a proposed law in Maryland that might offer some protection for children and help reduce their chances of becoming victims of identity theft.
A new law that's expected to come into force soon in the state of Maryland should hopefully protect thousands of children from identity theft. But, there is hope only if their parents act and the law is adopted by other states.
Lawmakers in Maryland have approved legislation that would make it much easier for parents to freeze their kids' credit reports and thus protect them from identity theft. What most parents probably don't know is that while adults across America can now use credit or security freezes to protect themselves from identity theft, their kids can't.
The credit bureaus have long argued that children under the age of eighteen cannot freeze their credit reports because there's nothing to freeze, they shouldn't have credit and so there should be no credit report.
However, that position simply ignores the reality of identity theft, where heartless thieves can be exploiting the Social Security number of a child, often for years, before the victim ever discovers it. As director of the Identity Theft Council, an award-winning non-profit, I've come across numerous cases of older teenagers applying for credit for the first time — like a very important college loan — only to discover that someone has been using their identity for years to rack up thousands of dollars in fraudulent and unpaid bills.
In one recent case I'd had to deal with, when an eighteen-year-old girl applied for her first credit card, she was turned down by the credit union because of an awful credit report. When she pulled her reports, she found that someone had been using her Social Security number for nearly ten years, to purchase homes, cars, motorcycles, and vacations, as well as open cell phone accounts, credit cards, and even a new business.
That someone turned out to be her father, who had amassed fraudulent debts in his daughter's name totaling more than three quarters of a million dollars. And while the father was finally convicted and sentenced to just thirty days in jail, the nightmare goes on for the teen whose life is on hold until she can untangle a ten-year financial mess that was none of her doing.
The new Maryland law could help protect kids like this, although having a dishonest parent could create a hurdle. But it's about time that every state in the nation implemented laws that would make it easy for parents to the lock the Social Security numbers of their kids, from the day they're born, until they're ready to take out their first credit.
And while it would be a great start, and some other states are looking at similar legislation, it's still far from perfect. Such laws would not prevent a thief from working or claiming Social Security benefits using the identity of a child. Nor would it prevent a thief from using the identity of a child to avoid arrest or to file fraudulent tax returns.
But we do have to start somewhere, and plugging this enormous security hole should be the first step. It would hurt the bad guys, protect the innocent, and save the banks billions of dollars in potential losses.
Learn more about identity theft protection.