On January 1, a new law went into effect in the state of Maryland offering Maryland parents a new, and possibly very effective, way of protecting their children's identities from theft.
If you are an adult and you suspect that your identity may have been compromised, many states now give you the right to put a "freeze" on your credit report at each of the three credit reporting agencies. In this way, if some granter of credit tries to access your credit history, they will be unable to, and thus will not grant credit to an outsider using your name and/or Social Security number.
But things don't work that way with children. If you suspect your child's identity may have been compromised, and you check the credit reporting agencies, if they have a credit report in your child's name or Social Security number, that usually means your child's identity has already been stolen and utilized by a scammer and you must then take the necessary steps to close down and expunge that credit file.
But if there is no record — if a credit reporting agency has no file in your child's name or Social Security number — you can't, as one credit industry witness told an FTC panel, freeze what doesn't exist.
That is until now, thanks to the new Maryland Child Identity Lock law. This law seeks to solve this "you can't freeze what doesn't exist conundrum" by requiring the credit reporting agencies, after various hurdles have been cleared, to create a credit file — or something that acts like a credit file within their systems — and place a freeze on it.
Specifically, the new law states:
IF A CONSUMER REPORTING AGENCY DOES NOT HAVE A FILE PERTAINING TO A PROTECTED CONSUMER WHEN THE CONSUMER REPORTING AGENCY RECEIVES A REQUEST UNDER PARAGRAPH (1) OF THIS SUBSECTION, THE CONSUMER REPORTING AGENCY SHALL CREATE A RECORD FOR THE PROTECTED CONSUMER.
WITHIN 30 DAYS AFTER RECEIVING A REQUEST THAT MEETS THE REQUIREMENTS OF SUBSECTION (C)(1) OF THIS SECTION, A CONSUMER REPORTING AGENCY SHALL PLACE A SECURITY FREEZE FOR THE PROTECTED CONSUMER.
Note: under the law, a "protected consumer" is a minor under age 16 or certain other persons, even adults, with diminished capacities.
Getting one or all three of the credit reporting agencies (Equifax®, Experian® or TransUnion®) to establish a file and then freeze it for your child is not a simple matter. All three have slightly differing policies and forms, and differing processes, but at the very least you will have to file copies of your child's birth certificate, Social Security card and then proof that you are the child's parent and are the custodial parent.
Once you accomplish this, and if you are a resident of Maryland, under the law which was written in cooperation with the credit reporting agencies, you can have a credit file established for your child and an immediate freeze put on it.
How many parents are going to go through this process is unclear. How much of a backlog will develop at the credit agencies is unclear. And finally, how big an effect this will have on child identity theft remains to be seen. But it is an interesting start.