Confirming Customers’ ID to Prevent Child Identity Theft
When the issue of identity theft occurs, banking inconsistencies and credit scores are what most frequently come to mind. While these are concerns that are universally associated with adults, children may also be victims of identity theft.
Synthetic Identity Fraud (SIF)
Most children don’t have bank accounts or credit cards or any real financial footprint to speak of – and that’s exactly the point. A child’s identity provides a fraudster with a real identity with nothing on the books to cross-reference.
This allows the fraudsters to craft a new synthetic identity out of the nuggets of truth from the child’s identity (name, social security number, etc.) and fabricate additional and useful information to run their scam.
Fraudsters can use the child’s Social Security number to apply for government benefits, credit cards and take out loans, only to burn the identity when it stops being profitable for them. This usually leaves the child and his/her parents holding the bag until they can prove that fraud has been committed.
Friends and Family Fraud
Sometimes the fraudster is close to home- a friend or family member. While we don’t want to suspect someone close potentially committing identity theft against someone we love, it does happen.
A 2018 Javelin Research and Strategy study revealed that the number of victims who knew the perpetrator in the case of identity theft spiked to 15 percent in 2018 from seven percent in 2017.
In fact, identity theft expert Axton Betz-Hamilton experienced child identity theft herself by her own mother. It took Betz-Hamilton eight years to remove fraudulent entries on her credit report, and now regularly monitors her credit.
Child Identity Theft – The Impact
While it usually isn’t too difficult to prove that a toddler didn’t open a bunch of credit cards, the ordeal can still be a stressful one for everyone involved.
Moreover, a significant problem is that this activity can go undetected for much longer than it would for an adult as children typically have no reason to check their credit score until at least mid to late adolescence when they apply for college loans or an apartment.
It’s not just that children can be targets, but that child identity theft has been on the rise for years. When combined with the fact that the fraud can continue for much longer than it would for adults, it creates a very expensive problem.
According to Javelin Strategy and Research, fraud committed against children amounted to $2.6 billion in 2017 alone. Not only is child identity theft financially expensive, it is emotionally expensive wreaking havoc on those affected.
For example, an Experian survey found that 35% of those who were affected by child identity theft needed professional help to deal with the emotional trauma.
Combatting Child Identity Theft
Fortunately, measures are being taken to attempt to stem the tide of this growing problem.
The Protecting Children from Identity Theft Act is designed to curtail synthetic identity fraud by requiring the Social Security Administration to create a database allowing financial institutions to verify a potential customer’s identity by referencing and verifying their name, Social Security number, and date of birth all match.
Unfortunately, this solution introduced in 2018 may take time to implement. As no online company wants to allow fraudsters into their business, methods of helping to keep them out are currently available. Some of these options specifically target fraudsters employing synthetic identities.
Businesses need to cross-reference potential user data and look for discrepancies themselves. This may seem like a daunting prospect, and if done manually and on a large scale, it certainly would be.
While there are many security options to assist companies — such as Knowledge-Based Authentication, Two-Factor Authentication, and Single Sign On — using a combination of these plus requiring a government issued photo ID limits how far a fraudster can take the scam.
How many toddlers take selfies while holding a government ID? And when comparing this photo to a database of legitimate IDs, the fraudster is stopped in their tracks.
Fraudsters will never stop trying to come up with ways to scam individuals and organizations. Whether that takes the shape of stealing the identities of children or hacking your personal information, online organizations must be prepared to protect themselves and their customers from the constant onslaught.
For their part, the US Government is working on a potential solution, but in the meantime and following, there are solid options available now that combine the tried and true methodologies of the past with technological advancement of the present.
Companies can neither afford to take customer verification lightly, nor do parents want to worry about their seven-year-olds getting into credit card or loan debt. The stronger the verification systems become, the more this crime becomes a thing of the past.