*Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.
This article was last updated Oct 09, 2017, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.
As odd as it might sound, children are the new targets of credit card fraudsters. The number of fraud cases related to children and credit cards has nearly doubled recently, and experts expect it to keep growing at an alarming pace. But what may be even more surprising and interesting is to note that most of the people who are perpetrating the fraud are closely related to those children. Parents are often the ones who are taking advantage of children's credit profiles to get their hands on credit cards or consumer loans.
Hopefully you have never thought to do this to your child, but if you have, you're not alone. Many young adults find themselves being denied for bank accounts, credit cards, and loans because of bad credit someone else acquired for them. A story from the Jackson Sun recently discussed a woman named Olivia who had 40 accounts in her name before age 18, all from someone using her Social Security Number. Poor Olivia is just one of hundreds of victims of this around the world.
Common Reasons for Child Credit Card Fraud
Most of these folks do not take advantage of the unvarnished credit of youngsters through any kind of nefarious and malevolent intent. Rather they do it just because they are feeling pinched for money. Those who snatch credit from children aren't usually organized criminals like those who run credit card fraud syndicates to steal credit from grown-ups. Instead the typical person who uses child credit is a parent, grandparent, or family member. They find themselves in a credit bind so they use the kid's name and social security number to apply for a credit card account. Credit card companies and banks don't normally check the age of the applicant, and soon an adult using a child's credit identity can get a line of credit – which is often used to help keep a roof over the child's head during tough economic times.
Of course there are those instances where a child's credit is hacked by someone who does not do it with a rather innocent purpose the way many parents or caregivers have been doing in order to weather the recession. Children are also an easy target for real professional credit identity thieves. That's because children generally don't ever use their credit, and parents don't usually see any need to monitor their children's credit or identity. So by the time a parent or child discovers the problem the thief may have done the damage and already moved on to another victim.
How the Fraud Works
There are instances where an adult will use a child's name on credit cards, loans, or even on utility bills or cell phone accounts. As long as they pay the bills on time it doesn't generally present a problem. But most people who are willing to steal a kid's identity or falsify it on legal documents to hoodwink a bank or credit card company usually already have a pretty lousy record of paying their bills on time and managing their finances. You don't usually resort to that kind of behavior if you have a stellar track record and a high FICO score. So what eventually happens is that the unknowing and innocent child grows up, turns 18, and starts applying for their own credit cards. They try to take out a student loan or buy a car, or they apply for a job where the employer runs a credit check as part of the standard background research done on any potential employee. Suddenly they find out that their credit is garbage because someone ruined it while they were still in grade school. There are even unfortunate cases where the young adult is forced to declare bankruptcy in order to keep creditors at bay.
How to Check for Childhood Credit Card Fraud
An easy way to check for this kind of thing is to just run the child's credit. Nobody who is under the age of 18 will have a credit file or credit report because they aren't old enough to need that kind of thing unless you have taken steps as a parent to establish credit for your son or daughter. So if you run a credit check using the child's social security number and a credit history pops up then you know that someone has been illegally tampering with their identity.
In the event that such a thing happens, get a copy of the child victim's credit report and take it to the police. They can take immediate steps to block the victim's credit records and investigate the case. Meanwhile you can contact any banks or credit card companies that are mentioned within the report and alert them of the fraud. Send those creditors a copy of the police report, too, so that those institutions understand the seriousness of the situation and can begin their own internal security investigations to find and stop the criminal.