Parent-Child Financial Fraud Is A Real Thing — Here’s How To Protect Yourself

What comes to mind when you think of identity theft? Probably some shadowy figure lurking in a basement in front of a computer screen. But that’s not always the case. An identity thief could be sitting next to you at the Thanksgiving table or on the couch while binge-watching your favorite TV show. Parent-child financial fraud which is exactly as it sounds — a parent stealing a child’s identity or vice versa — is more common than you think, as is being defrauded by other friends or relatives. According to Javelin Strategy and Research, in 2017 1.22 million people became victims of fraud committed by someone they know — that’s 7.3 percent of all fraud victims.

Why does parent-child fraud occur?

As you might expect, parents don’t typically have a child and immediately set out to steal his or her identities. It happens because they fall on hard times. “From our experience, parents will steal their children’s identities because of their own economic circumstance,” says John Heath, Directing Attorney at Lexington Law Firm. Parents who have terrible credit and aren’t able to secure the loans and credit cards they want or need often get to a point of desperation. They use their child’s social security number to open up a new line of credit since their own score is too low to do the same says Heath. Alternatively, children can also steal their parent’s identities for all of the same reasons.

What happens when a child’s credit is stolen?

A child often doesn’t find out that they are a victim until they reach adulthood and try to get a loan for a house or car, or a credit card of their own. At that point, it’s not uncommon that the child’s credit is in terrible shape; parents who steal their children’s identities often don’t have the skills or resources needed to keep that credit history in decent shape. The same is true if the child is the thief and an older parent the victim.

What can you do about it?

Heath says that the best thing to do is to be aware of what’s on your credit report and the credit of your children. You can pull one free credit report each year from each of the credit reporting bureaus — Equifax, Experian and TransUnion — at annualcreditreport.com. If you find activity on the report of a minor child, inform lenders, debt collectors and credit bureaus that the accounts were opened illegally. You’ll need some hard proof of this, so make sure you have adequate paperwork as well as a police report. And whether or not you find activity on a child’s report, consider freezing your child’s credit (as well as your own). “Credit freezes solve most problems in regards to new account fraud where a credit might be granted,” says Robert Siciliano, Security Analyst with Hotspot Shield. Beginning September 21, you will be able to freeze and unfreeze your credit (and your child’s) for free. You can keep your credit frozen and only request an unfreeze when you are planning on applying for a new loan or credit card.

With Hattie Burgher