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Your child begins to receive offers for pre-approved credit cards. It sounds annoying, but nothing to be worried about, right? In fact, it could be one of the warning signs that your family is the victim of child identity theft.
Nearly 3 percent of U.S. households with children under 18 — or one in 40 households — has been struck by child identity theft, according to the Identity Theft Assistance Center.
Each year, scammers use confidential financial information stolen from roughly 12 million people to commit crimes. They may, for example, use your Social Security number to apply for a credit card or charge purchases to you after stealing your credit card number.
Unfortunately, children can also be victims. What’s worse, they may not know it has happened until years later, when the bad credit history that the scammers have established in the child’s name prevents him or her from getting a student loan, apartment lease or credit card.
As with any kind of identity theft, prevention requires close monitoring. Regularly review the statements your child may receive from any savings or other financial accounts they have. Ensure that all checks or withdrawals are accurate and that there aren’t any unauthorized charges.
When your children are old enough, discuss your reviews with them. Explain the importance of keeping tabs on their money so that they are better able to protect their accounts, manage their money and stay on budget as an adult.
You can safeguard your entire family’s privacy by properly maintaining the confidentiality of all your paper and electronic financial and other records and shredding documents with personal information before you discard them.
Keep Social Security cards in a safe place, not in your child’s wallet. Warn your children to restrict their online purchases to reliable web sites that feature online security and privacy protection.
In addition, advise them not to divulge information about their financial accounts or Social Security number in response to any email, no matter who sent it or how legitimate it may look.
Since an identity thief can even use a birth date to access a birth certificate and create a phony profile, discourage them from revealing this information online.
If you believe your child has been the victim of identity theft, contact the three major credit agencies — Equifax, Experian and TransUnion — to see if they have a fraudulent credit history on file. If they do, ask the agencies to remove the incorrect accounts and other information and issue a fraud alert on their account.
Follow up with each creditor and let them know that the account in your child’s name is fraudulent. You can also file a fraud report with the Federal Trade Commission and a police report.
Your local CPA can offer a wide range of advice on the best ways to protect your money, whether that means addressing tax concerns, implementing smart saving habits or responding to identity theft. Be sure to contact him or her with all your financial questions.
Copyright 2014 American Institute of Certified Public Accountants.
The Money Management columns are a joint effort of the AICPA and the California Society of CPAs as part of the profession’s nationwide 360 Degrees of Financial Literacy program.
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