Teaching Financial Literacy to Tweens: Protecting Your Child's Identity

More than 1.3 million kids are affected by identity theft each year – and half are younger than six – according to Rebert Chappell Jr., a 30+ year law enforcement veteran and author of the book “Child Identity Theft: What Every Parent Needs to Know.” Kids' identities are attractive because:

• They don’t apply for credit.
• Their Social Security numbers are "clean" (no credit problems).
• Their identities aren't monitored, so discovering fraud could take years or decades.
• Lots of people have access to kids' identity information.

Many kids today are far more computer literate and tech savvy than their parents (understatement). Combine that with the growing number of ways to connect and bank online, and your child may be entering personal information on at least one website. It’s important to maintain online awareness and take steps to protect your kids. Note: A bank should allow you to be the primary name on your child's account – in which case, you won’t have to provide your child's Social Security number. (See also: Opening Your Child’s First Bank Account.)

Social Security Numbers

At some point, you may be asked to provide your child's Social Security number (SSN), or just the last four digits. While parents often resist providing the entire number, many feel that divulging the last four numbers is "safe." Take note, though: While Social Security numbers issued now are a random series of numbers, prior to 2011 this wasn't the case. Here are a few things that thieves know about SSNs issued prior to 2011:

• Social Security numbers have three sections.
• The first three numbers represent the zip code where the SSN was issued (therefore, if someone knows where your child was born, they can figure out this number).
• The second set of numbers (two digits) represents a specific window of time when the number was generated (therefore, if someone knows when your child was born, they can figure out these numbers).
• The last set of numbers (four digits) are the only random numbers, and, unfortunately, the ones that you are often asked to provide.

As a result, if someone knows your child's birthdate, where he or she was born and the last four digits of their SSN, they could figure out the entire SSN. Even if the thief doesn’t have the last four numbers, a little digging or engineering can provide the rest of the information needed to commit fraud against your child. A thief – who could be a total stranger, friend or relative – could use a child's SSN to:

• Apply for a loan.
• Apply for government benefits.
• Apply for utilities.
• Open a bank account.
• Open a credit card account.
• Rent a place to live. 

Warning Signs

There are a few things to watch out for that can help you determine if your child has been the victim of identity theft. For example, your child might:

• Be turned down for government benefits because the benefits are being paid to someone else.
• Receive a notice from the IRS (for example, that he or she failed to pay income taxes, or that his or her SSN was used on another tax return).
• Get bills or collection notices for goods and/or services you didn’t order or receive.
• Receive offers for credit cards in the mail.

(For related reading, see: 6 Ways to Avoid Becoming an Identity Theft Victim.)

Limiting Risks

While you can't eliminate the dangers of identity fraud, you can take certain steps to minimize the risks:

• Keep paper records, such as birth certificates and Social Security cards, in a secure place.
• Shred all documents containing personal information before throwing them away.
• Avoid sharing your child's SSN unless you trust the person (or business) asking for it – and always ask why they need it and how it will be protected. Don’t be afraid to say “no” if you’re uncomfortable giving it out.
• Be aware of events that make it easier for scammers to get your child's information, such as  home break-ins, lost purses/wallets/paperwork, security breaches at any place that has your child's information (like a doctor's office or school), and an adult in the house who might be looking for a way to get credit or "start over."
• Read the notice sent home each year from school that explains your rights under FERPA – the Family Educational Rights and Privacy Act (FERPA), enforced by the U.S. Department of Education. You have the right to opt out of sharing certain information with third parties.
• Be aware of your child's online activity. Help him or her set up any accounts, for "virtual" piggy banks or actual accounts, and make sure he or she is not providing any sensitive information.
• See if your child has a credit report when he or she turns 16. If there is one, any problems that are a result of fraud should be fixed before your child applies for credit or tries to rent an apartment.
• Teach your child to use strong email and account passwords (longer passwords with a combination of lowercase and uppercase letters, and number and symbols, are more difficult to crack.) Instruct your child not to share login and password information with anyone (except you).
• Use reputable computer security software and keep it up to date.
• Teach your child to avoid clicking on any links embedded in emails or that appear in a pop-up message.
• Tell your child that no bank (or credit card company, etc.) will ever ask for personal information via email. As such, instruct your child to never reply to emails, texts or pop-up messages that request this type of information. 

It is important to take into consideration that fraudsters don't necessarily target people who have large account balances. They might steal the $40 your child has in a bank account, but most often what they really want is to be able to run up huge amounts of debt in your child's name.