How It Works:
Criminals Can Derail a Child’s Life in Just 3 Steps

Step 1: The Thief Steals a Child’s Information

An identity thief has multiple routes he can take to steal a child’s Social Security number (SSN).

  • Technology: Sophisticated thieves use data breaches/hacks, computer viruses and email phishing to access children’s information.
  • Patterns: The government began assigning random SSNs on June 25, 2011, but numbers assigned before this date follow a somewhat predictable pattern that thieves can use to intelligently guess at the numbers.
  • Paper Trails: From school registrations to doctor’s office forms, there are many low-tech ways your child’s identity can fall into the wrong hands.
  • Purchased: There is a thriving online market for stolen identities. Thieves can purchase an identity easily and anonymously for as little as $40. And it’s not uncommon to see the same identity sold to multiple buyers.

Step 2: The Thief Establishes a Credit History

The thief will typically try to open an account with minimal credit history requirements—such as a cell phone, utility or unsecured credit card account—using the stolen SSN with a different name and date of birth. This is because there is no standard system in place that allows lenders and service providers to verify the name and date of birth on the application against the given SSN. They can only tell that the SSN is a government-issued number. This initial application formally establishes a fraudulent credit file under your child’s SSN with the credit agencies.

Step 3: The Thief Builds Up Credit, then Cashes Out

After the first account is set up, the thief can set up higher value accounts, each account growing in size and complexity as he or she builds up credit. When ready, the thief will cut ties with the identity, allowing any open accounts to go into default.

Source: 2012 Child Identity Theft Report