Why child identity theft and fraud is on the rise

Experts say parents often take too long to notice child identity theft, with lasting consequences

Experts warn child identity theft can take years to notice and the potential consequences can last into adulthood when applying for a credit card, a loan or renting an apartment. Getty Images

Identity theft usually conjures up mental images of desperate adults on phones trying to cancel credit cards or freeze bank accounts, but experts say the prevalence of social media and smartphones has caused children to be increasingly vulnerable to having their identities stolen, often with long-term consequences.

“Fraudsters are targeting children’s identities because they can exploit the information for an extended period,” said Rob Woods, director of fraud and identity for LexisNexis Risk Solutions, a global provider of information-based analytics and decision tools.

Mr Woods said criminals have learnt that because adults generally do not think their children are vulnerable, it generally takes much longer for them to figure out that a child’s identity has been compromised.

“This often remains undetected for years, as children typically do not engage in financial transactions nor do they or their parents monitor their credit,” he said.

With criminals well aware of the likelihood of the child's identity theft going undetected, Mr Woods said LexisNexis is seeing criminals opening bank accounts, applying for loans and even committing other financial crimes with the fake identity.

The increase in child identity theft, in part, is down to the easy access to a pool of potential victims through social media apps, LexisNexis said. Teenagers often leave their accounts public instead of private, and to make matters worse, they often post their full names, birthdays and other information that can be used for nefarious purposes.

In some cases, Mr Woods said identity thieves will use manipulative methods on social platforms.

“They lure young people into sharing personal details by disguising requests as harmless personality quizzes or fake competitions promising prizes,” he said. “Fraudsters design these tools to collect information from large numbers of people with minimal effort.”

Parents, he added, are also unwittingly compromising their children’s identities through more traditional scams such as email-based phishing attempts and what is become known as smishing – phishing tactics using text messages.

Unlike identity theft involving adults, who can quickly notice and report the problem, the damage from children and teenagers falling victim to identity theft can be longer lasting and significantly more consequential.

“People often uncover the theft only when, as adults, they apply for a credit card, take out a loan for school or a car or attempt to rent their first apartment,” Mr Woods explained.

“By then, the damage has already begun to disrupt their financial independence and daily life.”

How parents can protect their child's identity

According to Javelin Strategy and Research, child identity fraud cost nearly $1 billion in 2021, with that number expected at the time to increase.

Experts such as Mr Woods say parents can take some simple steps to try to minimise the chance of their children falling victim to fraud.

The most obvious but often overlooked way to stop identity theft for children and teenagers, he said, is to make sure social media accounts are set as private.

He also said it is never too early to instil the importance of preserving personal information that comes with the territory of basic computer and smartphone use.

“Teach children to keep their details private, use strong and unique passwords and avoid sharing their login details, even with friends and even for things that might seem harmless like gaming,” he said, before focusing the onus back on adults, who he said must stay on high alert for things that might seem strange.

“Parents can also look out for unusual signs, like bills or even credit card offers addressed to their child – often these are the first noticeable signs of fraudulent activity.”

If caught early, he explained, the damage can be minimal.