Child identity theft and subsequent fraud, often perpetrated by scams targeting children via social media and gaming apps, is one of the most worrying cybersecurity issues in America today.
According to Javelin Strategy & Research’s 2022 Child Identity Report: The Perils of Too Many Screens and Social Media, fraud losses per household with a victim of child identity fraud last year were $752, up from $737 the previous year . The good news is that the increased awareness is having an effect; Total losses from child identity fraud from July 2021 to July 2022 totaled $688 million, compared to $918 million a year earlier. Javelin attributes stemming from increased public awareness and collaboration between parents, law enforcement and their financial institutions.
Javelin Director of Fraud & Security Tracy Kitten recently moderated a webinar on identity fraud in children, featuring Ben Halpert, founder of SavvyCyberKids.org, Dave McCain, a special agent for the US Secret Service, and an anonymous parent whose teenage boy was the victim of identity fraud.
Identity theft and fraud: Hard to detect, hard to monitor
Child identity fraud often goes unnoticed for years, only becoming known when the affected child eventually applies for a job or student loan or tries to file taxes for the first time, Kitten said.
“Also, it’s very difficult to monitor,” Kitten added. “As a parent, if you don’t share an account with your child, you don’t know who they are interacting with online.”
Halpert noted that more education is needed for parents to help their children be tech-savvy and safe online.
“You teach your kids not to go out at the mall with someone they don’t know; but they’re communicating with all these strangers sitting behind a screen,” Halpert said. “Parents need to pay more attention to what their child is doing online.”
This is especially true on social media, where scammers often target children. Children are more willing to disclose personal information online and are generally much more open and talkative on social media than adults. This means scammers can obtain personally identifiable information (PII) from a child to commit fraud. Javelin strongly encourages parents to not allow their children to have personal profiles on social media until the age of 8 and severely restrict their children’s access to social media until at least the age of 6. When children engage in social media platforms like YouTube or Messenger Kids, they should do so through an account linked to a parent or guardian, and even then the risks are great.
Criminals target children on social media because they can quickly multiply their attacks.
“If a criminal can take over a kid’s social media account with 1,000 connections, they can spread fraud to all of those people (that the kid is connected to),” Halpert said.
It’s important for parents to be aware of the potential signs of cheating and be proactive about them, Kitten added.
“If, for example, a password for an e-mail account suddenly stopped working, it might be taken care of,” she said. “Don’t assume the kid just forgot the password; it could have been adopted and changed.”
cooperation with law enforcement
In years past, parents may have been reluctant to contact law enforcement following an incident of child identity fraud, or may not have known where to contact. Luckily that is changing. Javelin notes that cooperation with law enforcement agencies related to child identity theft and subsequent fraud has increased significantly over the past year, suggesting consumers are becoming more willing to engage with law enforcement.
Agent McCain advises parents whose children may be victims to contact local and state authorities first; then, depending on the severity of the fraud, the case could eventually be escalated to federal authorities.
Identity theft and fraud: a burden on the whole family
Identity fraud in children is often a burden for the whole family. Kitten notes that the number of hours it takes families to solve a case of child identity fraud is 16 hours. And that’s not even considering the emotional impact.
The anonymous parent said her family only found out about the scam when her daughter first attempted to file taxes.
“It’s still not resolved, and the real problem is someone out there has all their information that they could do something with at any time,” the parent said.
Javelin encourages all parents to sign up with a comprehensive family identity protection and monitoring service, particularly one that also monitors social media accounts.
This is what the mother did after the scam was discovered and she urged others to do so before the scam struck.
“I would tell others to proactively sign up with an identity verification service,” the parent said.
Help from financial institutions and credit bureaus
Financial institutions and credit bureaus can both play a key role in reducing children’s identity fraud. Halpert found that while an adult can quickly get online and freeze their funds in a few simple steps, it is a cumbersome, paper-based and time-consuming process for a minor. He urged credit bureaus to allow parents to quickly and digitally freeze their child’s credit.
“Credit bureaus have to help us with that,” Halpert said.
Financial institutions can also play a key role by providing education on the risks of identity theft among children. Banks and credit unions can also differentiate themselves and gain a competitive advantage by offering these services, Javelin noted.
Financial institutions should also encourage their customers to sign up for text and email alerts warning of suspicious activity.
“This is a fundamental alerting feature that financial institutions need to do better to encourage their customers and members to take advantage of, and institutions also need to ensure they encourage the ability to opt-in to these alerts so consumers can easily and seamlessly use them they can,” the Javelin report noted.