Have you checked your child's credit report lately?
Most children under the age of 18 shouldn't have a credit report at all. But as digital thieves become more sophisticated and federal agencies become occasionally vulnerable to hackers, cybercrime is finding new victims. Critical privacy data like Social Security numbers - which many parents obtain for their children in infancy for investment purposes - could be at risk years before a child ever opens a bank account or applies for a loan.
For the 15th straight year, the Federal Trade Commission tapped identity theft as the number one source of consumer complaints in its 2014 Consumer Sentinel Network Data Book released in February. The agency also noted a "large increase" in so-called "imposter" scams - phone calls and emails from thieves purporting to represent the government as a way to steal data and money.
This trend, of course, isn't just about the kids. Nor is it just about the Internet.
Working adults and seniors are also subject to an even wider range of financial risks in person, by mail and over the phone. Fraudsters easily identify and adapt to their targets' personal habits. That's why illegal phone and person-to-person activities tend to involve older individuals while digital crime has grown among younger people who generally spend more time online via desktop and handheld devices.
For all of these reasons, it may be time to think about a family fraud plan.
Checking the accuracy of credit reports is a good first step. Parents should begin by checking their own credit reports to make sure creditors and loan balances are accurate and no inaccuracies or unfamiliar lenders have crept into their data. Individuals can receive one free report a year from each of the three major credit agencies. Because credit agencies constantly update their data based on most-recent credit activity, it is wise to stagger receipt of each report throughout the year to catch problems as they surface.
Once parents confirm their credit reports are in order, it is appropriate to make sure other family members are doing the same. Adult children can confirm whether their own parents are doing similar checks; even debt-free seniors can be targeted for identity theft and credit scams.
Minors require a little more attention. As mentioned, most children will not have any credit data on file until at least the age of 18. That may be due in part to the Credit Card Accountability, Responsibility and Disclosure, or Credit CARD Act of 2009, which implemented new protections for consumers under 21. Under the Act, consumers under 21 will only be able to get a credit card with proof of their ability to make payments independently or the help of an adult co-signer.
This means parents need to watch for other red flags. Start with the mail. If a child is under age 18 and credit solicitations - or bills - start arriving, that's a likely indication of identity theft. Collection calls - real or fraudulent - might be another sign. Another tipoff might be a local bank refusing to issue a teenager a savings or checking account because they've detected a poor credit history. Sadly, crime statistics also show that family members can be culprits in identity theft because relatives' financial data can be easy to obtain.
Whether a problem has surfaced or not, parents may want to go directly to the TransUnion, Equifax and Experian credit agency websites to check respective policies and procedures for investigating credit history on behalf of a minor. Once a child establishes credit, parents should consider sitting down with their children several times a year to pass on the lifetime habit of evaluating their own credit reports.
Families should establish an ongoing conversation about fraud that stresses the best ways to protect financial privacy on paper, online and in face-to-face dealings. Younger people, particularly students, may need this conversation the most: A 2015 study by Javelin Strategy & Research indicated that younger consumers tend to be the least concerned about online fraud but most severely affected by it.
Here is a general checklist to follow for digital, person-to-person and document safety:
- For those who rely on paper statements, receipts and bills, make sure mailboxes are safe from thieves and any document with an account number or identifying data is destroyed before it's placed in the trash. The same goes for tax returns that are no longer needed.
- Learn how to protect all mobile computer and handheld data and have a game plan in place in case any family member loses their smartphone, tablet or laptop/desktop computer.
- Be aware of leading categories of scams. Over the phone and in person, be wary of requests for Social Security or other specific account data unless the person asking is known and trusted. These are called "vishing" scams, similar to "phishing" scams that involve fraudulent emails, texts and websites used to illegally collect personal data. Generally, be wary of calls from strangers or opening suspicious emails or attachments online.
- For mobile devices and computers, make sure all software security updates are installed immediately and passwords are unique and frequently updated.
- Think twice about using smartphone apps to pay for merchandise or services unless the issuer is known for secure software practices.
- Sign up for fraud alerts from banks, credit card issuers or investment companies to receive immediate word of unusual or potentially illegal activity on accounts.
Bottom line: The Internet has increased the risk of financial fraud for young and old consumers, but thieves still work by phone and mail. Monitor credit data and make sure loved ones know how to keep their financial data safe.
Nathaniel Sillin directs Visa's financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney