Protecting Kids From Financial Fraud

When we think of identity theft, adults usually come to mind — people who use credit cards and bank accounts. But increasingly, fraudsters are targeting a much more vulnerable group: children. With limited financial activity and oversight, children can become victims of identity theft without anyone noticing — sometimes for years. By the time a child applies for a student loan, a job or even a driver's license, they may discover their identity has already been used to rack up debt, open fraudulent accounts or apply for government benefits. The damage can take years to undo, setting them back just as they're starting their financial lives.

Learn how fraudsters are targeting children, how to stop fraud in its tracks, and what you can do to help prevent kids in your life from becoming victims.

How Fraudsters Target Children

Children's identities are especially attractive to fraudsters because they're often unmonitored. Many parents don't think to check their child's credit report and may not realize that children can be victims of financial fraud. As a result, fraudsters use a variety of tactics to exploit and steal children's identities, including:

• Financial theft, which includes opening credit cards, loans or utility accounts using a child's Social Security number.
• Applying for benefits like health coverage, housing assistance or unemployment using a child's identity.
• Masking criminal activity by using a child's name to avoid detection.
• Online deception, including phishing emails, fake contests and social media scams that trick children into revealing personal information.

The Scope of the Problem

In 2024 alone, over 18,000 complaints were filed involving victims under the age of 20, with reported losses totaling $22.5 million, according to the Internet Crime Complaint Center. But experts believe the real number is much higher, as many cases go undetected or unreported. Additional research from Experian shows that 1 in 50 U.S. children are victims of identity theft, and according to Javelin Strategy & Research, 1 in 45 children had their information exposed in data breaches. 

Warning Signs to Watch For

There are several red flags that may indicate a child's identity has been compromised. These include:

• Credit card offers, bills or financial statements addressed to a child.
• Debt collection notices or calls for accounts the child never opened.
• Denial of government benefits or health coverage because the child's Social Security number is already in use.
• IRS notices about unpaid taxes or income reported under the child's name.

If you receive any of these, it's important to act quickly. Contact the credit bureaus, report the fraud to the Federal Trade Commission (FTC), and consider placing a credit freeze on the child's file.

Tips to Help Protect Children from Fraud

This issue doesn't just concern parents — grandparents, teachers, daycare providers, tutors and even neighbors all play a role in protecting children from fraud. Protecting children from fraud starts with awareness and proactive steps. Here are some tips to help safeguard their identity:

• Talk to children about online safety. Teach them not to share personal information, how to spot suspicious messages or links and why it's important to be cautious online. Encourage children to reach out to a trusted adult and to stop or pause if they're unsure about a situation. Creating a code word can help them know they're talking to who they think online.
• Stay current on financial topics so you know what to look out for. Financial education tools like Zogo can be a fun way to up your money smarts.
• Monitor for unusual mail like credit offers, bills or tax documents in their name.
• Freeze their credit with the major credit bureaus: Experian, Equifax and TransUnion. This prevents anyone from opening new accounts in their name and can be lifted when they're older. Some good-to-know information about freezing your child's credit:
• Only a child's parent or legal guardian can request a freeze for a minor, unless the minor is 16 or 17, in which case they can request it themself.
• All three bureaus require a letter or completion of a form, evidence of the child's identity, evidence of the parent's identity and proof of relationship, but some may request additional information to verify your identity or address.
• All three bureaus require mail-in submissions — minors cannot have their credit frozen and thawed online.
• If you need to lift the freeze, be prepared to submit the same information you used to initiate the freeze. Some bureaus may require additional information, like a code distributed when the freeze was verified.
• Secure personal documents like birth certificates and Social Security cards. Don't carry them unless necessary.
• Shred unneeded materials with identifying information such as Social Security numbers, account numbers, medical information, school-related details and more. BECU hosts a twice-annual Shred and e-Cycle event where members can bring sensitive documents and electronics to be shredded and disposed of at no cost to you.
• Be cautious with online forms that ask for a child's personal information. Verify the legitimacy of the request before submitting anything.
• Report suspicious activity immediately to the FTC or your financial institution. To report fraud or suspicious activity to BECU, you can call or send us a message through Online Banking or in the mobile app. 
• Teach children about finances from a young age so they're familiar with money. BECU Early Saver and Checking accounts can help kids understand how financial accounts work so they can start their financial lives strong into adulthood.

Practice Good Digital Hygiene

Children are especially vulnerable online. They may not recognize the signs of a scam and can be easily lured by games, quizzes or messages that appear to come from friends or family members. Part of preventing fraud also includes using strong safeguards. Here are some ways you can set up technology to help:

• Stay current on software updates for phones, tablets, computers and gaming consoles — this includes making sure antivirus software is up to date.
• Remove personal details and scrub technology before selling, discarding or donating electronics.
• Leverage controls, such as automatic password change prompts, screen locks, biometrics like fingerprints or face recognition, privacy settings and parental controls to prevent unauthorized access to devices.
• Set up a password manager on your devices and your child's devices to create and manage unique passwords. That way, if information on one website is breached, fraudsters won't have passwords needed to access other accounts.
• Warn children about the risks of using public Wi-Fi, especially for any site containing personal information, and set up a virtual private network (VPN) for an extra layer of protection.
• Be mindful of information posted online about children, either by adults or by children themselves.

By staying informed, watching for warning signs and taking simple preventive steps, adults can help children start their financial lives on solid ground and free from the burden of fraud.

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized financial, tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation when making financial, legal, tax, investment, or any other business and professional decisions that affect you and/or your business.

Resources:

• IdentityTheft.gov 
• Parents: Talking to your kids about text scams | Consumer Advice
• 11 Common Scams Targeting Children and Teens - Experian
• Child Identity Theft | TransUnion
• How To Protect Your Child From Identity Theft | Consumer Advice
• Internet Safety for Kids