For many parents, committing identity fraud against their child starts innocently enough.
Oftentimes, the parents’ credit scores are low or their financial accounts aren’t in good standing, so they decide to open a credit card, rent an apartment or start a utility account using their child’s information. But because the parents have already established poor financial habits, or because money is tight, the account goes unpaid, and the child’s credit is ruined.
“They think they’re doing what they need to do for the family,” says Al Pascual, senior vice president of research and head of fraud and security at Javelin Strategy & Research. “They don’t think they’re taking advantage of the child. They’re trying to work the system.”
But even if they’re doing it with the best intentions, opening an account in another person’s name without his or her consent is fraud and can destroy the victim’s credit health. “Just because your parents are doing it, it’s no different than a complete stranger doing it,” says John Ulzheimer, a national credit expert who formerly worked with FICO and Equifax. “It’s identity theft.”
While you may envision most identity thieves as distant, shadowy hackers in far-flung countries, the truth is that sometimes identity theft and fraud are perpetrated by the people nearby. In 2017, 1.22 million people became victims of fraud committed by someone they know, according to Javelin Strategy & Research. That’s 7.3 percent of all fraud victims, and they spent 16 hours, on average, resolving the fraud, which is nearly twice the average of 8.7 hours for all fraud victims.
So how do you prevent Mom and Dad from stealing your identity and destroying your credit? While you can’t choose your parents, you can decide how you handle financial fraud. Here’s what to know when a parent destroys your credit.
[See: 10 Ways to Protect Yourself From Online Fraud.]
Spot the signs. It’s nearly impossible for young children to keep an eye out for the signs of financial fraud — they simply don’t know what a credit report is or what normal credit card use looks like. But teenage or adult children may start to see hints that something is amiss.
Sons and daughters should keep an eye out for financial statements sent to the house in their names, not their parents’ names. They may start getting debt collection calls during which the caller asks to speak with them instead of Mom or Dad. They may be rejected when they apply for a credit card or find fraudulent accounts when they pull their credit report for the first time. These are all signs that someone may be taking credit in their name.
Once the child is sufficiently suspicious, it can take some investigative work to trace these anomalies back to the parents. “Children’s identities are very valuable,” Pascual says, and any number of fraudsters — from a parent to an uncle, a family friend or a stranger — may have stolen their information. But as they start investigating the fraudulent accounts, calling up credit card companies, utility providers and other account holders and asking about details, the trail may lead back to Mom and Dad.
[Read: How Consumers Can Protect Their Online Privacy Right Now.]
Take action. First, assess the damage. If a parent has been using your name, Social Security number or other personally identifiable information to open accounts and qualify for credit, the financial damage may stretch back years, perhaps from before you turned 18. You’ll need to inform lenders, debt collectors and credit bureaus that the accounts were opened illegally.
Make sure to tell your creditors and credit bureaus about any accounts that were opened when you were a minor, Pascual says. “If you were under 18 at the time, the credit bureau is going to be obligated to investigate and more than likely have that removed [from your report],” he says.
For debt opened after you turned 18, you may have to work a little harder to convince credit bureaus, debt collectors and financial companies to take your claims of financial fraud seriously. That proof will likely include supporting your story with paperwork, including an Identity Theft Report and a police report. “In order to fully restore yourself with your creditors, you have to have a police report,” says Adam Levin, founder of CyberScout, a provider of identity theft protection services, and author of “Swiped.” If you don’t, “they think it’s disingenuous, or they think you’re a credit repair company.”
These forms will ask whether you know the fraudster, and if you’re answering them honestly (as you’re legally required to do), you’re going to have to rat out Mom or Dad. “If you say no, you’re lying and falsifying a police report,” Ulzheimer says. “That’s illegal.”
This step can be particularly hard for children. Your information may inspire law enforcement or creditors to take legal action against your parents. “They committed a crime,” Ulzheimer says. “The police may go after them, or the creditor may go after them with a lawsuit, as they are legally liable for whatever debt they took out in their kid’s name.”
If the child can’t stomach the idea of tattling on Mom and Dad, then it will be much harder to fight the debts or clear up their credit report, and it might be impossible. “If they don’t rat out their parent, then that’s it. They’ve agreed to be liable for the debt,” Ulzheimer says.
[See: 9 Financial Tools You Should Be Using.]
Protect yourself. If you’re concerned that Mom or Dad might attempt to impersonate you when opening financial accounts in the future, take some steps to protect your identity and limit the chances that they’ll continue harming your credit.
You can “freeze” your credit to make sure nobody can view your report to approve new credit requests. Protect accounts with strong passwords and consider lying on your security questions, Levin says, so that Mom or Dad won’t know how to answer them. Pull each of your free annual credit reports from the credit-reporting bureaus — Equifax, Experian and TransUnion — each year, and consider establishing fraud alerts on your credit files or signing up for fraud protection. It won’t undo past credit damage — or repair any damage to your relationship with your parents — but taking steps to protect yourself may help you maintain strong credit and avoid repaying debt you never borrowed going forward.
More from U.S. News
15 Financial Steps to Take Your First Year After Graduation
10 Offbeat Ways to Earn Extra Money
7 Signs Your Romantic Partner Is Financially Unstable
Don’t Let Your Parents Destroy Your Credit originally appeared on usnews.com
