Your Kids are Being Targeted for Identity Fraud

By:  |  Category: Blog, Security Thursday, June 14th, 2018  |  No Comments

No one wants the hassle of a data breach leading to leaked personal information, but these types of crimes are especially harmful to kids. Over a million children were victimized by identity fraud last year alone, with an estimated cost of $2.6 billion.

The 2018 Child Identity Fraud Study, conducted by Javelin Strategy & Research and sponsored by Identity Guard, discovered that 11% of households had at least one minor’s data compromised in a breach last year. Almost 40% of minors who found out their data was breached then became victims of fraud. In contrast, only 19% of adults who were notified eventually became targeted.

Why the discrepancy? 

First of all, adults are more in tune with their finances. If they run out money on an account they notice pretty quickly and intervene. On the other hand, kids have small or non-existent financial histories, which allows a huge opportunity for criminals to leverage and exploit their information to build account networks. This “blank slate” lets fraudsters slowly grow accounts over time before tapping them out.

Kids rarely have a FICO score and because they have no credit history, the con will go unnoticed far too long. Criminals often combine data from multiple victims to create false identities. Social security numbers are particularly hot tickets here because minors haven’t yet established financial histories; because of this, their SSNs don’t raise red flags when they’re used in identity fraud.

Sadly, sixty percent of child identity fraud victims have some sort of personal relationship with the criminal using their data; while only seven percent of adult fraud victims know their perpetrator. Identity fraud against minors is difficult to prevent because many fraudsters have legitimate access to the children’s information. Two-thirds of child fraud victims are under the age of eight, 20% were between the ages of 8 and 12, and 14% were aged between 13 and 17.

The Problem with Cyberbullies

Researchers also found a strong connection between cyberbullying and fraud. Minors who were bullied online (6.67%) were more than nine times more likely to be fraud victims than those were not bullied (0.72%). The average fraud amount among bullying victims was $4,075, more than four times the average total among non-bullied targets.

“In many cases, fraud and bullying are not perpetrated by the same individual but arise from the same underlying vulnerabilities,” says Al Pascual, senior vice president of research and head of Fraud & Security at Javelin. “Children who are unprepared to protect themselves from online risks are likely to encounter individuals who wish to target them emotionally or financially.”

The majority of children targeted with identity fraud are also hit with new-account fraud, which affected 0.96% of minors in 2017, because they don’t have existing financial accounts. Adults, on the other hand, typically experience existing-card fraud (ECF) because they’re targeted for the value of their accounts.

Unfortunately, perpetrators do more than steal children’s identities to open new accounts and drain existing ones. Between 410,000 and 560,000 kids were impacted by false tax claims in 2017, and attackers also use their data to gain unlawful employment or avoid punishment for crimes.

Sadly, victimizing minors leads to a bigger haul for the bad guys, who stole $2,303 when misusing the identities of children — more than twice the average fraud total for adult victims. It’s also easier for adults to avoid liability for fraud, as they only have to pay an average of $104 per incident. The families of child identity fraud victims pay an average of $541 out of pocket.

Educating kids and training them to be cautious online lowers the potential for fraud. Also limiting their amount of time online cuts down on the risk of kids giving out confidential data. Only 0.69% of children of “highly cautious” guardians were affected by identity fraud in the past year, compared with 3.64% of dependents of less cautious guardians.

For all those helicopter parents guarding your kid’s computer use, good job! More caution led to lower prevalence of fraud, and when fraud happened, it was for a lower amount and more easily contained.

EnhancedTECH offers Identity Monitoring for Corporations, Executives, Employees and Individuals with Family Plans-to protect those kiddos! Give us a call at 714-970-9330 or contact us at [email protected] for more information.

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