Identity fraud is often thought of as a problem that affects adults. Adults have valuable account balances and credit lines that criminals want access to, after all. Children’s identities, however, can be just as valuable as they provide a “blank slate” for fraudsters to abuse.
This is an especially true for fraudsters looking to perpetrate synthetic fraud schemes, where a mix of real and made-up identity information is used to create a brand-new identity. Using a child’s social security number to build a synthetic identity can help a fraudster evade detection as they build up credit and take out loans before “busting out.” Unlike adults, who may notice suspicious activity related to their credit or identity and report it, there is typically no one monitoring a child’s credit.
Evidence shows that children are being targeted more and more by fraudsters. IDology has seen a sharp increase in the number of underage identities submitted to our system for identity verification. Similarly, a new report from Javelin Strategy & Research reveals that more than 1 million children (1.5% of minors in the US) were victims of identity theft or fraud in 2017, costing businesses $2.6 billion dollars. Two-thirds of those affected were age 7 or younger.
The Protecting Children from Identity Theft Act (which, since being proposed, has been incorporated into the Economic Growth, Regulatory Relief, and Consumer Protection Act and enacted by the President on May 24, 2018) is intended to make it easier to protect children and adults from synthetic schemes. This bill requires the Social Security Administration (SSA) to create a database of consumer information that can be used by financial institutions to verify that an identity by matching name, SSN, and date of birth.
While the implementation of the required SSA database is probably still some ways off, there are steps businesses can take now to protecting kid’s identities and prevent synthetic identities from getting into their systems. Given their reliance on real and fake data, preventing synthetic identity fraud depends on a business’s ability to analyze multiple layers of an identity (including location, email address, phone number, and activity) to determine a person’s legitimacy and intent. Access to consortium data from a network of other companies further strengthens a business’s ability to fight fraud. Relying on old-school, static identity matching simply won’t cut it. To learn more about how to identify and stop synthetic identity fraud, download our free whitepaper.