Child identity theft rising, according to FTC

JONESBORO, AR (KAIT) - In a world where technology reigns supreme, lawmakers are looking to combat identity theft, a growing problem according to the Federal Trade Commission.

Identity theft is a crime that can go undetected for years, especially if the victim is a child. In some cases, the crime goes unnoticed for more than a decade.
According to the FTC, which testified to lawmakers in September of 2011, 34 companies nationwide were cited for not taking steps to protect personal information since 2001. Shortly after that, the FTC held a forum on child identity theft. Panelists said social security numbers that belong to kids are unused, and are like blank slates for crooks.

In a Region 8 News investigation, we wanted to know why criminals could use a social security number to obtain a line of credit by using fake names and fake birthdays. According to Lisa Shifferly with the FTC in Washington, identity thieves use a gap in the financial system to their advantage.
"I personally feel like the federal government should put into place laws that require credit issuers to do much more thorough checking to make sure that if they're issuing credit to that person, that that person is really who they are," said Garry Patterson, area manager for Clearpoint Credit Counseling Solutions.
Here's how it works; a criminal obtains an unused social security number, either by purchasing it online or stealing it. After that, they try to obtain a line of credit by using the social security number, but supplies a store clerk with a fake name and date of birth. The credit reporting agency will then inform the clerk there has been no activity on that social security number. If the clerk approves the card anyway, a line of credit is established.
According to Shifferly, there is no way for a clerk to verify the real name and date of birth of a social security number. She says criminals use this gap. We asked why this gap exists.
"If we could figure that out, and if everybody could agree that we could come up with a workable, sensible, inexpensive, not very burdensome system, I think pretty much every business in Arkansas, every business in the country would want that because they don't want to cause problems for their customers or even for people they don't know," said Senator Mark Pryor, who claims a majority of businesses in the country would support such a verification process.
Pryor, who also serves as chairman of the consumer subcommittee in the Senate, said child ID theft is a talking point in Washington.
"It's a difficult problem. I think a lot of it is internet related. A lot of it is brick and mortar related, but I think most of it is internet related. It's very hard to verify identity on the internet," said Pryor.
However, the federal government requires businesses to verify a legal work force. U.S. Citizenship and Immigration Services requires businesses to use a system called, E-Verify. The system is designed to ensure companies employ a legal workforce.
Region 8 News asked Pryor why that service couldn't be applied to retail services, since both use social security numbers. He said he wanted to study the idea further.

"Anytime you are verifying information, you're opening up huge databases to lots and lots of people all over the country, and you may be creating a problem if you're not careful," said Pryor. "We'll have to look at that and I know that Senator Rockefellar and I have the bill that we have in Washington. That's going to help part of this, but it doesn't really help on the retail end of it so to speak."
Pryor said lawmakers could take action as soon as 2013.
"This is a gap in the system that we have that we need to try to close, and we're all going to have to work hard to do this," said Pryor.
The Arkansas Attorney General's Office offers advice to anyone battling fraudulent credit claims and identity theft cases. Visit their web-site here. Among some of the tips, ask lots of questions to merchants who ask for social security numbers before giving it out. Consumers are also advised to ask why merchants need the numbers, who will access it and how they'll be disposed of.
For more tips, click here.
Victim Shares Her Story
At 31 years old, Lindsey is a medical specialist who performs in home care around Region 8. Lindsey, who requested her identity be hidden, said a relative stole her identity when she was only 16-years old. She said her father signed a waiver for her to join the military at age 16.
"When I came back from basic training, I knew (someone) had gotten a phone in my name," said Lindsey. "I moved out on my own, and tried to get a phone in my name. I had to pay that old bill off, and then they told me there was something on my credit that was going to keep me from that."
Lindsey claimed her last mission was in New York City for 9/11. She said her job was to assist in identifying bodies.
"It almost makes me feel as if I'm sick. It just makes me sick to my stomach and it aggravates me," said Lindsey. "By this time, I was 20 and 4 years went by, and I never knew it was on my credit."
Lindsey was referring to a bill that had been run up on Fingerhut, an online catalog retailer.
"I had my credit ran, and when I did that I realized there was an account that was almost $1,300 that was in my name and I went to the police, told them it was identity theft because I had no trace of it. It was when I was still a kid," said Lindsey.
Lindsey said she got nowhere with police. Eventually, RJM Acquisitions took her to court, winning the case with a judgement against her. That judgement will be on her credit report until October, 2015, a year after she graduates from a nursing program.
Lindsey provided court documents to back up her claim. The original credit account was opened in 1998. Lindsey graduated high school in May of 1999.
"I didn't really have proof (who did it). They sent me an itemized bill and some of the items on there were actually things I got for Christmas," said Lindsey.
Lindsey said the account has since been paid in full and she's in good standing with RJM Acquisitions.
"It's almost like it's a record for the rest of your life. It's like a permanent record is what they used to say in school," said Lindsey.

She never confronted the relative about the theft.
Tips to Report/Prevent Identity Theft
"I've heard instances of children that were delinquent on their mortgages, had their car repossessed and literally had hundreds of thousands of dollars of debt before they were in the 1st grade," said Garry Patterson with Clearpoint Financial.
Patterson said parents should watch over their children's credit every year by checking the three credit reporting agencies, Experian, Equifax and Transunion. It's free to check once a year.
"If somebody gets a hold of a child's ID and they use that thing for, say 20 years, they can run up a lot of debt in that time," said Patterson. "When these businesses get these returned applications, they issue the credit. There are very few safeguards in place and again, it involves trust amongst family members. If you've got bright people out there who know how to steal identities, (there are) very few safeguards."
Patterson said consumer protections are in place for identity theft victims; however, it's difficult to get the blemish entirely wiped clean.
"You're entitled, as a consumer, to file a 100 word statement regarding anything on that report. So in others words, you contact all three credit reporting bureaus and you file a 100 word statement explaining that your identity was stolen, that you've contacted the police for the report and it's been misplaced. Any time anybody asks for that credit report, that statement is released explaining (what happened,)" said Patterson.
Pryor said one option to eliminate such fraud may be to enact a new law.
"I just think that if a company is extending credit, you know, if they're extending a loan or they're extending a credit card, and if that loan goes bad or that credit card proves to be fraudulent, if they've given that to someone where they didn't even verify their identity, it seems to me that the burden should fall on them," said Pryor. "I think if we put the economic incentive on them and kind of say, hey, if you want to extend credit to fraud people, that's your business, but you're losing money on that deal because you can't come back to the family."

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