What is Financial Child Abuse?
The simplest definition of financial child abuse is identity fraud combined with financial fraud. Financial child abuse occurs when someone intentionally commits identity theft using a child’s Social Security Number, then compounds the crime by using the child’s identity to benefit their own finances.
The identity thief may use the clean credit report of a child to take out loans, work despite a criminal record, work though they are in the country illegally, or try to get utilities turned on until their own credit report has healed.
Financial child abuse is increasingly common due to the fact that many adults run their credit reports, while it is very difficult to run a credit report against a child's Social Security Number, even as a parent.
Taking the Easy - and - Illegal Way Out of Bad Credit
Parents have used their children’s Social Security Numbers in an effort to get around their own bad credit. If you have declared bankruptcy or have trashed your credit after going through a divorce, you may not be able to get the utilities turned on without a massive deposit or get an apartment without putting down several months’ worth of rent.
By using a child’s Social Security Number, the parent gains access to a clean if blank credit report. While this blank credit history is worth less than a good credit history, it is better than a bad credit history. With a blank credit report, a parent can get a cell phone with a modest deposit, an apartment with two months’ worth of rent and a new car with a 5-10% interest rate instead of an exorbitant one. Financial child abuse seems to be the easy way out of a bad credit history, but it is illegal.
American born children of illegal immigrants are at particular risk of financial child abuse. While the parent is in the country illegally, the child is an American citizen, has a clean credit report tied to his or her Social Security Number and no criminal record. A parent in the country illegally may start by using the child’s Social Security Number to gain employment.
The Social Security Number of the child is then used to get a driver’s license, set up utility bills and bank accounts. The parent then builds a whole financial life on the child’s Social Security, including credit cards, home loans and car notes. If parents are able to work and provide a better life based on the child’s financial identity, they rationalize the theft, ignoring the fraud they perpetrate on their own family members.
Financial child abuse is also driven by the need to collect welfare benefits in a country that limits welfare benefits for illegal aliens. Since illegal aliens have a lower education attainment than the native population (with half lacking a high school diploma), those who are working earn far less than natives. Due to their illegal status, they often end up working for less than minimum wage out of the need to support their families, increasing the need for social services to make up the gap. Illegal immigrants may file for benefits under a child’s Social Security Number such as welfare or simply collect unemployment after working under a child’s identity, increasing the demand on the social safety net. This problem is separate from the practice of illegal aliens filing for the Earned Income Tax Credit for American born children and children living in Mexico.
Family members are not the only ones who steal children’s identities. Identity thieves target children’s identities for fraud as well. Children don’t know about the identity theft until they start seeking employment or try to sign up for credit cards.
Adults can check their own credit reports, but children cannot do this for themselves and parents rarely check the credit reports of their children. Identity thieves target the identities of children so that they can sell the personally identifiable information to criminals who will use it to rack up debt or get a “fresh” financial start, regardless of the impact to a victim they know will not know about it for years.
The Impact of Financial Child Abuse
Financial child abuse causes problems the moment the child becomes a legal adult if not sooner. For every news report about American born children of illegal aliens discovering that they cannot get student loans because a parent filed for bankruptcy under their name or cannot work because their parent is already working under their Social Security Number, dozens more cases are unreported. However, financial child abuse is not limited to illegal aliens.
Parents have used their own children’s Social Security Number to get credit cards and run up debts when their own credit was trashed. Young adults have tried to file for Social Security Disability only to be refused because someone was working under their Social Security Number. Children have been denied Medicaid because an adult is working under the child’s Social Security Number.
Financial child abuse can make it difficult for a young adult to get a job that requires a credit history check, since the fraud under his or her name gives them a bad credit history. Financial child abuse can cause problems with the IRS for the identity thief’s back taxes and debt collectors who find the original holder of the Social Security Number. Financial child abuse will cause strife between generations if it occurs within the family.
Signs of Financial Child Abuse
If your child has a credit report at all, this is a sign of financial child abuse. If you cannot open a credit card for your teenager because of a credit check, this is a likely sign of financial identity theft.
If you cannot open a bank account or credit card for your child because one already exists with the institution associated with your child’s Social Security Number, demand the details of the account to determine if this is the result of identity theft or a relative setting up an account in the child’s name.
If you receive credit card solicitations addressed to your under-age child, this is a possible sign of financial child abuse or identity theft.
If you cannot claim your child as a dependent on your tax return because the IRS says the child makes too much money, this is a sign that someone else is working under his or her SSN.
If your child applies for his or her first job and is denied due to poor credit, this is a sign of financial child abuse or identity theft.
If your 18 year old son or daughter is denied a security clearance upon joining the military due to a bad credit history, this is a likely sign of identity theft and financial child abuse.
- FTC Guide on Preventing Child Identity Theft
“Safeguarding Your Child’s Future: Child Identity Theft”, Federal Trade Commission
- Identity Theft: 'Kids Don't Know They're Victims' : NPR
It wasn't until she applied for Medicaid that Jennifer Andrushko discovered someone had been using her young son's Social Security number. Because kids don't have much use for credit, the crime often goes undiscovered for years. Now, Utah is piloting
- Illegal immigrants turn to identity theft - NBCNews.com
When U.S. Air Force veteran Marcos Miranda had his identity stolen, he went from being a valued customer and employee to a government statistic.
- Fraud by illegal immigrants destroying children’s lives - The Hill's Congress Blog
Illegal immigrant workers not only take jobs from American workers, they also damage the future of millions of American children through fraud and identity theft.