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Children are a common target for identity theft. Over 1 million kids were victims of identity fraud in 2017, according to Javelin Strategy & Research. Perhaps more shocking is that 60% personally knew the perpetrator. Meanwhile, only 7% of adult victims could say the same.
It points to the seriousness of what's called familiar fraud. Unless it's addressed, children who are victimized could enter adulthood with a credit history already ravaged by fraudulent activity. Understanding how familiar fraud works can help you detect it—or prevent it altogether.
What Is Familiar Fraud?
It's easy to assume that con artists are unknown predators lurking in the shadows, but they can also be people close to you. According to Eva Velasquez, president and CEO of the nonprofit Identity Theft Resource Center, this can include a spouse, parent, friend, caregiver or anyone else who has access to your personally identifiable information (PII) or account information. If motivated to do so, they could do the following things in your name without your permission or knowledge:
- Open new accounts
- Make large purchases
- Receive medical care
- Commit other identity crimes
When the person committing the fraud is a friend or family member, they may readily have access to your confidential information and devices. This makes it easier to verify your identity.
How to Help Prevent Familiar Fraud
While there are no surefire ways to avoid being targeted, you can take steps that help prevent a familiar fraudster from being successful. Consider the following actions:
Place a Security Freeze on Your Credit
Requesting a security freeze will limit access to your credit reports, including for legitimate purposes. If someone tries to open an account in your name, the lender will not be able to view your reports when attempting to do a credit check and therefore won't be able to approve the account. You can freeze your credit by contacting each of the major credit bureaus (Experian, TransUnion and Equifax). You'll have to remember to "thaw" the freeze whenever you want to apply for credit.
"Freezing your credit is now free for everyone, including minor children, and it's one of the most robust risk minimization steps you can take," Velasquez says. "If your credit is frozen, another person cannot open new lines of credit using your identity information even if they have your identity credentials or PII."
Just be sure to protect the PIN that's used to thaw your credit, just like you protect other sensitive documents and information.
Set Up a Fraud Alert
Adding a fraud alert to your credit reports is usually a quick and easy process and may be preferable to a credit freeze if you plan to apply for credit in the near future. It adds a notification to your credit file that asks lenders to take additional steps to verify your identity before approving any new credit requests. You only need to request a fraud alert with one of the credit bureaus and it will be added to all three of your credit reports.
A temporary fraud alert lasts for one year and can be canceled at any time. If you know you've been the victim of identity theft, you can opt for an extended fraud alert, which lasts seven years. Some people prefer fraud alerts over credit freezes because they don't require you to thaw your credit when completing a legitimate credit application.
Monitor Your Accounts for Suspicious Activity
Staying on top of your accounts can alert you to potential familiar fraud. "If you check your accounts on a consistent basis, you should be able to catch any unauthorized purchases and take the appropriate steps to resolve the fraud," Velasquez says.
It's also wise to check your credit reports regularly for suspicious activity. Unfamiliar accounts or elevated balances are red flags for identity theft.
Explore Identity Protection Programs
Taking more in-depth precautions may help you sleep better at night, especially if you've been the victim of familiar fraud in the past. Experian Premium and Family memberships provide identity theft monitoring and dark web surveillance, which can offer some peace of mind. You can also lock and unlock your credit file with ease, adding an additional layer of protection. If you are ultimately victimized, you'll have access to fraud resolution services and up to $1 million in ID theft insurance.
Keep Sensitive Documents in a Safe Place
Velasquez suggests taking extra steps to keep your personal information safe from potential scammers. A lockbox or fire safe can do the trick. It's also wise to be mindful of oversharing information with those close to you, as people can't steal information they don't have.
"Don't leave your purse or wallet out when visitors come because they could also be easily accessed," she says. "While it may seem overboard, familiar fraud is typically committed by people you trust and would not expect to steal your PII."
How to Detect Familiar Fraud
Familiar fraud often goes undetected for years. It's usually discovered when someone goes to take out a loan or apply for new credit, only to find fraudulent activity on their credit reports. With regard to minors, children under 16 likely won't have a credit report at all. There are some cases where a credit report may have been created for them, however, such as if they've been added as an authorized user on an adult's credit account. If they have a credit report and you can't think of a clear explanation why, it may be due to fraud.
The best way to detect familiar fraud is to check your credit reports regularly and monitor your accounts. "If you spot unusual activity on your existing accounts or on your credit file, you need to act quickly and take the appropriate steps to resolve the fraud and recover your identity," Velasquez says.
What to Do if You Experience Familiar Fraud
Reacting sooner rather than later can help prevent further damage. Here are some helpful tips for overcoming identity theft:
- Protect your credit. If you haven't already done so, now is the time to establish a security freeze or fraud alert. This action can help put a stop to the fraud and prevent more abuse.
- Report the fraud. While this may feel difficult if the perpetrator is a family member or friend, it's still wise to report the fraud to the appropriate law enforcement agency as it's a criminal act. Beyond that, you can also report it to the Federal Trade Commission at IdentityTheft.gov. Here you'll also find recovery resources and step-by-step guidance for setting things right.
- Dispute fraudulent charges. "Be sure to contact the companies where the fraud happened and the three credit bureaus," Velasquez says. The latter is especially important as each has its own process for disputing information on your credit reports that you believe to be inaccurate or fraudulent.
The Bottom Line
Familiar fraud is often a quiet form of identity theft that you don't see coming. You can check your credit reports for free at AnnualCreditReport.com. Experian also has lots of resources to help you protect your credit, including free credit monitoring that will alert you to new credit inquiries and changes on your credit report.