A mortgage at age 2? A car loan at age 5? It’s an increasingly common occurrence for foster children, who are vulnerable to identity theft because of the transitory nature of their lives. Find out what lawmakers are doing to protect their financial future.
Thursday, June 09, 2011
These days it’s not unusual for toddlers and kindergartners to have mortgages, car loans and credit card debt.
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Child identity theft is on the rise—and foster youth are particularly susceptible because of the transitory nature of their lives. They carry identification cards that often display their Social Security numbers. And many people—including relatives, foster parents and social workers—have access to those cards and other personal information.
“Foster youth are treated differently because their Social Security number is used to get help and support,” said Matt Cullina, chief executive officer of IDT911. “That’s setting up exposure points that don’t exist for other consumers.”
At any given time, more than 460,000 children are in foster care nationwide, according to federal figures. Each year 30,000 foster children leave the system when they turn 18 years old. Many of them don’t know their identities have been stolen and their credit destroyed until they have exited care and applied for a credit card or an auto loan. “At that point they discover they’ve got a whole lot of explaining to do,” Cullina said.
In April, Colorado passed a law to protect foster youth against identity theft by directing local courts to make sure that foster youth between the ages of 16 and 18 obtain a free credit report. If a file is flagged, the case will be referred to government agencies or nonprofits that can help clean up credit records. The new statute goes into effect this summer. California and Connecticut have similar laws on the books.
In Rhode Island, Congressman Jim Langevin is pushing for federal legislation to protect foster children. The Democrat has introduced the Foster Youth Financial Security Act, a bill that would:
- Ensure that foster children transitioning out of care have basic documents and tools for achieving independence
- Protect against identity theft and credit fraud by requiring that foster care agencies review the credit reports of all foster children, and take action to clear them if there is an inaccuracy, prior to their leaving care [Note: Only children with unusual activity on their accounts have credit files]
- End the use of a child’s Social Security number as an identifier
- Require agencies to help foster children apply for state benefits and financial aid and educate them about obtaining health and auto insurance
Identity theft against victims who are age 19 and younger accounted for 8 percent of all identity theft complaints made to the Federal Trade Commission in 2010, up from 7 percent the previous year.
Victims are plagued by debts and bad credit that can prevent them from renting an apartment, getting an auto loan or opening a bank account.
Cullina said that if the numbers are accurate, the risk to foster youth is much greater than previously believed. There is no sure way to eliminate identity theft, but Langevin’s bill is a step in the right direction to keep foster children safe.
“It provides the opportunity for financial literacy,” he said. “It gives the tools for youth to become advocates for protecting their identities.”