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Wisconsin law aims to protect children from identity theft

May 06, 2014 Dave King

Children are often targets of identity theft because of their clean credit histories. If victimized, consumer credit scores of young consumers can be damaged before they even have their first credit card.

For this reason, Wisconsin recently implemented the Child Credit Protection Act, which allows parents to create and freeze credit records for their kids, according to The Associated Press. Accounts can be frozen by parents until the age of 16, which prevents any fraudulent credit accounts from being created. Any that already exist can be shut down and damage can be repaired.

In addition to this law, Wisconsin legislators - along with banks and other lenders - may want to provide parents with information on warning signs of child identity theft, such as:

  • Collection calls for a child - When people owe debt that is past due, collection agencies may call them in an attempt for repayment. While normal for adults, this shouldn't happen for a young child who doesn't even have a bank account, let alone debt. If parents begin receiving collection calls for a child, there is a good chance he or she was a victim of identity theft, according to the Federal Trade Commission.
  • Being turned down for government benefits - Parents can apply for certain government benefits for their child. On the application, it is required that the child's Social Security number is included. If that application is declined because benefits are being paid to another person using the number, child identity theft may have occurred.

Warning signs are important to understand, but banks and lenders need to also make people aware of the steps that can be taken after being victimized. For one, people need to check credit reports immediately to locate any potential accounts that may have fraudulently been opened in their child's name. It may also be smart to set up a fraud alert moving forward, which can be accomplished by alerting a credit bureau.

It is clear identity theft is a major problem in the U.S. States such as Wisconsin are taking the necessary steps to reduce this crime, but banks and lenders also need to do their part. In addition to offering the above information to consumers, financial institutions need to step up identity verification for loan and credit applications.