In the duplicitous world of fraud, it could be called the "original SIN." A parent applies for a social insurance number (SIN) for her child in order to open a Registered Retirement Savings Plan, but unless the number is protected, it can be used to create a completely new identity to apply for credit.
Because a SIN isn't associated with a birth date, fraudsters can easily fabricate a date of birth and other information to create a new identity to apply for credit, warns personal finance expert Kelley Keehn.
One of the biggest challenges with child identity theft is that it's not discovered until years later when a child applies for a cellphone or some sort of credit and is denied.
Further, it's difficult to know if your child has been victimized because children don't have a credit report, says Keehn.
She's the author of the e-book Protecting Your and Your Money: A Guide to Avoiding Identity Theft and Fraud.
The comprehensive guide was recently released by the Chartered Professional Accountants of Canada.
While Keehn found it difficult to get a handle on just how many Canadians are victims of this type of fraud, she says the troubling trend is on the rise south of the border.
"According to a U.S. study, the identities of 140,000 children are stolen each year," says Keehn.
The Edmonton Police Service recently acknowledged that child identity theft is on their radar, underscoring the importance of being vigilant.
"For starters, make sure your child's SIN -- just like your own -- is under lock and key, along with paperwork," she says.
Much of this type of fraud is "friendly fraud," which means someone you know -- possibly a former spouse, an ex-nanny or perhaps a friend or relative -- deliberately uses a child's SIN to obtain credit.
"The fact that a family member could do this to your child adds another layer of shock to the theft when it's discovered," says Keehn.
Only a government agency, bank or other financial institution, or an employer when they get a job (and not part of a job application) should ask for your child's SIN. Watch for red flags, such as unsolicited mail in your child's name or a phone call from a creditor.
Be diligent. If asked to provide a copy of your child's birth certificate for school or to participate in a sport or activity, ask how that information will be protected and if it will be shredded or returned to you when no longer needed.
- Don't store any form of your child's SIN and other sensitive information on your computer.
- Shred unnecessary information that contains your child's SIN.
- Explain to your children why information like their names, address, dates of birth, SINs and later their passports and driver's licences must be protected and kept secret. As they get older, don't allow them to carry too much information in their wallets.
"In the world we live in with data breaches we can't protect ourselves 100%, but we must do everything we can to ensure we're not being lax with our information," Keehn says.