Identity thieves are beginning to steal Social Security numbers of children, long before they're ready for a savings or checking account or a credit score--and that could threaten the nation's credit system, said an Associated Press report.
The thefts could be a problem for credit unions and other financial institutions because they rely on credit scores from FICO, Experian, TransUnion and Equifax. But those scores could contain false information, planted by people who use stolen Social Security numbers to piggyback on the credit of someone else, according to Kansas City law enforcement agents.
Kansas City Assistant U.S. Attorney Linda Marshall and Julie Jensen, a special agent with the Federal Bureau of Investigation's office in Kansas City, said that in the fraud, online businesses use computers to locate dormant Social Security numbers, usually of children or long-term prison inmates who don't use them. The companies sell the numbers under another name to people who establish phony credit and run up huge debts without intending to pay.
The sellers skirt the law by referring to the Social Security numbers as "credit privacy numbers" or CPNs. They are also called "credit profile numbers" and "credit protection numbers."
Jensen discovered the scheme and says it is easy to create a false credit score using the CPNs, said the article.
The crooks have years to use the numbers before the child is old enough to apply for credit. That makes the fraud difficult to detect, and authorities can't estimate how prevalent the practice is.
The fraud is emerging because 25.5% of consumers have credit scores of 599 or below, which means they're poor credit risks. Many credit decisions are based on the credit scores provided by FICO and the three major credit reporting bureaus. But Jensen says those credit scores could contain false information.
FICO said it has tools for businesses to protect themselves, but the tools are expensive, the article said.