Illustration by Carli Krueger

Identity Crisis

Written by Christianna Silva Category: Valley News Issue: January 2019
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A new federal act, the Economic Growth, Regulatory Relief and Consumer Protection Act, could make it easier to protect Valley kids from identity theft.

did your toddler spend thousands of dollars at Scottsdale Fashion Square? Did he buy a $250,000 Aston Martin and book a trip to Paris? Not likely. But Arizona kids are likely to have their identities stolen and hundreds of thousands of dollars of debt incurred in their name, experts say.

Arizonans reported 8,330 identity theft incidents in 2017, giving the state the 10th highest per capita rate of identity theft complaints in the country. Reformed ID thief Brett Shannon Johnson told NBC News that fraudsters can buy a child’s Social Security number on the dark web for $2.

It’s a problem that extends beyond Arizona. Across the U.S., more than 1 million children were the victims of identity fraud or theft last year. Due to the impact from last year’s Equifax hack, Congress passed the Economic Growth, Regulatory Relief and Consumer Protection Act, a new law to combat fraud that will make it easier and free for parents to check and freeze credit information in their child’s name.

The act, which went into effect on September 21, 2018, also loosened restrictions placed on banks after the financial crisis and made some changes to consumer credit law, including relaxing rules for banks that have more than $250 billion in assets (see sidebar). Lael Brainard, a Fed governor appointed by the Obama administration, says the deregulation riders are extraneous and come at a time when banks aren’t particularly weighed down by regulation: Their profits are surging, even here in Arizona, where Phoenix banks have seen $98.3 billion in deposits across 60 banks, a 6.1 percent increase from last year, according to the Federal Deposit Insurance Corporation.

But hidden within all of the politically charged lingo was something Stephanie Webb, an attorney at Radix Law in North Scottsdale who specializes in bankruptcy law, sees as virtually good for everyone (except fraudsters).

“The law is trying to help consumers gain better knowledge about their credit history and help parents check in with their children’s credit history and freeze their child’s account,” Webb says.

Webb cites the case of a child from Peoria who was just 7 years old in 2011 when debt collectors began calling her house about credit cards opened under her Social Security number. Her parents had no idea what was going on. Why would they have even considered checking their child’s credit?

“I was thinking it’s got to be a mistake, because there’s no way my little girl opened credit anywhere,” Jill Carlson told ABC15 in April 2018. “I just thought, ‘Well, I just live down the road [from the bank] and I’ll just take my little girl and her identification and close this account.’ I found out quickly that’s not how it works.”

Since her daughter’s Social Security number didn’t match the name of the account holder, Carlson was told she couldn’t close the accounts. Eventually, she discovered dozens of fraudulent accounts in her child’s name.

Carlson and her daughter are still dealing with the aftermath of broken credit, as are many other children who have recently become victims of identity theft. Webb says this law is making it easier to protect them, because now, parents can check their children's credit whenever they want to.

“One thing to keep in mind is that adults can use this for themselves, too,” Webb says. “All adults should track their credit and their credit reports and more if they suspect fraud. It does allow people to keep a better track of things in their credit report.”

Oftentimes children are victims of identity theft by their parents. Under this law, those kids can check their own credit scores, too.

“Children and teenagers can also check their own credit scores if they suspect a parent is using theirs,” Webb says.

That’s Not All, Folks!
This new federal act does more than simply allow consumers to check their credit score, or their child’s credit score, for free. Some other things the EGRRCPA does:
Pares back some of the regulations on banks that were imposed after the 2008 financial crisis in an attempt to reduce compliance costs for banks.

Requires the Federal Reserve to take a closer look at banks with between $100 billion and $250 billion in assets and draft their own specific rule changes that would get rid of some of their regulatory burdens.

Relaxes rules for banks that have more than $250 billion in assets.