Surprise! Your 9-year-old is the Proud Owner of a Lexus!

Of all the worries that parents of young children face, few would rank the prospect of their 7-year-old opening up six credit cards and running up $35,000 in debt as one of the most pressing. But increasingly, parents and young adults are struggling with a very similar reality these days — only the children themselves aren't to blame, identity thieves are.

Last week, two stories of childhood identity theft hit the headlines...

• In Florida, a woman was accused of opening up a Capital One credit card under her daughter's name, and then using the card until the girl's father began to notice collection notices being sent to their home.
• In California, a man was discovered to be using the identity of a 4-year old who died in 1984. He was caught after using the deceased child's name to buy a home, a car, and to obtain several credit cards.

A Growing Problem

According to the Federal Trade Commission, there were more than 34,000 incidents of childhood identity theft reported between 2005 and 2007. The figure makes up about 5 percent of all identity thefts.

Chiefly to blame is a credit check system that at no time makes an effort to verify the age of individuals. With nothing but a Social Security number, thieves are often able to gain a credit history by finding creditors who don't require a photo ID or birth certificate. The first age that goes into a system like Trans Union, Experian, or Equifax, becomes permanently associated with the applicant's name and Social Security number.

Here's how John Moira, the father of the girl who had her identity stolen by her mother, describes it:

"My heart dropped, I couldn't believe it," said John Moisa, who became suspicious when he received correspondence from the credit card company addressed to his daughter. "At first I didn't think about it until my mom said she was getting collection calls at her house."

Moisa called the credit card company, which wouldn't initially talk to him until he faxed proof of his daughter's age. Moisa said he's spent the past several months trying to repair the girl's credit.

"It was unpaid, past-due bills, so it didn't look good," Moisa said.

Parents Are the Best Protectors (and Most Likely Culprits)

Some experts estimate that around half of childhood identity theft is committed by parents and relatives with access to a full range of information and documentation associated with a child. Other reports point to teachers, administrators, coaches, babysitters, and others with easy access to documents and records. (Some teachers have even been known to have pupils write their social security numbers on all homework and tests, exposing students anyone who bothers sifting through the school's wastepaper baskets.)

With a down economy, parents and family members might be more likely to turn to identity theft as a way getting their hands on additional credit.

"The majority of cases involve parents who may be going through a tricky time, going through a divorce and looking for additional credit," said Purl, Chief Operating Officer for Grand ISS, a St. Petersburg-based investigative security firm.

Purl said with more people out of work, identity theft cases involving young children are likely to increase.

"I think we're going to see more crime in general, as money is more tight for people. We've seen that with credit card fraud and white-collar crime. It's an easy way to make money," Purl said.

How Can We Protect Our Kids?

It's becoming increasingly important for parents to help their kids get savvy about giving away personal information on the internet, or over the telephone. Beyond that, responsibility falls on parents to be vigilant about who they send copies of birth certificates to, and to notice things like debt consolidation notices coming in the mail addressed to their children.

For more on how to prevent childhood identity theft and what to do if you think your child has been targeted, check out this fact sheet from the Identity Theft Resource Center - www.idtheftcenter.org.