In Asia Pacific, child identity fraud is often enabled by a universal and seemingly innocent activity – parents sharing details of their children online. (JG Photo/Yudha Baskoro)

Trying to Retain Customers? Protect the Next Generation; Kids Now Prime Targets for Identity Theft


AUGUST 27, 2019

Child identity fraud is a growing and expensive problem. A 2018 report released by Javelin Strategy and Research found that more than a million American children were victims of identity fraud in 2017, incurring losses of an estimated $2.67 billion. Appallingly, two-thirds of the victims were younger than 8 years.

Children are attractive targets for fraudsters as their identity information is less likely to have been used before, granting criminals a clean slate to work with. Exacerbating the problem is the difficulty in detecting fraud perpetrated against young victims.

To carry out their crimes, identity thieves create a fabricated or synthetic identity by combining personal details from different people, or faking information altogether. For example, they could take a child's government-issued identity number and combine it with a fictitious name, address, phone number and birthday, for credit applications and to open bank accounts.

In the Asia-Pacific region, child identity fraud is often enabled by a universal and seemingly innocent activity – parents sharing details of their children online. By posting photographs of children at their birthday parties with location tags, parents unwittingly give away three key pieces of information used in identity theft: a person's name, date of birth and home address.

Furthermore, details commonly used as security questions, such as a mother's maiden name, names of pets and names of schools, can often be deduced from a parent's social media account. With so much of a child's life documented online, children's identities are easily mined for data and then sold for profit by data brokers to those who can use that information to build profiles.

The sharing of children's photos and information on social networks, known as "sharenting," is becoming a cause for concern. Barclays has forecasted that it will account for two-thirds of identity fraud facing young people by 2030, and cost £667 million ($818 million) per year.

Given that the Asia-Pacific region tops the world in social media usage and has almost 2 billion active social media users, our region is particularly vulnerable to the problem. Compounding the issue, the region has a patchwork of data regulation laws and policies, unlike the seismic shift in data privacy we have seen in Europe with the introduction of the General Data Protection Regulation. Asia will need to look at improving its fragmented approach to this area, which will remain especially difficult when many governments have resisted reform in this area and the concept of data privacy is somewhat foreign to many citizens.

Adding to this, the banking sector in Asia Pacific is facing intensified competition and disruption as new indigenous virtual banks and global digital-only banks enter the scene. In the race for digital supremacy, financial institutions will need to look for creative ways to build customer loyalty while not forgetting the most important factors of security and confidence.

On a fundamental level, retaining profitable customers comes back to helping customers better manage finances and protect themselves – and their children – from fraud.

Teach Your Customers to Protect Their Children

Banks and lenders should obviously invest in state-of-the-art payment fraud monitoring and know-your-customer technologies, but beyond these efforts, education is key. A financial institution that proactively engages parents with tools and education to protect their children's financial futures, demonstrates its commitment to helping families and positions itself as the service provider of choice for the next generation of customers.  

One important initial step is education, with many lenders now building resource centers on their websites for parents. This information should include guidance for parents on best practices on social media and on how to check their children's credit files.

The resource center should educate parents on how sharing information online may impact children and their future lives as adults. The onus is on parents to limit what they share and who they share it with. Aside from reviewing the privacy settings on their social media pages, parents should also think twice before disclosing any kind of data on the internet. No matter how innocuous it may seem, data is a valuable resource that can be exploited by today's digital fraudsters.

In addition, the resource center should also cover common warning signs that a child's identity has been stolen, such as calls from collection agencies, bills or credit cards sent in their child's name, pre-approved credit card applications or government notices related to taxes, benefits or even traffic violations in their child's name. Also, it should provide parents with directions for freezing their children's credit if they believe fraud has occurred or if they want to take precautions.

Finally, a financial institution's resource center should not just sit on a website, unused. Lenders should promote it via email, link it to the mobile banking app and train branch staff to be aware of the issue and prepared to walk customers through the facts. This could also include infusing the resource center into life-stage-based marketing campaigns such as: "Congratulations on your new baby! Let's protect their financial future."

Providing customers with recommendations and education on how best to protect themselves and their families is how organizations can demonstrate their commitment to current customers. The unfortunate reality is that identity fraud can happen to anyone. Financial institutions must ensure they protect their customers' data, while also providing the tools and education to empower customers to protect themselves and their family.

Subhashish Bose is a business segment leader in the fraud, security and compliance department at global analytics software company FICO.