As if online predators and the adverse effects of social media on children’s development weren’t enough to keep parents awake at night, the digital age has added a new nightmare to the list: identity theft. Children’s personal information is increasingly exposed online. As you can imagine, criminals are exploiting their digital footprints to commit fraud, leaving families to deal with long-term financial and emotional fallout.
In an alarming trend, affluent households in the U.S. are at the center of a growing identity theft crisis impacting children. The 2024 Child & Family Cybersecurity Study by Javelin Strategy & Research uncovers children’s online vulnerabilities. Criminals go where the money is; the report found families earning over $100,000 annually. Over half (58%) of U.S. children affected by identity theft come from such households, highlighting the intersection of wealth and exposure to cyber risks.
Our thoughts on the report follow, you can get a full copy here.
Social media usage is a common denominator among victimized children, with 96% of identity theft cases in the past six years involving active users. Cybercriminals exploit these platforms to access personal information, often leading to monetary fraud. Despite these dangers, only 5% of U.S. parents had enrolled their children in identity protection services (IDPS) before a breach. Alarmingly, many remain reluctant to take such measures even after an incident.
Risks of an Expanding Digital Footprint
Children’s online presence, an increasing reality, compounds the risks. One in eight children in the U.S. has experienced identity theft or a related scam in the past six years. Mobile numbers and login credentials, which are misused in over half of these cases, also become gateways to more fraud. Cybercriminals often target children’s email accounts, with 63% of compromised accounts leading to fraudulent activities. Additionally, adult-owned accounts used by children, such as peer-to-peer payment apps like Venmo or Zelle, are prime takeover targets.
Credit and debit cards are the preferred tools for fraudsters exploiting children’s stolen identities. Physical cards were used in 71% of cases. Card numbers and prepaid cards followed that. Synthetic identities—created by piecing together stolen personal information—are an escalating threat—criminals leveraging such data for years after the initial breach.
Parental Inaction and Missteps
The study revealed a need for more proactive measures among parents. While 55% of households freeze their child’s credit post-incident, others remain unaware of how to take such steps. Even credit freezes, however, offer incomplete protection. Once stolen, personal identifiable information (PII) can be repurposed for synthetic identity fraud or other long-term schemes.
Parents often fail to report cybercrimes affecting younger children (under 6 years old) and teenagers. While children aged 6 to 12 are more likely to disclose online interactions, teens remain silent, leaving parents in the dark until significant damage occurs. This silence underscores the urgent need for better awareness and communication.
Wealth as a Double-Edged Sword
The study also highlights how socioeconomic status plays a role in cyber risks. Children from affluent families enjoy greater access to devices. From online gaming to e-commerce platforms. This access to wealth and the vulnerability of online activities make them attractive targets for criminals. While at the other end of the spectrum, foster children face vulnerabilities as well. This comes as a result of a lack of financial safeguards and a parent watching over them.
Interestingly, some, financial institutions have started offering services tailored to foster youth. They are able to open financial accounts with safeguards designed to defend against exploitation. However, the report notes a broader level of industry action is needed.
Financial Institutions and Social Media Accountability
As with fraud committed against other age groups, financial institutions (FIs) are in a critical position to mitigate risk. The report recommends integrating IDPS as standard offerings for customers, particularly wealth management clients. Enhanced fraud alerts, physical biometric authentication, and transparent account access histories are additional measures FIs should adopt. These tools empower parents and provide early warnings of suspicious activities.
Social media platforms, where 96% of child identity fraud cases originate, must also share accountability. Current identity verification practices during account setup and usage are insufficient.
Recommendations
- Engage wealth management advisors to address child identity risks for affluent clients. Forty percent of investors expect their financial advisors to help secure their accounts. Wealth advisors frequently see fraud impacting their clients’ accounts. This creates an opportunity to engage high-value clients on cybersecurity, especially for children.
- Provide real-time identity theft and fraud support. Financial institutions (FIs) need trained staff to handle consumer concerns directly, not through automated responses.
- Strengthen authentication using biometrics and passwordless methods. Synthetic identity fraud often exploits children’s stolen information. Traditional credentials like usernames and passwords are easily compromised.
- Offer detailed account access history to consumers. Provide tools like last-login timestamps and device alerts. These help users detect suspicious activity before the institution identifies it.
- Invest in AI-driven fraud detection. Use artificial intelligence to support banking staff with real-time scam prevention and enhanced identity verification.
- Expand fraud alert options. Alerts are critical for users of peer-to-peer payments and custodial accounts. They help consumers recognize suspicious activity early.
- Make full-family identity protection a standard benefit. Identity protection services (IDPS) should be included in financial institutions’ offerings through online and mobile platforms.
- Educate parents and guardians about online risks to children and teens. Social media increases children’s exposure to cybercriminals. Teach families to limit online sharing and recognize manipulation tactics.
- Explain the limitations of credit freezes. Freezing credit is effective for stopping some fraud. Still, it cannot prevent all identity theft, such as synthetic identities or fraudulent benefit claims.
Conclusion
The report presents a troubling picture of child identity theft. It isn’t hard to understand that as online footprints grow, the risks increase. This landscape requires broad action from a range of authorities. Parents, financial institutions, and policymakers are all needed. Cybersecurity is no longer optional—protecting the next generation from financial and emotional harm is essential.
