November 16, 2008

Are Your Children’s Identities Safe?

The following is a guest post by a friend and fellow entrepreneur Julie Fergerson.  We met several years ago while each of us was in the middle of our very own first high tech start-up.  Julie is currently a VP at Debix.  Debix provides services to help you monitor your credit.  My husband and I signed up a while ago, and we recently signed up our kids.  We were at her daughter’s 5 year old birthday party that she mentions below.  We just got the results back for our kids who were part of a batch of 83 kids that were evaluated.  Thank goodness our kids are safe but 3 of those kids had compromised credit.  Check out Julie’s post below to learn more about how to protect your children’s identities.

Are Your Children’s Identities Safe?

Hi, my name is Julie and I am a mother of two little kids, age 2 and 5.  I am also an executive at Debix, the Identity Protection Network, and have been chasing criminals and stopping fraud over the past decade.  Recently, I helped design a new product to protect children’s identities.  As usual with any new product launch (July 28^th, 2008), I asked my friends at my daughter’s fifth birthday party to enroll and give me feedback on what they thought. 

I was stunned to find that two of the fourteen children at the party (age 4 and age 9) had someone else using their identities.  This hit so close to home that I decided to research the size of the problem.

So we scanned 500 children who were under the age of 18, and found that 1 in 20 kids (5%) already have someone else using their social security number.  To put that in perspective, that means about one kid in every classroom in the US is a victim of identity theft.  Worse yet, the average child victim had over $12,000 in debt and 12% of the child victims are age 5 and younger - shocking!

To ensure the results were accurate we hired Javelin Strategy and Research, a top-tier analyst firm to analyze the results and report their conclusions.   You can download the research report here: www.debix.com/research.

You can hear stories from the parents about their children being victims at (http://news.debix.com/index.php/categories/child-victims/).

As I talk about this problem with other Moms, the first question is always, “what does it mean that their kid is a victim of identity theft?”  It means the child will not be able to use his credit when he needs it for things as important as college loans, first apartments or even a first job.  As part of my research I met Lindsey, a college student at Texas State, who is living this problem.  When she applied for her first internship competing against 400 other candidates, she was thrilled when she got the job and received the company welcome gift.  Unfortunately a few weeks later, she received a letter rescinding her job offer - she was told she was not hirable because someone else was using her social security number.  After what she calls “a full time job” of working to clear her name for six months, she was able to restore her identity and get the job.  

The next question I get is “how can this happen?  Surely companies know the social security number belongs to a kid.”  The answer is no.  There is no system in place to warn companies and the Social Security Administration does not publish a database of social security numbers with names and ages of kids.  The social security administration has a formula for issuing a social security number, but you can’t tell the difference between a number that was issued to a 39 year old immigrant to the US and a newborn.  About all you can tell from the number is the year and location it was issued (check out SSA Algorithm for issuing SSNs.)

It is our job as parents to protect our children and give them every possible advantage when they become an adult.  We have to protect our kids as best we can so when they start out they have a clean record and aren’t starting adult life at a disadvantage.

The solution I built at Debix finds the problems and restores the child’s identity for $20 per year.  While we try to keep our pricing affordable, we also took the time to publish the steps a parent would need to do if they wanted to protect their kids on their own at www.childrenscreditcrisis.org. 

I also worked with the FBI to produce a webcast to teach parents how to protect their kids from Identity Theft.  Feel free to pass this information along.

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Do you have any stories to share about identity theft either from personal experience or a friend’s?

September 14, 2008

Household CFOs - Take Charge of Family Finances

All of us managing households during these challenging economic times, should read Mechel Glass’ guest post below.  Mechel is Household CFO’s Director of Education. 

On top of the other things I do, I manage the finances in our household, and I can appreciate the time and thought it takes to make sure your finances are in order.   It’s even more important when you have a family and kids to plan for.  I can’t say that I’m an expert at it and I’m sure I could do better if I had more time sit down with my husband to think about it, but we do the best we can.  Thankfully, I had a mother, who like Mechele, taught me the value of saving, budgeting, and not overspending when I was young.  I also had the inner drive to work hard, be independent, and support myself.  So it wasn’t so hard to live within my means as I got older.  Thanks Mom!

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My daughter, Sarah Amirah, has had a piggy bank since the day she was born. Of course, it took a few years before she was aware that it was filling up with coins and bills. But now that she’s four, she’s on her second piggy bank and is somewhat aware that she is accumulating some serious coinage with the change I let her have from trips to the grocery store. 

Her first piggy bank is one of those old-fashioned ceramic ones that you can’t sneak into. I think the only way to get at the cash is to smash it. Smash the pretty gift from her grandmother to get the cash? That won’t be an easy decision! 

Although it may seem like I started financial education very early with Sarah, I think there is no reason to postpone teaching children little lessons about saving. Truth is, many adults these days are putting themselves at risk because they never developed savings habits. 

Through my position at Consumer Credit Counseling Service (CCCS) of Greater Atlanta, I talk to people everyday who are so overwhelmed with handling day-to-day finances like paying bills and managing bank accounts and credit cards that they can’t make plans for unexpected emergencies or long-term needs. Adding even more stress is the increased cost of groceries and gas, which has led many of these families to the verge of financial crisis. 

The reality is two in three “Household CFOs” - those primarily responsible for the household finances - do not have an emergency savings account, putting them at financial risk in the event of a crisis. Our recent national survey also found that nearly one in three households has not prepared a will, purchased insurance of any kind or made other preparations for a significant life-changing event. Yet, almost half of those surveyed have already experienced some sort of financial setback within their household in the past year.

In response to our survey findings and the current economic conditions, we are launching a national financial awareness campaign, “Household CFO” and enhancing our CredAbilityU online education program to offer free on-demand courses, interactive webinars and financial management tools. Through this program, we hope to provide tangible solutions that real Household CFOs can use in today’s economically challenging times. 

At CredAbilityU.org, online classes are available 24 hours a day, 7 days a week, on a variety of topics - from homeownership to money management to dealing with bankruptcy. Live webinars on special topics are also scheduled throughout each month. You can also sign up to receive the Household CFO Report, our free newsletter, which offers monthly tips and advice on how to take control of family finances. 

But don’t stop at CredAbilityU.org; there are a host of free resources available that offer practical information and helpful tools, including:

• Ÿ Consumer advocate Ilyce Glink’s site, www.ThinkGlink.com
• Ÿ Credit score-reporting site, www.MyFico.com
• Ÿ Free credit report site, www.AnnualCreditReport.com 

And, don’t get discouraged - it’s easy to get overwhelmed, but there is help out there and it won’t take long before you feel more capable and confident in your role as the chief financial officer of your household.