Foster Children Struggle To Recover From Identity Theft
Gerry Smith / Huffington Post
SAN DIEGO -- After bouncing between a dozen foster and group homes here in this seaside town where the Pacific shore meets the Laguna Mountains, Mercediz Hand wanted at least one thing in her adult life: a stable home.
But after aging out of foster care, Hand discovered someone had been using her identity since she was 10, taking out a mortgage and racking up $3,000 in unpaid cellphone bills.
Her credit was ruined. This summer, she slept in her car, a 2002 Chevrolet Monte Carlo, because she could not qualify for an apartment. Then her car was repossessed because she defaulted on a loan with a 21 percent interest rate -- the lowest rate that lenders would offer. She finally found a landlord who did not check her credit, but she wants to move because her apartment is infested with roaches and termites.
Sitting outside a coffee shop on a recent afternoon, the 24-year-old mother of two said she is considering filing for bankruptcy.
"It should be easier to get these things fixed, but it's not," she said in an interview. "It doesn't go away."
Experts say foster children are particularly vulnerable to identity theft because their personal information passes through many hands, increasing the chances their Social Security numbers will be used to commit fraud.
Now, lawmakers and child welfare advocates are looking at ways to protect the financial reputations of foster children amid growing concern over child identity theft. With increased frequency, thieves are hijacking children's unblemished Social Security numbers to take out credit cards, car loans and mortgages, thereby destroying the credit histories of young adults.
This fall, President Obama signed a law with a provision that requires all states to run credit checks on older foster children and help resolve cases of identity theft before they age out of the system.
But experts say that is not enough. The real problem, they say, is that foster children's Social Security numbers are overexposed. Matt Cullina, who has adopted three foster children, said he receives five to seven ID cards each year that include their full name, date of birth and Social Security number -- more than enough information to commit identity theft.
"There's probably no other segment of the population that has ID cards with those three pieces of information on it," Cullina, chief executive of Identity Theft 911, said at a July forum on child identity theft.
Rep. James Langevin (D-R.I.) has introduced legislation, the Foster Youth Financial Security Act, that goes further by prohibiting states from using Social Security numbers to identify foster children. The bill, which is still pending, would help protect foster children from identity theft by reducing the public exposure of their sensitive information, according to Amy Harfeld, a policy consultant for the Children's Advocacy Institute in San Diego.
"The point is, we need to stop putting kids' Social Security numbers on their ID cards and passing them around like candy," Harfeld said at the forum, which was hosted by the Federal Trade Commission.
Last year, more than 18,000 child identity theft complaints were reported to the commission, compared with about 6,500 cases in 2003. The increase comes as the recession has left many Americans with greater need for clean sources of credit, making the temptation to hijack a child's pristine record even greater.
But the real figure is probably much higher, experts say, because the crime often goes undetected until victims turn 18 and find their damaged credit is preventing them from acquiring student loans, jobs or apartments. ID Analytics estimates more than 140,000 children are victims of identity theft each year, based on a one-year study of those enrolled in the firm's identity protection service.
The profile of a child identity thief takes different forms. In some cases, family members who have ruined their own credit steal the identities of their children. In others, organized criminals target institutions such as foster homes where children's identities are lying around virtually unguarded.
Last February, Felix Nkansah, 28, of New York, was sentenced to six years in prison for participating in an identity theft ring that stole records of children in foster homes to file fraudulent tax returns.
Experts say such cases highlight the porous security of children's data in foster care, where personnel are focused on protecting children, but not their identities.
"Record management at foster agencies is a joke," Dan Hatcher, a professor at University of Baltimore Law School who does research on poverty issues, said at the forum. "Caseworkers either are not looking for these issues, or when they spot it, they don't know what to do."
In a study of about 2,100 foster children in Los Angeles County, more than 100 children (about 5 percent) had accounts opened in their names, with an average $3,600 in debt. One foster child was found to have a $217,000 home loan, according to the study, which was released in August by the California Office of Privacy Protection, a state agency.
Thieves who steal the identities of foster children are targeting a group that already faces financial obstacles. Less than 3 percent earn four-year college degrees after leaving the foster care system. By age 24, less than half find full-time jobs, and nearly 40 percent have been homeless, according to a study by the Children's Advocacy Institute and First Star, a nonprofit that works with victims of child abuse and neglect.
Mercediz Hand has been homeless twice, but not for a lack of money. She has a steady job working at a homeless shelter. But her credit is so damaged that she and her husband, who ruined his own credit, and their two children, ages 7 and 4, are forced to live in an unsafe neighborhood. On a recent night, a stranger assaulted her outside her apartment, she said.
"I don't want to stay where I'm at. It's not a good neighborhood," Hand said, wearing sunglasses to hide her badly swollen left eye. "But this is the only kind of apartment I can get because my credit is so horrible. I'm renting from anyone who is willing to rent to me."
In the foster care system, a wide range of people have access to a child's Social Security number, including parents, grandparents, foster parents, social workers and group home personnel. Each time a foster child is moved to a new home, their personal information goes with them, further exposing data that should be kept private.
Foster children are also less equipped to fix their credit problems because they do not have the safety net that family often provides, according to Lisa Schifferle, an attorney with the Federal Trade Commission. Every year, about 35,000 foster children age out of the system nationwide without being adopted.
"Once these children are emancipated from foster care, clean credit is essential in their process to establishing a strong start to adulthood," Schifferle said at the child identity theft forum.
Foster children are also more likely to become identity theft victims because they come from struggling families who may view their pristine Social Security numbers as a new source of credit, Cullina said. And children are less likely to report family members to police, making it more difficult to remove the fraud from a credit report, he said.
As more foster children have found their credit destroyed, child welfare advocates have sought to help. Over the summer, First Star and Identity Theft 911 taught 30 foster children from around Los Angeles how to protect themselves from identity theft during a five-week training course on the UCLA campus. First Star President Peter Samuelson said he plans to replicate the pilot program, which was funded through donations, across the country next summer.
Here in San Diego, the fallout of identity theft has presented yet another hardship for young adults who have seen their share. Mercediz Hand entered foster care after her uncle, a registered sex offender who lived with her family, tried to molest her, she said.
She discovered her identity had been hijacked when she ran her first credit report at 18. She has only been able to see a report from one of the three credit reporting agencies because she is unable to answer a security question: the amount of her mortgage.
"I keep telling them, 'I didn't open up a mortgage. I have no idea what you're talking about,'" she told The Huffington Post. "I'm a little scared to find out what's on the other reports."
When Suamhirs Rivera aged out of the foster care system in 2008, he tried to apply for an apartment and a cellphone, but was denied. That was when he learned someone had used his identity to rack up $75,000 on 30 credit cards while he was in foster care, he said. His credit score was 350, the lowest possible.
"I didn't know what to do," Rivera said in an interview. "I thought, 'Where the hell am I going to live if I'm not able to rent an apartment? What's going to happen to me? How am I going to get a job or how am I going to be a productive member of society?'"
Rivera, now 21, filed a police report, but still has been unable to remove the debt from his credit report, he said. As a result, he pays steep upfront costs for basic needs, putting down a $460 deposit for a cellphone and a $2,750 deposit for his $795-a-month apartment. He is unable to afford a car because the interest rate would be too high, he said. Three banks have sued him for failure to pay the debt, he said.
"It's been a constant battle," Rivera said.
Helena Kelly says banks would not give her loans because her credit was damaged by identity theft.
Helena Kelly, who was placed in foster care at age 10 after her mother went to jail for shoplifting, lived with 14 different people, shuffled between aunts, parents, cousins and a foster home. Along the way, someone stole her identity to take out student loans and lease cars and an apartment, ruining her credit, she said.
Now a full-time student at San Diego City College, Kelly, 22, said banks would not give her a student loan or a car loan because of her bad credit, so she paid for school and bought a car by borrowing government-issued student loans.
She spent three weeks this summer sleeping on friends' couches because she could not qualify for an apartment. She now lives in transitional housing for former foster children, but must leave soon because she is taking custody of her younger sister.
Meanwhile, someone is still using her identity, she said. When she applied for cable recently, she learned she had an outstanding balance dating to when she was 11. Kelly, along with Hand and Rivera, are working on their credit problems with the help of the Children's Advocacy Institute in San Diego.
Kelly said she feels angry that even after leaving foster care, her fate is still not under her control.
"My whole life in foster care, I was punished for choices my parents made," Kelly said. "Now I'm being punished as an adult for choices a stranger made under my name. I just want to live for the actions and choices that I make."