Familial fraud is a form of identity theft committed by a parent, child, sibling, extended family or close friend of the victim. It can be committed by anyone you’re close to.
Fraud within one’s family and social circle may sound unlikely. We often imagine identity thieves in some far-away basement in a black-hoodie hunched over a PC poking around the dark web. But the closer someone is to you, the better access they have to your personal information—and the easier it is for them to use your relationship for financial gain.
Opportunity makes familial fraud a common form of identity theft that can leave you in serious financial (and emotional) trouble.
How does it work?
Familial fraud is as opportunistic as scams come. With no difficulty at all, a parent can open a credit account in their child’s name using personally identifiable information already in the parents’ custody. If you leave your wallet lying around, a friend can easily snap a photo of your Social Security card and other credentials when you leave the room.
With personal information readily available, fraudsters can open new lines of credit, make large purchases, or even receive medical care in your name.
Familial fraud can fly under the radar for years. It’s usually discovered when someone opens a utility account, applies for a loan or applies for new credit. Fraudulent activity is then spotted on the victim’s credit report. When the victim is a child, a family member can rack up years’ worth of debt before their first attempt to build their own credit.
A famous example is Axton Betz-Hamilton’s struggle with familial fraud, which began when she left for college. A utility company flagged her credit. Upon investigation, she found an extensive credit report containing fraudulent credit entries and collection agency notifications going back twenty years.
Betz-Hamilton spent the next sixteen years tirelessly working to remove fraudulent credit accounts and collection agency demands from her record. Only when her mother passed away did she discover the thief. Using only stolen Social Security numbers, her mother had been opening (and defaulting) on credit accounts in her daughter’s name as well as her husband and her father-in-law.
What can you do about it?
Familial fraud is insidious, but you can prevent it (or quickly squash it). Regardless of your fraud history, review your credit reports and your childrens’ reports, too, at least twice a year, check account statements often for irregularities, and the next time you loan money to friends or family, lend them cash instead of your credit card.
What if it happens to me?
Familial fraud comes with a unique emotional component. Your privacy has been breached, and so has your trust. This can be an emotionally difficult experience; you may feel empathy for the perpetrator and not want to press charges, or fear retaliation and damaged relationships.
This can cloud your judgement when it comes to reporting the incident.
As hard as it may be, victims should respond to the crime exactly as they would had it been perpetrated by a stranger. Place a 90-day fraud alert on your credit, file a police report immediately, and dispute all fraudulent accounts and charges. Freeze your credit at the three credit reporting agencies.
Recovering from identity theft is a slow and challenging process that can take years to resolve. The sooner you pursue action, the easier it will be to get things back on track. Check with your insurance company and HR department to see if they have a relationship with an identity theft resolution service, and if they do take advantage of the service.
Remember that familial fraud can be committed by anyone who has access to your personally identifiable information.
Keep your accounts secure, your personal information private, and know that when it comes to your personal information, it is best to be vigilant.
Freeze your credit at the three reporting agencies, and your kids’ credit too.