Fraud and cyberattacks that target children are alarmingly on the rise. According to data from an upcoming report to be published by Javelin Strategy & Research, nearly $1 billion was lost to child ID fraud in 2021. Furthermore, 1 in 50 children were affected by child identity fraud during the past year and 1 in 45 minors’ personal information was exposed via data breaches in the past year.

These attacks are increasing because children are online more than ever. It isn’t just social media; children are playing video games online, engaging in discussion on forums such as Reddit and Discord, and much more. In order to protect these young consumers, parents need to be educated about how their children are being targeted by fraudsters online. But financial institutions can play a key role in stopping child identity fraud as well.

To find out more, PaymentsJournal sat with Javelin’s Director of Fraud & Security Tracy Kitten, and Ben Halpert, founder of savvycyberkids.org, an online resource teaching children and their parents about cyber safety.

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Getting Ahead of the Child Identity Fraud Problem

The easiest way to stop the scourge of child identity fraud is to get ahead of the problem by educating children and their parents on the various ways fraudsters target children. Criminals obtain personally identifiable information (PII) from children in various ways, such as by interacting with them online or by finding information on the dark web from previously exposed data breaches. After cybercriminals have enough PII, they can use that child’s identity or create a synthetic identity with PII gleaned from multiple victims, and open new accounts, take out loans, or commit many other types of fraud.

Children need to know what types of information they should not give out online and learn to identify the tactics used by those trying to scam them, Kitten said. Financial institutions, though not directly involved in these attacks, can engender consumer trust and loyalty by offering information and education to their customers on how to stop child identity fraud, she added.

“Financial institutions need to let parents know that they are a resource when it comes to preventing child identity fraud,” she said. “Financial institutions have an opportunity to really play the role of a leader in this space and act as an educator to their customers.”