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Stolen Innocence: Theft of Children's Identity Rising

As children head back to school, it is a good time to remember that parents should be very careful when they share their children's Social Security numbers.

Peter Dazeley | Getty Images

Criminals are increasingly searching for random Social Security numbers. Once they find them, they cross-check these numbers against other databases to see if the numbers have been used to obtain credit.

If they haven't, thieves are selling these unblemished numbers—often calling them credit profile, or credit protection, numbers, or CPNs—for anywhere between a few hundred dollars to as much as several thousand dollars a piece.

Many times these inactive numbers are tied to children or long-time prison inmates.

Since children won't be applying for credit to buy a car or receive a credit card for years to come, those who purchase these numbers can use them to obtain phony lines of credit and rack up debt, sometimes for years.

The Associated Press reported that the Identity Theft Resource Center, an organization that offers counseling and resources to identify theft victims, has seen a notable jump in the number of children who are victimsof identity theft in the last year. They estimate the number of cases rose by 9 percent in the latest month.

Javelin Strategy, a research group that studies identity theft, estimates that 5 percent of consumers who are a victim a data breach indicated that their children's information was used fraudulently.

There is no way to completely protect children against identity theft, experts said. However, there are actions parents can take.

1) Protect Your Child's Number.

Steve Schwartz, executive vice president of Intersections, a provider of services to help prevent identity theft said he has heard stories of parents who are asked to provide a child's Social Security number to sign up for a Little League baseball team.

Schwartz suggest parents opt out of these requests or provide some sort of alternative identification.

Even when registering for school or daycare, parents should be cautious and ask how the school protects the information as educational institutions are often targeted by thieves.

"Social Security numbers should be provided on a 'need to know' basisonly," Schwartz said.

2)Teach Kids About Identity Theft.

Children need to know not to divulge personal information on the telephone and online.

"Treat your identity elements like money," Schwartz said.

3) Shield Your Computer from Viruses, Spies.

This means keeping firewall, computer virus and spyware protection active and up-to-date. Use strong passwords with a combination of letters, numbers and symbols.

4) Be Vigilant, Watch for Red Flags.

Potential warnings signs include pre-approved credit card offers addressed to your child or calls from collection agencies.

5) DON'T check your child's credit report.

By requesting a credit report, a parent could unwittingly establish a credit report and open the door to thieves.

According to Rob Vamosi, a research analyst at Javelin, identity protection services can perform scans of credit report headers that search for the child's name among the credit reports. This type of search will not inadvertently establish a new credit record.

Another option is to report the fraud if you suspect it. The Federal Trade Commission's Web site outlines steps you can take to report fraud. Their identity theft hotline can be reached toll-free at 1-877-ID-THEFT (438-4338).

6) DO Call Social Security.

A call to the agency can discover whether any income has been associated with the child's Social Security number. If it has, there's a chance the number is being used fraudulently.

A recent study by ID Analytics, a San Diego-based risk management services provider, found more than 40 million Social Security numbers were associated with multiple people. Sometimes these multiple listings are signs of fraud, but other times, it is simply a clerical error.

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Questions? Comments? Email us at consumernation@cnbc.com

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