In July 2008, Tanya Allen, 44, of Reynoldsburg, Ohio, was informed that her teen son's identity could have been compromised due to the theft of a school district laptop. The district paid for her son's credit monitoring service and Allen learned that her son has around $58,000 in bogus debt attached to his Social Security number.

"My husband and I do as much as we can to protect our own identities," says Allen. "We pull our own credit reports, but never once gave a thought to pulling up my son's." Allen works for a credit agency. She's in the human resources department and is well aware of what a bad credit record can do to a young man just starting out. "He's about to go to college," says Allen, who has talked with her son several times about the impact of a stolen identity. "He does not know the depth of how this could continue to affect him. He's going to have to get waivers from each one of those creditor stating that this indeed was not him, someone else used this information. "

Allen has since been working with the credit monitoring service to clear her son's name before he applies for college loans. Even though minors can't legally open up a credit account, the credit reporting agencies and the credit issuers have no way of verifying age, says Experian's Sweet. They take an application -- often rendered online -- at face value. If you say that a certain Social Security number is yours, and they check it and they find that there is no credit history, then they assume that this is your clear credit file. No one assumes that a child's identity may have been stolen.

There is currently no way to fix this system, but several agencies are working to close the loophole, says Identity Theft Resource Center's Foley, who hopes to introduce legislation next year that could mitigate the unverified age situation. It takes at least several months to clear a child's name, and perhaps longer if the thief is a parent, says Foley. A police report must be filed and a child is typically reluctant to file one if the theft is committed by a family member.

In addition to filing a police report, the parent is advised to file a report with the FTC. The FTC recommends asking the credit bureaus to place a fraud alert on the accounts, close all tampered accounts, and place a credit freeze on the account. With a freeze, all future credit requests will be denied until the child turns 18.