Identity thieves are cashing in on dead children across the nation, stealing their Social Security numbers to collect fraudulent tax refunds from the Internal Revenue Service.
Grieving families — including the Watters family of Lake Forest — say their anguish is amplified by the realization that the crooks get help from an unexpected source: the Social Security Administration's "Death Master File," which records and lists information about everyone who dies in the United States.
Armed with the deceased child's Social Security number and other personal information, crooks falsely claim them as dependents and have the refunds routed to them.
The DMF list, created in 1980 to help financial institutions fight fraud, has also been posted — and updated weekly — online for years by popular genealogy sites, including Ancestry.com, which charges a nominal fee, and FamilySearch.org, a free site run by The Church of Jesus Christ of Latter-day Saints, the Mormons.
The file contains the names, birthdates and Social Security numbers of more than 90 million deceased Americans.
"I can't understand why it's necessary to display a whole Social Security number," said Lisa Watters.
Her 5-year old son Benny, a bespectacled blond boy who played Ping-Pong from his hospital bed while fighting a brain stem tumor for more than two years, died in September 2010. When his family filed a tax return in August 2011, it was rejected, apparently because someone else had stolen the boy's identity and already had claimed him as a dependent.
Lisa Watters points the finger at the genealogy websites — Benny's number is readily available on FamilySearch.org.
"It just seems like such a simple fix," she said.
The Watters have re-filed by mail and are awaiting a refund.
Although there is no national tally of the purloined use of dead children's identities, the Scripps Howard News Service had identified 28 families — from California to Georgia — who say thieves sought to profit off their dead children by claiming them as dependents in recent years.
The threat has mushroomed in the last five years, said Pat Loder, executive director of the Compassionate Friends USA, a nonprofit organization based in Oak Brook that serves grieving parents.
As a protection, Loder has directed the group's 630 U.S. chapters to stop posting deceased children's birthdays in local newsletters.
"Their identities are ripe for the picking," Loder said, blaming the Internet for the surge in risk. "Times change, and the world now is not the one we used to live in."
Because the IRS will not provide ID theft victims with details about the fraudulent filers — the crooks also have a right to privacy, the agency says — victims say they have no idea who claimed their children or how. "The IRS won't give you any information on who did it," Lisa Watters said.
A relic of simpler times, the death file was created in 1980 under the new Freedom of Information Act at the request of U.S. businesses seeking a tool against identity theft. It seemed like an open-government solution to the rising problem of consumer fraud.
Today, Social Security officials acknowledge the records they release are misused, but said a 31-year-old federal court order hamstrings them from fixing it.
"It is tragic that unscrupulous individuals use the public DMF to commit tax fraud," said spokesman Mark Hinkle. "But our hands are tied, however, and change will only happen if Congress acts."
Representatives of Ancestry.com say they are merely publicizing information that has already been released by the federal government.
Officials at The Church of Jesus Christ of Latter-day Saints said the federal government does not allow them — or others — to redact Social Security numbers they post on FamilySearch.org.
"By contract, the records received from the Social Security Administration must be posted in their entirety," said Chief Genealogical Officer David Rencher.
But by posting such information, "They make it pretty easy," Watters said
Victims and privacy groups suggest restricting the use of the Death Master File, delaying how quickly the information is released, or making public only the last four digits of Social Security numbers.
In a scathing 2008 audit, Social Security's Inspector General's Office urged the agency to wait at least a year before posting private information about deceased Americans and limit the amount of information released in the list, especially to "explore alternatives to inclusion of the full" Social Security number.
The agency agreed to consider the recommendations but so far has not enacted any of them.
Scripps Howard News Service with Sun-Times staff
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