When the debt collector first called last fall, Dani, a college senior in New York City, was sure it was a mistake. After all, she'd never even applied for the two credit cards that the caller said were in her name. And she certainly hadn't racked up a combined balance of $23,000.

Dani, who asked that her last name be kept private, called home to Southern California in a panic. To her shock, her mother casually admitted that she'd opened the accounts using Dani's Social Security number and passport, but promised she would pay them off. Six months later, the debt collectors were still calling. Dani eyed her credit report and couldn't believe what she found: Over the past four years, her mother had secretly opened nearly a dozen credit cards and credit lines in Dani's name, charging up $100,000 in debt.

In one of the worst and most hidden forms of identity theft, parents are increasingly taking out credit cards and loans in their children's names. "It's in a large part tied to the economy," says Steven Toporoff, an attorney at the Federal Trade Commission, noting that while the government doesn't specifically measure theft at the hands of parents, the agency has seen a recent surge in cases. The hardest-hit victims? People under 29. Just as 20-somethings are striking out on their own—buying first cars or renting first apartments—many are discovering that their credit history has already been trashed by Mom or Dad.

"The parents have ruined their own credit rating, so they move on to the person whose Social Security number they can easily access," says Linda Foley, who runs the nonprofit Identity Theft Resource Center in California. She adds that the problem for the victims isn't just financial, but personal: The kids are faced with having to decide whether to prosecute their parents.

In fact, that's why the crime often goes unreported. Many victims, unwilling to file charges, either take on the debt themselves or decide to go bankrupt. But bankruptcy is no easy fix: The black mark of a bankruptcy stays on a person's credit report for a decade. One Alabama woman, who asked that her name be withheld, learned that the hard way. She was 18 when she came home from college to find her name on a fistful of new credit cards taken out by her mom. Facing $30,000 of debt, she couldn't bring herself to report her mother to the police, opting instead for bankruptcy when she was 21. A decade later, she expects to finally see her credit report cleared this winter. (She no longer speaks to her mom.)

Dani, however, did file a police report against her mother—not because she wants her to go to jail, but because credit counselors said it was the best way to prove the charges weren't hers. "It's the hardest thing I've ever done," she says. "It's so sad that money had to ruin my relationship with my mother. If you can't trust your mom, who can you trust?"

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