My 3mo. had it too, but it's getting better. I just put a little mineral oil on it, let it "soak" in, then scrub it when I give her a bath. It's slowly going away. I bottlefeed and always hold her to my left, and when some leaks out of her mouth it always goes in that direction. I'm wondering if maybe it was formula build-up or irritation, as gross as that sounds. I was not real good about cleaning behind her ears because she only gets 2 baths a week, and then one day I noticed the scabs and crust and I've been really good about it since!