Identity fraud is costing the UK more than £1.3bn a year, according to official figures, and projections from Capital One Bank suggest that by the end of 2005 there will be 212,000 cases – equating to one every two and half minutes. Worldwide, it is anticipatedthatidentity fraud will is likely to cost governments, individuals and businesses $200bn $200,000m (£105bn) by the end of this year.
Last year there were overmore than 50,000 reported cases of identity theft in the UK and consumers’ increasing vulnerability is creating a mushrooming the market for anti-fraud products and insurance policies is mushrooming.
HSBC’s move into an otherwise untested market in 2003 was the first admission by a large financial institution that identity fraud is Britain’s fastest-growing white-collar crime. Since then the threat has prompted several insurers, including Saga, CPP, More Than – a Royal & Sun Alliance subsidiary – and from this week HBOS, to offer have launched products insuranceagainst identity fraud.
These new insurance policies are designed to offer financial assistance to consumers who have been targeted by fraudsters who steal their identity. This type of fraud occurs when someone uses an individual's personal details – for example, their name, date of birth, address and national insurance number. Often this information is used to apply for credit cards, loans and other financial products. But it can also be used to apply for mobile phone contracts, driving licences or even passports.
The first time individuals may become aware they have beenare a victim of identity theft is when unpaid debts land on their doorstep. In extreme cases tThis can result in problems with debt collectors, county court judgments, obtaining and difficulties getting a mortgage or even a job.
Most insurers’ anti-fraud services insurance policies tend merely to offer be information to help customers prevent identity fraud rom taking place but some also offer the ability policies that to recover some of the expenses incurred when identities are stolen. This could include the reimbursement of loss of lost earnings or the costs of suing a fraudster. At the very least, insurance cover can offer somepeace of mind butHowever, the level of cover on policies varies substantially. so consumers are advised to check the small print.
“The cost to busy people of proving their innocence and cleaning up their credit files is estimated to be around £8,000 and expected to can take up around 300 hours,” in time,” says Colin Whitehair, chief executive of St Andrew's Membership Services, a subsidiary of HBOS general insurance.
Last month Capital One bank launched its current an ad campaign – featuring the impressionist Alastair McGowan – to promote its identity theft assistance service which provides advice to help prevent, spot and resolve identity theft for all its platinum card customers.
“Some policies offer more of a tea and sympathy type service offering customers a do-it-yourself approach,” says John Busby, business relationship manager at Capita Insurance Services, which is expected to launch its own insurance product on to the market any minute.imminently. “The range of services available is very different and only the ones that offer complete cover are really worth looking at.”
Credit Expert from Experian sends out an e-mail or text message alert when there’s a change in someone’s file status – this would help to spot if someone was trying to open a bogus account in your name, and you would be able to stop it. It costs £50 a year and you get access to your credit file. Callcredit offers a similar service for £39.99.
But there ’s are also a lot of ways people can protect themselves for free. Simple steps that cost nothing iinclude shredding or ripping up all old documents such as bank statements and utility bills before you throw them away.
If you have already been a victim of fraud your file can be password-protected for free with Experian so that firms doing a search on your account have to ask you for a password before they can conduct a full credit check.
Financial services companies warn that no individual is immune from identity theft. Ricky Gervais, the creator and star of the BBC hit series The Office, is currently at the centre of a court case this week after fraudsters allegedly stole his identity and tried to buy £200,000 of gold bullion using cash from his account.
“Ultimately, it is crucial that the consumer remains as vigilant as possible,” says Steven Philippsohn, senior partner at city law firm Philippsohn Crawfords Berwald. “In the recent Ricky Gervais case, it was fortunate that the plot was foiled, due to a fan of The Office thinking that the transaction was suspicious. By stripping away regular face-to-face contact, it only takes simple information, such as date of birth, address, a mother’s maiden name and passwords to conduct this kind of fraud.”
The problem is that, unlike other types of fraud where the bank usually picks up the tab, it falls to the victim to establish to the satisfaction of the credit reference agency and all others concerned, that a fraudster is responsible for any substantialthe debt.
“Most companies say the burden of proof falls on the customer,” says Whitehair. “It can be very difficult to prove your innocence because in cases of identity theft, the fraudster will have access to all your personal details and it will be difficult to prove that it was not you that opened the account or took out the credit card.”
But identity fraud is unlikely to go away; fraudsters are facing an increasing need to find new sources of revenue following the introduction of tougher measures such as “chip and pin” technology to tackle credit card fraud.
