Banks and building societies have been carpeted for failing to put in place adequate standards to prevent identity theft. In fact, some of the practices, such as dumping customer details in the street, have been positively encouraging it. It is little wonder then that identity theft is the fastest growing consumer crime in the UK.
Getting personal
Con artists have numerous ways to obtain our personal information, and now that the holiday season is upon us, they will put that expertise to good use. Research by the Association of Payment Clearing Services, which is responsible for card transactions, shows that fraud against Britons abroad surged by a staggering 43 per cent last year to £118 million.
Card theft is highest in Spain and France, which are among the most popular holiday destinations for UK tourists. This is despite advances in chip and PIN security throughout Europe. The chances of becoming a victim of this crime are even higher in countries such as America and Thailand as they do not use chip and PIN technology. But you don’t have to go abroad to be a victim.
This year, The Fraud Act came into effect and means that the act of identity fraud is now classed as a criminal offence even if a victim does not report a crime. Previously, police could only investigate identity fraud or prosecute a fraudster if a crime had been committed and the victim reported the crime. As victims of identity fraud often don’t realise they have had a crime committed against them – usually, they are first alerted when contacted by a debt collection agency – it made it difficult for police to pursue and prosecute criminals.
Under the new act it will be a crime to commit ‘fraud by false representation’, which means that if an identity fraudster purports to be somebody else, they can be prosecuted. It also makes tampering with a machine, such as a chip and PIN machine or a cash point, with the intent of committing fraud, a criminal act.
Leaving footprints
Although fraud victims who have had money stolen from their accounts or credit cards opened in their names usually have the debt written off, it can be difficult to repair credit reports – and that is disastrous for clients that are seeking a mortgage or secured loan. Banks and building societies will usually cover consumers against loss through theft or fraud if the cardholder has taken steps to protect cards and PIN numbers. But it can still take weeks before a case is resolved and consumers have losses refunded. Should the cardholders’ identity be stolen as well, the result is often the stuff of nightmares.
New research from Capital One reveals over 42 million adults in the UK don’t even know how to discover if they’ve been a victim of identity theft, while only one in 10 knows what to do if they suspect their identity has indeed been stolen. These are shocking figures for such a widespread crime given that Britons currently worry more about having their identities stolen than they do about various other risks such as contracting cancer or heart disease, according to research from Finaccord. An online survey of 1,580 respondents found that 17.8 per cent of those asked said that they are very concerned about the threat of identity theft and 40.3 per cent of those asked said they are quite concerned.
Further research, carried out by YouGov, also revealed at least 2.5 million people throw documents, such as bank statements, away intact. Five million leave important personal information lying around on the kitchen table, 4.5 million regularly carry sensitive documents in their wallets and bags when outside, 32.5 million store personal information in their homes insecurely, and 14 million do not shred confidential personal documents before throwing them out.
Identity insurance
The best advice for preventing identity theft is to protect personal information by redirecting mail when moving home, keeping important documents in a safe place and safeguarding your PIN and password details at all times. However, given the ubiquitous nature of the crime, and the poor performance of lending institutions and customers when it comes to protecting their details, suggesting some form of identity theft insurance to a client would be prudent in many circumstances.
There are now some exciting products in the market. One such product combines identity theft cover and legal expenses cover with premiums starting from around £20. These policies come with add-ons such as cover against claims being brought against you from financial institutions and recovery of lost earnings and up to £25,000 worth of cover for legal fees.
In the UK in 1999 there were 20,000 recorded cases of identity theft. By 2005 this had risen to 137,000. This year the number is set to soar to 170,000 and one in three UK citizens can be expected to be the subject of identity fraud in their lifetime.
These are your clients. Their identity and credit histories deserve protection and it is incumbent on you, the intermediary, to raise the issue and suggest solutions to the identity theft problem.
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