Identity theft: Is ID fraud insurance worth taking?

Thursday, 15 Oct 2009 14:40

Identity fraud is a big worry for consumers, according to a recent survey, with 76 per cent of UK adults concerned about becoming a victim and 39 per cent feeling more at risk now than six months ago.

Consumers have every reason to be worried, fraud prevention service Cifas says. The overall number of identity frauds has increased by 33 per cent in the first nine months of 2009 from 2008, a new report states.

Account takeover fraud – where fraudsters assume the identity of a victim to drain their existing account – is on the up, as application fraud is proving less lucrative in these credit crunched times.

"As credit granting diminished during the credit crunch, fraudsters saw the writing on the wall and turned their attention away from application fraud, knowing that this would present fewer and fewer opportunities.

"Instead, fraudsters have reacted to economic circumstances, and migrated towards identity fraud and account takeover fraud," Cifas notes in the report, The Anonymous Attacker.

The financial services industry has taken steps to tackle the problem, but the statistics show more needs to be done.

One solution offered by several banks and credit card providers is ID theft protection.

Sarah Routledge investigates how useful these products are and how consumers can best protect themselves against this growing threat.

Credit monitoring

Credit reference agencies Experian, Callcredit and Equifax will each monitor your credit record and alert you when any application for credit is made in your name. There is also unlimited access to your credit report online or by post whenever you request it, and you receive a quarterly statement detailing your credit activity.

If you do find yourself a victim of fraud, there is access to a team of dedicated specialists who will help you clear your name.

Equifax charges £7.50 a month, Callcredit charges £12 a quarter and Experian charges £6.99 a month.

"With the online service we provide, you can check your credit report every day, but I would recommend at least checking every few months," says Mark Ward, head of consumer services for Callcredit.

"With our monitoring service you get peace of mind because we let you know if anything changes, by SMS or email. And if something is wrong, we've got a dedicated victim of fraud team who will take you through all the steps you require to put it right."

This service could be quite useful, especially if you have been a victim of fraud or suspect you could be vulnerable to an attack. Finding out quickly about a fraud is important and could save a lot of hassle.