Friday, 29 July 2011

Identity theft is on the rise

Imagine you’re in another country at a conference on your own. Halfway through the week you fancy a nice meal out after a long day networking. You go to use your card to pay and find that it has been declined. A quick (premium rate) call to the bank confirms that someone else has been spending your money with a cloned card in yet another country.

Fortunately the bank had picked up quickly that I couldn’t be in two places at one time so had put a halt on all transactions. After another round of security questions to confirm that I was the real McCoy and they instructed me to go to a cash machine at which point they briefly lifted the ban on transactions and I was able to get enough cash out to see me through. However, although a solution was found, this event changed the way I thought about my personal data and security for good.

The worrying thing is that fraudsters can obtain personal and financial data in many ways, the most common of these include:

  • Sifting – rifling through post and rubbish, taking bank/credit card statements

  • Lifting – stealing personal information such as identification, credit or bank cards

  • Falsifying – completing change of address forms to redirect mail

  • Spying – obtaining personal information from insecure websites

  • Skimming - capturing details of credit cards

  • Copying - accessing postal records

With the data collected, fraudsters can access bank accounts; obtain credit, goods or services; duplicate or apply for passports; and even claim state benefits all without the victim’s knowledge.

In a recent article the Financial Times (1) reported that fraud in the UK increased by 10% in the first half of this year compared to the previous six months, according to new figures from fraud prevention service CIFAS. Of the 111,504 cases reported, identity fraud made up almost half of the crimes, with a further 10% of cases involving the illegal hijacking of a victim’s bank account. Such cases involving the misuse of an account or facility have risen to their highest levels since 2009 and now account for a quarter of all fraud crimes.

Latest figures provided by the Experian Fraud Index (2) also show that incidences of identity theft are becoming increasingly frequent. In the first three months of 2011:

  • 20 in every 10,000 applications for financial products were found to be fraudulent, representing an increase of 24% on the fourth quarter of 2010

  • 35 in every 10,000 applications to open UK current accounts were detected as being fraudulent, representing a 58% increase than in the fourth quarter of 2010

  • 12 in every 10,000 insurance applications and claims were fraudulent, this represents an increase of almost 4% from the fourth quarter of 2010 and 43% from the first quarter of 2010

  • 34 in every 10,000 mortgage applications were also uncovered as fraudulent, which is the second busiest period for mortgage fraud ever recorded by the fraud index.

There are many ways to help prevent the likelihood of being a victim of identity theft and websites like offer practical tips and advice. However, if the worst does happen then an ARAG Family Legal Solutions Policy can be there to help.

Firstly with the Family Legal policy, your clients have access to Legal Services Online where they can download documents such as credit repair letters; they will also have access to the Legal Advice Helpline where they get advice from legal experts 24/7. In the worst case the policy covers your client for a dispute arising from the use of personal information without their permission to commit fraud or other crimes.*

If you would like to find out more about ARAG’s Family Legal Solutions policy and how it can help your clients please contact one of our sales team via email at

* Exclusions, terms and conditions apply; see the Family Legal Solutions Policy Wording for full details.

1. (26 07 11)

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