Insurance may not be the best way to protect against identity theft

While this type of fraud is on the increase, most banks and credit card companies have services that can help. Chiara Cavaglieri reports

As the new ITV drama series Identity unfolds, you'd be forgiven for thinking that the criminal underworld of ID fraud is sinister and complicated.

In reality, stealing someone's identity to apply for goods and services and run up huge bills is a fairly straightforward gig for criminals. With just a few key details they can fraudulently take over your existing accounts, or apply for loans and credit cards in your name, destroying your credit record in the meantime.

"While certain people appear to be more likely to be targeted by fraudsters than others – such as people renting property with shared mailbox facilities – the threat of identity fraud is universal and is certainly something we should all be taking more seriously," says James Jones from Experian, a credit reference agency.

The latest statistics from Cifas, the UK's Fraud Prevention Service, show this is one of the fastest growing crimes. During the first quarter of 2010, there was almost a 20 per cent increase in identity fraud compared with the same period last year.

"Surprisingly, a lot of identity fraud takes place at the victim's current address and usually involves intercepting or redirecting the victim's post, whether the fraudster is attempting to apply for new accounts or take over existing ones," says Mr Jones.

Criminals are increasingly using open sources such as the internet, social networking sites such as Facebook or Twitter and births and deaths registers. Phishing is another weapon, when criminals try to get your PIN through setting up fake websites, or sending emails and letters posing as your bank.

When it comes to protecting yourself against ID theft, there are several options, but think carefully before you reach into your pocket. Insurance products are available that aim to cover the cost of fixing the problem, such as Bank of Scotland's IdentityCare policy, which costs £6.95 a month. This offers unlimited access to your credit report, monthly monitoring to identify any irregularities in your credit file, up to £25,000 towards your legal expenses to help to clear your name, up to £1,000 emergency cash and a credit report repair service.

While this may sound like a worthwhile investment, the truth is that you can get a lot of the same protection for free. First, you aren't actually liable for any money spent fraudulently as your bank or credit card provider will cover the cost of your losses as long as they don't consider you to have been negligent.

Second, these insurance policies don't cover any money lost through fraud. They cover only the cost of sorting out the mess, which in most cases will be limited. In the worst-case scenario, you may have to fork out for legal fees incurred to clear your name, but you may find that your home insurance policy already covers this so do check before paying for a standalone policy.

"Unfortunately, banks and credit card companies are continuing to cash in on people's fears of fraud by selling needless identity-theft insurance. We recently included ID fraud cover in our top 10 list of useless financial products. If you have bought ID theft insurance, read the policy carefully and think seriously about cancelling it," says Cathy Neal, a senior researcher from Which?.

Despite this, you may still want some form of protection as fixing the damage caused by ID fraud can take a long time, often leaving you out of pocket in the interim. Capital One credit card holders, for example, get a free subscription to its ID fraud alert service. This offers two free credit reports a year, allowing you to see which products you've applied for and check for mistakes. You also receive email alerts if there are any changes to your credit file, as well as assistance if you are a victim of fraud, including one-on-one help with cancelling accounts and repairing your damaged credit status.

One of the major worries, particularly in this economic climate, is that ID fraud can severely damage your credit record. Although credit reference agencies such as Callcredit, Experian and Equifax can help, cleaning up a damaged record can be a painstaking process, so it's much better to take simple steps to reduce your chances of being impersonated in the first place.

"Shred all documents, credit card or bank statements, as well as letters from doctors, employers and indeed anything bearing your full name and address or signature. Receipts can also be valuable to a fraudster, so take care to shred these too," says Richard Hurley from Cifas.

You should never give your credit card details over the phone unless you've made the call. It's also important to examine your bank and credit card statements carefully each month and keep an eye on your credit report at least once a year so that you can report anything unfamiliar at once.

If you do become a victim of ID fraud, inform the relevant issuer as soon as possible with a telephone call and a follow-up notification by post. You should request a copy of your credit report too from one of the three agencies to check the extent of the fraudster's activity.

You can also sign up to protective registration with Cifas for £14.10 a year. When you ask for the service to be enabled, a warning is added to your credit file so that its members will undertake additional verification checks to ensure the application is genuine and not one undertaken by a fraudster.

Expert View

Richard Hurley, Cifas

1. If your utility bills do not arrive, contact your supplier.

2. If you have moved house, use the Royal Mail redirection service.

3. If you are going on holiday, arrange to have someone collect your post.

4. Keep your home secure, and keep your personal documents locked.

5. Treat your plastic cards, travellers' cheques and passports as securely as you would cash.

6. Protect your computer by adding a firewall and anti-virus software.

7. Don't download email attachments or click on a link in an email unless it's from someone you trust and never provide sensitive information in an email.

8. Before entering your payment details into any website, check that the URL begins with https.

More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete tomorrow
people'I’d rather have Fred and Rose West quote my characters on childcare'
Kim Jong Un gives field guidance during his inspection of the Korean People's Army (KPA) Naval Unit 167
newsSouth Korean reports suggest rumours of a coup were unfounded
Arts and Entertainment
You could be in the Glastonbury crowd next summer if you follow our tips for bagging tickets this week
Have you tried new the Independent Digital Edition apps?
Swimmer also charged with crossing double land lines and excessive speeding
moneyForbes 400 list released
Life and Style
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
Life and Style
Moves to regulate e-cigarettes and similar products as medicines come amid increasing evidence of their effectiveness
healthHuge anti-smoking campaign kicks off on Wednesday
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
peopleBroadcaster has a new role bringing 'the big stories that matter' to US
Arts and Entertainment
A new Banksy entitled 'Art Buff' has appeared in Folkestone, Kent
Arts and Entertainment
Shia LaBeouf is one of Brad Pitt's favourite actors in the world ever, apparently
filmsAn 'eccentric' choice, certainly
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    Day In a Page

    Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

    Isis an hour away from Baghdad -

    and with no sign of Iraq army being able to make a successful counter-attack
    Turner Prize 2014 is frustratingly timid

    Turner Prize 2014 is frustratingly timid

    The exhibition nods to rich and potentially brilliant ideas, but steps back
    Last chance to see: Half the world’s animals have disappeared over the last 40 years

    Last chance to see...

    The Earth’s animal wildlife population has halved in 40 years
    So here's why teenagers are always grumpy - and it's not what you think

    Truth behind teens' grumpiness

    Early school hours mess with their biological clocks
    Why can no one stop hackers putting celebrities' private photos online?

    Hacked photos: the third wave

    Why can no one stop hackers putting celebrities' private photos online?
    Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

    Homegrown ballerina is on the rise

    Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
    Education, eduction, education? Our growing fascination with what really goes on in school

    Education, education, education

    TV documentaries filmed in classrooms are now a genre in their own right
    It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

    It’s perfectly reasonable to negotiate with villains like Isis

    So why don’t we do it and save some lives?
    This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

    Is a sub-2-hour race now within sight?

    Dennis Kimetto breaks marathon record
    We shall not be moved, say Stratford's single parents fighting eviction

    Inside the E15 'occupation'

    We shall not be moved, say Stratford single parents
    Air strikes alone will fail to stop Isis

    Air strikes alone will fail to stop Isis

    Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    Nadhim Zahawi: From a refugee on welfare to the heart of No 10

    The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
    Witches: A history of misogyny

    Witches: A history of misogyny

    The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
    Shona Rhimes interview: Meet the most powerful woman in US television

    Meet the most powerful woman in US television

    Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
    'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

    Endangered communities photographed 'like Kate Moss'

    Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style