Who'll stop the fraudsters stepping into your shoes?

Cases are soaring but the onus is still on consumers to be 'vigilant', warns Kate Hughes

Following the loss of 25 million people's per-sonal details by HM Revenue & Customs (HMRC), ID theft is on everyone's lips. But how big a problem is it really? What are the banks and the Government doing about it? And how good are the anti-theft products being pushed by insurers and credit card providers?

In 1999, according to official figures, just 9,000 cases of ID theft were recorded. By 2003, that was up to 43,000, and in 2007 the number was 80,000. Compared to incidents of burglary, car theft and domestic violence, this crime is small fry – but it is growing fast. This year, the number of ID theft cases will undoubtedly top 100,000 – and it may be worse if criminal gangs get their hands on the information lost by HMRC.

Ultimately, the main financial losers are banks, insurers, the Government (which of course hurts taxpayers) and retailers. But the hassle and disruption for people who have their identities stolen can be immense. It can take many hours for victims to convince banks and other institutions that they are who they say they are – and even then, some will find they are turned down for credit in the future.

One of the fastest-growing forms of ID theft involves fraudsters taking on the identity of the recently deceased. This can cause distress for their families.

One victim told The Independent on Sunday of her horror that the identity of her dead mother had been stolen and then used to obtain fraudulent loans. "I was very angry. Mum hadn't been well off and had worked hard not to get into debt, never taking out loans or credit cards and always paying her bills. The police were not at all interested. They told me to go home and forget about it. It has been going on for the last two years and Mum's name is still being used."

Tapping into the growing fears of identity fraud, some banks and insurers have been pushing so-called ID theft protection to customers, either as a free add-on to a financial product or as a standalone service. The first into this area was the Capital One credit card firm, followed by Barclaycard and HSBC. Generally, though, these add-ons are rudimentary, offering an advice line, a named case handler and tips on how to spot the signs of ID fraud.

Pay a £7 monthly fee to the standalone service Halifax Indentitycare and you get regular credit reports, alerts of activity on your credit file, £25,000 towards any legal fees you incur, and a dedicated service to repair your credit record.

Peter Gerrard, head of insurance research for price-comparison site Money-supermarket.com, says many anti-ID fraud products are of "dubious" worth. He adds that the provision of alerts and credit reports, while "useful", is "no substitute for account holders being vigilant".

Picking up the pieces after the theft of an identity is, says Ed Mayo, chief executive of the National Consumer Council (NCC), "stressful, disruptive and often frightening". The NCC is calling for a "one-stop shop" where all victims are given help in putting things right, and where the data of banks, credit reference agencies and the Government can be updated quickly to stop fraudsters in their tracks.

Mr Mayo adds that banks, retailers and the Government need to stop being "lax about the security details of the public".

There are some signs that banks are upping their game a bit: staff are being trained to spot fake documents and many, particularly in overseas call centres, operate paperless offices with no internet connection, so employees cannot copy customers' details.

However, the loss of so many people's information by HMRC shows there is a long way to go before Britons can feel safe their identities are protected.

How to protect yourself

* Don't carry personal information such as bank statements or utility bills.

* Shred personal information before disposing of it in the rubbish.

* Check credit reports regularly.

* If your post fails to arrive, contact the post office – a "mail divert" may have been set up by fraudsters.

* Avoid giving personal information over the telephone or internet if you can possibly avoid it.

* Have different passwords and pin numbers for your accounts.