Big banks link up to beat ID fraud

An initiative that could drastically curb one of the fastest-growing areas of identity fraud is being backed by five out of the top six banks and seven out of the top eight credit-card issuers, as well as all the main mobile phone companies.

An initiative that could drastically curb one of the fastest-growing areas of identity fraud is being backed by five out of the top six banks and seven out of the top eight credit-card issuers, as well as all the main mobile phone companies.

The programme is being led by the US group ID Analytics, which says it could have a live system running and combating fraud by June this year.

ID Analytics already has a system operating in the US, where 14 top companies, including five major banks and two mobile phone groups, are using it to prevent application fraud.

These scams involve fraudsters, or gangs of fraudsters, using information they have picked up about people to steal their identities and apply for bank accounts, credit cards, mobile phones, loans, etc in their names. Similar techniques have been used to take over people's bank or credit card accounts, transferring funds out or running up large bills.

The Association for Payment Clearing Services (Apacs) issued figures last week showing that identity fraud was growing by 22 per cent a year. The problem has been highlighted in TV commercials featuring the impersonator Alistair McGowan as well as high-profile cases involving celebrities including Ricky Gervais.

Simon Williams, the UK managing director of ID Analytics, said that the system it had created spotted patterns of fraud, which can be used to root out rogue applications.

All the participants in the programme must allow ID Analytics access to their data, which is stored in a secure, encrypted system that none of the parties can access. An application made at bank A that has similarities to applications at credit card company B, or mobile phone group C, will be spotted by ID Analytics, even though the individual companies might not pick it up themselves.

ID Analytics has taken expert advice from Rosemary Jay, a former legal adviser to the Information Commissioner, and is convinced its system will not breach the Data Protection Act.

Banks have claimed in the past that the Act has prevented them from sharing information to combat fraud.

The banks are set to come under more pressure from consumers and politicians to show they are doing all they can to prevent fraud, which is estimated to be worth about 1 per cent of UK banks' profits.