How to guard against ID fraud threat

Despite the Revenue’s huge blunder in losing millions of our personal details, there are still ways that families can protect themselves. Millions of families have been put on red alert against the risk of identity fraud after tax officials lost the personal details of 25m people.Europe’s biggest loss of confidential information sparked a nationwide search for two computer discs containing the addresses, National Insurance numbers, bank account numbers, and sort codes, of families receiving child benefit.There are fears the details, lost by Revenue & Customs, could be a goldmine if they fall into the hands of criminal gangs. Fraudsters could use the information to steal people’s identities, open bank accounts and take out loans or credit cards in their name.

Banks were quick to reassure their customers that there was no evidence that money had been lost. They added that the information is not enough in itself for an ID fraudster to access your bank account.

But it has prompted independent security advisers to urge families affected, as well as those who bank online, to tighten their security measures and keep a close eye on their bank accounts for suspicious transactions.

Vigilance may be required for many years as fraudsters are unlikely to use the information immediately. Even the children whose names are mentioned on the discs could be at risk in the future.

Helen Lord, fraud and regulatory compliance director at Experian, the credit-rating group, said: “The fraudsters will wait until they turn 18 and start applying for loans, credit cards, mobile-phone contracts and other credit products in their names.

“That could have a catastrophic effect on their ability to get on the housing ladder, rent a flat, obtain their first credit card, obtain a loan for their first car or open a bank account.”

Even before this bungle, identity fraud was a growing problem. Latest figures from Apacs, the UK payments authority, show credit-card ID theft to have increased by 24% since last year. It accounted for £18.7m of losses in the first half of this year and is one of the fastest-growing financial frauds in Britain today.

Online fraud is also increasing rapidly. It cost £155m in 2006, a 32% increase on the year before. But there are ways to combat the fraudsters.

Be alert to danger

Most banks and credit-card companies monitor your banking activities and will inform you if they suspect anything unusual – if you suddenly take out large sums, for example.

Some, such as Royal Bank of Scotland, offer a free fraud alert service which sends a message straight to your mobile phone if it spots a potentially dodgy transaction.

Equifax’s Identity Watch sends out e-mail alerts or mobile text messages within seven days of possible identity theft.

The credit-reference agency monitors loan and credit-card repayments for unusual activity. It is currently offering the service for £3.99 a month rather than the usual £6, although a minimum three-month subscription is required.

You will also receive one free Equifax credit report which includes details of loans and credit-card repayment histories going back six years.

A premium service costing £7.50 a month or £69.99 a year, sends e-mails or text messages within 24 hours and you have unlimited access to your credit report.

You can apply direct to any of the credit-reference agencies – Experian, Equifax and Callcredit – to check your credit file. Each report costs £2. Checkmyfile.com allows you to trawl through your reports from all three for £16.95.

Remove damaging information

The spread of the internet means that the amount of accessible personal information that can be misused has rocketed.

CPP, an internet security firm, offers a service called Identity Protection Alert which scans the internet weekly to find any information about you that it classifies as of “high risk” so that you can remove it.

This would include any publicly accessible website, including Facebook and MySpace, that has your name in conjunction with your address.

Credit-reference agencies warn that fraudsters are targeting such social-networking sites for information, including mothers’ maiden names, employment histories, addresses and date of births – some of which are commonly used passwords for accounts. The service costs £69.99 a year.

Stand out from the crowd

You can register with Cifas, the UK’s fraud prevention service for £11.75. If you are a victim of ID fraud, your bank will usually register you free with its service. Once you are registered, your name and address is earmarked. When you apply for a loan, credit card or mortgage you will be asked more personal questions than usual to provide further proof of identification; and so will any fraudster applying for credit in your name. A disadvantage is that you will find it difficult to get “instant” quotes.

Track the fraudsters

If you think you’ve been sent a fraudulent letter or your online banking website looksa little different, you can check if you are being targeted by fraudsters using the website millersmiles.co.uk.

The website regularly updates information about the latest scams and shows you what bogus websites and letters looks like.

On Friday, it posted a fake Abbey web page that has been sent to customers of the bank asking for account details.

Avoid identity theft insurance

Some home and contents insurance policies offer ID theft insurance as a matter of course. Hiscox, for example, offers added cover to its home-insurance policies bought through brokers. It will pay for solicitor’s fees and potential loss of earnings if you need to take time off work to sort things out.

However, specialist ID theft insurance is best avoided. Peter Gerrard at Moneysuper-market, a comparison site, said: “Many of these products are dubious value for money. If consumers are vigilant and report any unusual activity to their bank or card provider these losses will be covered by the provider as a matter of course.”

‘Tis the season to be cautious

THOSE who do their Christmas shopping online need to be particularly vigilant as experts predict a surge in online fraud over the festive season.

Online spending is expected to increase to £5.6 billion as the holidays approach, according to Apacs, the UK payments authority, providing rich pickings for criminal gangs.

We explain the precautions you can take and spell out your rights.

How do I know that an online shopping website is genuine?

The Howard web tool has been developed by the European Commission to alert shoppers to bogus websites. It is being launched in Britain on December 3, just in time for the Christmas spending surge.

Fake websites offering eye-catching deals to lure unsuspecting shoppers into divulging bank or credit card details are a growing problem.

Howard will enable you to check information about individual websites, including when and where the site was registered, whether it has any formal accreditation and consumer comments about the site on internet chat forums.

You will be able to access the tool from ukecc.net.

Online retailers must give consumers the chance to check the details they input before their order is placed.

The retailer also has to give full details of who they are and both a geographical and an e-mail address. It is also a good idea to try to get a contact telephone number if possible.

Always print out your order confirmation, which is usually sent to an e-mail address when you make an online purchase.

If an e-mail is sent confirming acceptance of your order, you have a legally binding contract, but if it just acknowledges your order, you don’t.

Can I ensure my payment is secure?

Look for https at the beginning of the website address before inputting personal details as this tells you the site is secure. A padlock icon displayed at the bottom of your computer screen is another indication that it is protected.

Many credit-card issuers offer safer online payment methods such as Verified by Visa and Mastercard’s Secure Code. When registering, a cardholder chooses a private password to use when making a purchase with their card over the internet with a participating retailer. This ensures an extra layer of security before your card can be used. Some banks have their own versions, such as Halifax Secure and Lloyds TSB ClickSafe.

What if the goods I receive are faulty?

The seller is responsible for the quality and condition of the goods. You are within your rights to ask for a replacement product or for your money back if they arrive broken or damaged.

If there is a problem, then the seller must bear the cost of returning the faulty or damaged goods.

STAY SAFE ONLINE

- Always use secure websites, indicated by a padlock icon displayed at the bottom of your computer screen or https at the start of the web address.

- If you buy something for more than £100, use a credit card as you will be entitled to a refund from the card company if the goods are faulty and the retailer refuses to return or refund.

- Check that the retailer gives a geographical and an e-mail address. Get a contact telephone number if possible.

- Keep copies of all paperwork and print out e-mails relating to the purchase.

- Check your bank and credit-card statements regularly.