Identity Theft: A Case Study
It is a type of crime that is increasingly affecting more and more people. The London Metropolitan police recently calculated that identity fraud cost almost £14 billion in 2008. This works out as an average cost of £230 for every person in the UK.
In this case study we look at how identify fraud has affected one person, and the steps she had to take to prevent having to pay for the cost of the theft herself.
What is Identity Theft?Identity theft involves criminals using a variety of different methods in order to access your personal information and to use it to ‘steal’ your identity.
Once they have your personal details, the fraudsters can pretend to be you, and they can apply for benefits, obtain new credit cards, bank accounts and even mortgages under your name.
They can also take control of your existing accounts and change your details, running up thousands of pounds of debt in your name – debt that companies will be expecting you to repay.
Such an experience happened to 26 year old trainee accountant Kelia. Kelia never had any problems with her credit cards, and used to pay all of her monthly bills on time.
Kelia's Story“I’ve always been quite responsible with money and although I do spend too much on credit cards, I make sure that I pay my bills and never let my debts get out of control” she says.
However, in June of 2007, Kelia started to receive statements from a credit card company that she did not owe money to. She recalls:” “The statement referred to an outstanding balance of £2,500, with a credit card company that I have never had an account with.
“I ignored the first letter as I thought it must have been a computer error. But when the next statement arrived a month later, and they were increasing the outstanding balance because I hadn’t made any repayments, and warning me about possible legal action, I decided to contact the credit card company to tell them I knew nothing about this card.”
Kelia made several calls to the credit card issuing company, and was told by one of the company’s advisers that the details of her account would be passed on to their fraud department, and that no further action would be taken against her.
Threatening LettersUnfortunately, that was not the end of the story. In February 2008, Kelia got a letter from a debt collection agency, requesting she make an immediate payment of £3,200.
Kelia explains: “the letter was a formal demand for payment, and it said that if I did not pay the full amount in the next seven days, I would be issued with a County Court Judgement against me, and that bailiffs would have permission to take my property to recover the money. I was in a state of shock.”
Kelia got back in touch with the credit card company to find out why she was still being chased for this debt. The company explained that an error had been made.
How the Problem EscalatedWhen the fraud was reported, the credit card company should have closed the account while investigations were made by their fraud team. Instead, the account remained open, and after six monthly payments were not collected, the account was automatically referred to a debt collection agency.
“I was amazed that after the credit card firm told me the situation had been resolved it was actually getting worse. I looked on the Internet and found a website created by the government called identity-theft.org.uk. The advice on the site told me that I was not liable to repay this money, as it had been reported as identity fraud and there was no proof the debt was mine.
“I insisted the credit card company contacted the debt collection agency immediately to make sure they didn’t issue me with a CCJ. I also demanded that they write to me to confirm that I was not liable for the debt. I told them that I would be making an official complaint to the Financial Ombudsman Service if they didn’t do this. That seemed to do the trick.”
Resolution - at LastFive working days later, Kelia, got a letter from the credit card company to say that the account had been dealt with my their fraud department and had been settled. Kelia then contacted the debt collection agency who confirmed that she would not be expected to repay the debt. Kelia was mightily relieved, although still concerned at how serious the situation become.
Kelia said: “with hindsight I was probably too trusting that the credit card company would resolve the situation. I should have got them to send me written confirmation that the credit card debt was no longer linked to me, and I should have then requested a copy of my credit score to make sure that it was not still on my credit history.
“I still don’t know how the thieves managed to set up a credit card in my name, but I am very careful now in case it happens again. I shred all my financial documents, rarely use my cards for Internet shopping and I always look over my shoulder when I’m withdrawing money from an ATM.”