Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

The MoneySaving Forum: join to chat & swap tips with other MoneySavers. Learn how in the Forum Introduction Guide

ID Fraud Protection

Cut the costs of ID theft cover
Laptop with chains

Scams to grab personal details are big business for tricksters and have stoked ID fraud fear up to fever pitch. But is there really anything to be afraid of? And what can you do to protect yourself?

There are several tips and tricks you can use to minimise the chances that fraudsters will get your details. Our Q&A below explains it all

Scams to grab personal details are big business for tricksters and have stoked ID fraud fear up to fever pitch. But is there really anything to be afraid of? And what can you do to protect yourself?

Our Q&A below explains it all.

What is ID fraud?

It's when a criminal steals your identity and uses it to apply for credit and services, leaving you to foot the bill.

It can be as simple as going through your rubbish bags, finding your old letters and bank statements and then applying for financial products using your details.

Some criminals sweep personal details from social media accounts such as Facebook, LinkedIn or Twitter, to build up an even stronger profile of your identity, so be careful what you publish.

But actually, you're rarely liable for cash which is fraudulently spent, providing you can prove it wasn't you and that you haven't been negligent.

Why is it a problem?

It's a nightmare to sort out and can leave you out of pocket. ID theft can also lead to unpleasant encounters with debt collectors, court actions and problems getting credit or a mortgage. It's usually stressful as well as time-consuming.

So, while it's important to be concerned, taking the same sensible precautions as normal is what counts. Crucially, banks cover the cost of ID fraud as long as your negligence didn't let the fraudsters get the PIN.

Banks say that if your PIN is easily guessable, eg, 0000, 1234, or your date of birth, they won't pay out on any fraudulent transactions made on your card. If it's easy - change it!

How do I protect myself?

Anti virus softwareThere are a number of preventative measures:

Keep your PIN safe

Get a shredder

Lock down your phone

Protect yourself online

Always check bank statements

Regularly check your credit reference files

The prime worry is that criminals will take your identity and use it along with other information to build a new profile, apply for new products in your name, which will go on to your records and ruin your credit history. Yet as long as you take sensible precautions, the risks are limited.

How does ID fraud work?

Phishing There are two ways that fraudsters normally operate:

Phishing - getting you to give up your details

First, they try to get your PIN or password by what is known as 'phishing'. This means they set up websites, or directly contact you by email, phone or post, claiming (and looking/sounding) like they are genuinely from your bank, and they ask you to enter/tell them your PIN.

If it works, they'll have all they need to access your money, and theft is easy.

So there's a very important golden rule. No matter whether it's a traditional letter, email or a phone call:

NEVER EVER EVER EVER give anyone your PIN or password.
Don't do it, don't think about it. Always assume it's a fake.

Sadly, the banks are culpable here. They do sometimes call and request some personal details or passcodes, and this doesn't help matters. Yet we have to protect ourselves and not rely on the banks. Having said that, no bank should ever ask for your PIN.

Even if you think the contact is genuine, while it's a hassle, just don't give them an answer. Instead, use what you already have stored as their correct phone number, website or postal address, and contact them back. Then you can be sure you're dealing with the correct people.

ID fraud - using your identity to get credit

ID theft Second, fraudsters may apply for products using your identity. To spot this, regularly check your credit reference files, which contain all data passed on by banks about how you do your banking.

If someone is stealing your identity, this is where you'll spot any products listed that you never applied for.

You should check your credit file at least once a year. Read the Credit Rating guide to find out how. With cashback sites and free trials, you can even get paid to check.

Unfortunately, many people don't take this precaution, leaving themselves hostages to fortune. Always, always check your credit file at least once a year. Otherwise fraud can continue for years without you knowing.

The same applies if you receive goods or services you haven't bought, or are notified you've been accepted for financial products or phone contracts that you didn't apply for. All these are warning signs someone's been using your identity.

If you think you've been a victim of fraud, report it to ActionFraud (tel 0300 123 2040), the UK's national fraud reporting centre. It may also be able to offer help and advice on what to do.

Do I need ID fraud insurance?

No no no no NO!

An entire industry has built up selling us the fear of ID fraud, and then trying to sell us insurance against it. In some ways these companies are almost, although not quite, as bad as the fraudsters themselves. Many don't mention that ID theft insurance only covers the cost of salvaging the mess, not the money lost through the fraud.

Most non-high net worth individuals don't need to pay for these expensive insurance policies. While ID fraud is a hassle, you're covered by the banks unless you're culpable.

ID fraud insurance should be differentiated from payment protection insurance, which is commonly sold with credit cards. They're not the same thing.

If you think you've been mis-sold identity theft insurance then you could be due compensation. A company called CPP, plus banks that mis-sold identity theft and card protection insurance, set up a redress scheme (now closed) to compensate customers. Read the Reclaim CPP Card Protection guide for full info on the mis-sold product and what you need to do next.

Can I get more protection for free?

ID fraud protection should come automatically with all credit cards, but some give a little more.

If you have the Capital One Aspire Elite* credit card (annual fee £120, 19.9% rep APR), or apply for a new one, you'll get a free subscription to its ID Fraud Alert service. Importantly, this alerts you when changes are made to your credit record.

The card's hideously expensive, and you need to earn £50,000 and be a homeowner to get it. If this isn't you, and you only want the ID Fraud protection, it's cheaper to sign up to alert systems offered by credit reference agencies.

Aqua credit card customers get automatic protection provided by Noddle, worth £80 a year. This includes the Noddle credit report, alerts and the improve service, which gives you tips if your credit score is below average.

Bear in mind the Aqua Classic*, Aqua Advance* and Aqua Reward* cards have quite a high APR (all are 34.9% rep APR) in comparison to others, but the major perks are the free monthly credit reports for life and the alert system which instantly notifies you if someone tries to open an account in your name.

Full details: Aqua credit cards

Full details: Capital One Aspire Elite

Free ID fraud assistance for Direct Line home insurance customers

Most credit card providers will monitor your account for suspicious activity and will contact you if there are transactions that don't fit in with your usual spending patterns to check they are legitimate. However, this is not a failsafe so it's important to check your statements, and report cards missing as soon as you realise.

Too late! I think my ID has been stolen

Need instant help? If you think you've fallen victim, Experian's* CreditExpert monitoring includes access to an ID fraud protection helpline. This costs £14.99 a month, but it offers a free 30-day trial to new customers. So if you need it, simply sign up to the service, use the ID fraud helpline and then cancel the service before the 30 days is up. See the Credit Scores guide to find out how.

If you've noticed unusual account activity and genuinely suspect someone is using your identity to apply for new products, then contact the fraud prevention service CIFAS, and ask it to put a 'protective registration' on your credit reference file. This costs £20 and alerts all lenders who see it to carry out further checks before approving credit applications.

However, don't use this lightly. Getting Protective Registration on your files will slow up any credit searches, as your name will be flagged up, but this won't stop you from taking out products, it will stop the fraudsters.