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What is identity fraud?

What would you do if your credit cards were stolen? If goods that you did not purchase were charged to your credit accounts? If unauthorised credit accounts were opened in your name?

These actions are typical examples of identity fraud, where criminals steal victims' identities in order to take over their credit accounts or to open new accounts in their names.

Most of us have never experienced identity fraud and many of us may be unconcerned and believe we're not affected by it. But we are.

Identity fraud affects everyone
Identity fraud is on the increase and is the UK's fastest growing crime. According to the Cabinet Office, identity fraud costs the UK at least £1.3bn every year and is one of the more difficult frauds to combat. The trouble with a successful fraud is that both consumers and lenders are fooled. Although lenders are employing ever-more sophisticated methods to spot fraudsters, people who are targeted by fraudsters often take up to 14 months to realise they are victims of identity fraud.

When criminals buy goods and services on credit using false information, we all pay through higher prices and more expensive credit terms, even if our own accounts are untouched. And when someone is victimised by a particularly successful scam, criminals are more likely to continue cheating others using similar fraudulent operations.

Some typical scams
The rise in Internet usage has meant an increase in the number of online scams. Here are some examples:

The Nigerian scams
The fraudsters send emails to people telling them they can release a fortune that is tied up in an African bank by allowing them to transfer the money into the person's account. In return, the person will be given a share of the profits.

Another variation on this is an email supposedly from the widow of a high-ranking Nigerian official pleading for the recipient to help her access her late husband's money. Again, the recipient is asked for their bank details.

The catch with these scams is, of course, that rather than money going into the person's bank account, the fraudsters clean them out using the details sent to them.

This form of fraud has made headlines recently, with Barclays, Lloyds TSB, Natwest and even the Bank of England affected.

Barclays customers were sent emails saying that the bank was making technical changes. There was a link to go to a page where customers were prompted to enter their account details

Lloyds TSB customers received emails saying their accounts would be cancelled due to a new security measure unless they went to a site and entered their details

Natwest, Halifax and Nationwide customers were sent emails saying they needed to verify their accounts by going to a site and entering their details. An email supposedly sent from the Bank of England urged people to download anti-virus software

The fraudsters set up "spoof" email addresses that look like they could credibly belong to the institution. Once they have received account details, they siphon money out via "mules" to their own accounts abroad. These scams are believed to be run from Eastern Europe.

Lottery and prize draw wins
Emails are sent out to people telling them they've won a lottery or prize draw and they need to send a payment for "administrative" or some other purpose in order to claim their winnings. Of course, there is no prize...

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