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Unfair 'blacklisting' due to ID fraud set to boom

Press release: 28/04/2009

  • Credit ‘blacklisting’ as a result of identity theft set to rise by 440,000 over the next five years (1).

  • One in four Brits say that they have experienced credit-related problems for no valid reason (2).

  • Victims face an average cost of over £2,100 to clear their name (3).

The number of Brits whose credit rating has been badly damaged by identity theft is likely to almost double within the next five years, according to a new report (4). This equals 240 people a day being affected by the problem.

New research by home insurer LV= shows that nearly half of all Brits (46%), equivalent to 21 million adults in the UK, have experienced some sort of credit problem (5). Of those experiencing problems, 27% blamed mistaken identity or being linked incorrectly to another person, and 29% said they had no idea why they had encountered a problem.

LV= is today warning people that if they believe they have been refused credit unreasonably, they should investigate it further. It could be a sign that they have become a victim of identity theft.

To help assist the growing number of people affected by this problem, LV= home insurance now offers customers free access to an Identity Fraud Helpline. The helpline is staffed by specially trained expert advisers who will explain what people can do if they think they have been a victim of identity fraud.

The LV= research, undertaken by the Centre for Economics and Business Research (CEBR), includes views from over 6,000 adults who were questioned about their experiences in applying for credit cards and other services. The research shows that as many as half a million adults (6) have been ‘blacklisted’ as a result of being hit by identity fraudsters, with the figure predicted to rise by a further 440,000 over the next five years.

The full repercussions of being targeted by identity fraudsters include being refused banking services such as a credit card (40%), having to pay legal fees to sort the problem out (8%) and even being denied a mortgage (6%) (7).

In the past decade identity fraud cases have rocketed, rising on average by 33 per cent annually for the past eight years (8). The research also reveals that victims of identity fraud face costs of over £2,100 to clear their name.

Mistaken identity is also a key driver for people being unfairly refused credit. The LV= research shows that 16% of those experiencing problems blamed a previous resident of their home, 3% said the problem lay with their ex-partner and 1% put it down to having a similar name to someone with a bad credit history.

Previous occupants of a property can also cause problems with more than a quarter of people (27%) receiving bills meant for a former resident, one in ten (9%) receiving a court summons intended for a previous occupier, and 8% even having bailiffs knock on their door looking for someone who lived there before.

John O’Roarke, managing director of LV= home insurance, said: “In the last ten years we’ve seen a massive increase in the number of people targeted by fraudsters, illustrating the importance of vigilance in protecting personal information and monitoring for any problems that might prove to be a ‘symptom’ of identity theft.

“Our research shows that an unfair credit rating is a common problem for many and more worryingly, identity fraud is likely to rise sharply in the coming years. That’s why we’ve set up the LV= Identity Fraud Helpline, free to all our home insurance customers, so that anyone who thinks they might have become a victim of identity theft has somewhere to go for help and support.”

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1. CEBR prediction from the LV= research report entitled ‘Blacklisted Britain’
2. 46% of people said they had experienced credit problems. Of these, 56% 29% said they didn’t know why, while 27% said it occurred through no fault of their own, equivalent to 25% of the total population or one in five people.
3. Opinium research conducted for LV= among 6,000 adults between 20 and 27 March 2009 found that the average cost of clearing your name as a result of identity fraud is £2,174.
4. According to the Opinium research 2% of people have been a victim of identity fraud. The UK adult population (over 18) is 47.9 million (derived from the Labour Force Survey); 2% of this is equivalent to 508,000. CEBR predicts cases will rise by 440,000 cases in the next five years, i.e. the figure will almost double.
5. Credit problems are defined here to include being denied a loan (including mortgage), credit card, utility, or service contract e.g. mobile phone or broadband, being investigated by bailiffs, incorrectly receiving a court summons or unpaid bills.
6. See note 4 above.
7. Responses taken from the Opinium research.
8. CEBR analysis based on CIFAS data: in 1999 there were 9,000 reported cases of identity fraud, rising to 77,500 in 2007.