UK Liberty

ID fraud estimate fraud

Posted in ID Cards by ukliberty on October 10, 2008

Yet another fraudulent estimate of the cost of identity fraud.

Press Association:

Identity fraud costs the economy £1.2 billion every year, a Home Office report found [hat-tip FishNChipPapers]

Well, not so much ‘found’ as, ‘lied’ ‘made up’ ‘claimed’.

Because,

The latest figures take into account costs incurred setting up systems to prevent and prosecute fraudsters, as well as the financial loss to organisations.

It seems to me the cost of identity fraud and the costs of dealing with identity fraud should be given separately, but they are not. Well, the Home Office says that,

These are relevant costs as in most cases, these costs would not be incurred if identity fraud was not an issue and it is very likely that if organisations did not incur these costs, the financial losses to the UK economy would be higher as a result.

But we could easily ramp this total up (or down, depending on our motives) by deciding to spend, say, £2bn on combatting ID fraud.  If we did, would it be fair to say that ID fraud costs £3.2bn?  The ID card scheme is estimated to cost some £5bn  – would it be fair to say that this should be counted as a cost of ID fraud, and therefore ID fraud costs £6.2bn?  Of course not.

They are trying to obfuscate again.

Another issue is that some of this £1.2bn is either not related to ID fraud at all or it’s what we usually think of as plain old fraud, like not informing the government your wife has died and continuing to claim her pension, or evading fines by moving house and not giving the government your new address.  We have a problem if the Home Office really think that withholding a new address is identity fraud.  I suspect though that it’s more of a case of massaging the numbers.

  • Assocation of British Insurers, £31m – The cost of internal fraud through re-opening closed claims, dormant accounts and paying claims for personal gain. Also includes account takeover of life policies and cashing joint life policies (estranged spouses).
  • Audit Commission, £36m – Represents losses from public sector occupational pension schemes due to, for example, next of kin continuing to claim pension payments following the death of a relative.
  • Ministry of Justice, £35.8m – Cost relates to unpaid fines due to no trace of identity or address. This can be due to a number of reasons such as false or innacurate information being provided and offenders not attending court to verify their details.
  • British Cheque Cashers Association,  £0.4m – Estimated direct financial loss and  cost of prevention, detection, reporting in relation to cashing of cheques by someone other than the payee.

There’s also the same old problem with the  (£201.2m) figure from APACS in that it includes card-not-present fraud (a growing problem) and fraud at point-of-sale when no proof of ID is demanded (i.e. most occcasions here in the UK) – something that ID cards will have no chance of reducing.

As the Home Office admits about the figure for APACS, “As the banks’ fraud prevention and detection systems, the investigation processes and the supporting resource do not solely focus in isolation on identity fraud related crime, these figures can only be regarded as indicative.”

Well, it seems to me it’s arguable that they are even indicative.

(By the way, Telecommunications Fraud Forum, I’ve never heard of “Method of Operandi“.)

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