Identity theft on the increase

IDENTITY theft looks set to increase as credit and debit card companies get to grips with plastic fraud, a report warns today.

Market analyst Datamonitor said UK card fraud fell for the first time in nine years during 2003, dropping by 5% to £402.4m.

But Datamonitor warned that as it becomes more difficult for fraudsters to commit card fraud, they are likely to turn their attention to identity theft.

The practice involves a fraudster using someone else's personal details to apply for credit. Losses from the fraud rose by 44% during 2003 to £29.7m.

The group said the fraud was hard to tackle because it largely depended on how carefully individuals disposed of personal documents with their name and address on them.

Most people did not know they had been the victim of identity theft until they had a credit application turned down, or they accessed their credit record.

The group is predicting that levels of credit card fraud will fall yet further with the introduction of Chip and Pin cards.

The new cards aim to cut fraud by including a smart chip that can store information more securely than a magnetic strip, and by having customers verify a purchase with a four-digit number rather than signing a receipt.

Datamonitor said the reduction in overall fraud was due to a drop in the level of fraud committed on UK cards abroad.

It said that domestic fraud was still rising, with card-not-present fraud, counterfeit fraud and stolen cards accounting for more than 80% of total losses.