Like Spyblog, I noticed Home Office Minister, Andy Burnham, out and about yesterday on the breakfast TV circuit hawking the government’s latest ‘research’ into the supposed costs of identity fraud. The news is, of course, ‘bad’ – it always is when the government are trying to justify unpopular measures and drum up support for something by trying to scare the bejeebus out of the general public.
So, of course, the estimated costs of identity fraud to the country have gone up, from the last discredit figure they were hawking around – £1.3 billion – to a new and equally discreditable figure of £1.7 billion.
And the solution to all this – well identity cards of course. And boy does Burnham talk a load of bollocks on that subject when he gets going.
Of course, his brief interview on the BBC Breakfast sofa, with Dermot Murnaghan, was prefaced by the obligatory cautionary tale of a couple who had their internet bank accounts were looted by thieves, with suspicion falling on their recycled rubbish as the source of the information used to get at their accounts; but where Murnaghan, to his credit, tried to point out that ID cards offer no protection against this kind of fraud all he got in return was a load of bullshit about biometrics – which Burnham thinks will enable us to ‘own’ our identity – and a bunch of waffle about preventing multiple ID registrations, neither of which were relevant to the question. Classic politico stuff – answer the question you wanted to be asked, not the one you were actually asked.
All this achieved was to point up the problem with Breakfast TV as a medium for this kind of discussion. At most, each interview segment lasts 4-5 minutes, often with a 30-60 second introductory film, interspersed with all the regular features – headlines, news round-up, sports news, local news, brief review of the day’s papers, all running to an hour-long rolling cycle and leaving no time for the interviewer to mount follow-up questions or challenge a politico when they start spouting crap. All of which is why, I suspect, the Breakfast TV gig is far more popular with politicians than an appearance on Radio 4’s Today programme or an encounter with Paxman on Newsnight, where the format allows time for journalists to get their teeth into the interview.
It says a lot about the attitude of senior politicians to political debate that many of them now spend more time glad-handing the like of Richard and Judy than they spend appearing on serious news programmes or discussion programmes like ‘Question Time’ – speaking of which, wasn’t last night’s show a major disappointment. Not only did they put the pretty boy Tory wannabe ex-soap actor and failed pop star, Adam Ricketts, on the show – and isn’t he an irritating little squit – but the rest of the panel was such a yawn fest that it was barely worth watching at all. What happened to the great QT tradition of feeding the idiot/newbie to a heavyweight? Surely QT could have got someone like Tony Benn on the programme to give Ricketts a real test of his ability as a politico rather than the dull and uninspiring bunch they did put up
Anyway, enough bitching and moaning for now, back to the government’s identity fraud figures, which as they released them into the public domain, deserve as rather closer look.
2 February 2006
Association of British Insurers – £22m
A number of insurers (representing approx 36% of the industry) estimated that their financial loss in 2003 due to identity fraud was £7.9m, which translates to £22m for the industry as a whole.
Not only is the total figure given an extrapolation from a sample which assumes uniform rates of fraud across the industry sector – which may not be true – but no definition is give as to what the ABI classes as identity fraud.
This figure could relate to fraudulent application for insurance, where a false ID is used to obtain a policy against which a false claim is then made, but could also include other forms of fraud against which ID cards would be useless, the obvious one being motor insurance fraud where a driver involved in a minor road traffic accident provides false information to the other driver involved either to avoid a claim against their insurance or because they are not insured, leaving the other drivers insurance company to pick up the bill for repairs.
Likewise, it is not clear from this report whether the figure quoted relates solely to the material costs of fraud or whether it includes the operational costs of investigating fraudulent claims, which is likely to be near enough a fixed cost irrespective of the introduction of ID cards
APACS, the UK payments association – £504.8m
Losses resulting from plastic cards being used by criminals pretending to be the rightful owner or by criminals using a fictitious identity.
This figure comprises:
(i) Counterfeit (skimmed/cloned) cards – £129.7m
(ii) Cards lost or stolen – £114.4m
(iii) Card not present – £150.8m
(iv) Mail non-receipt – £72.9m
(v) Fraudulent applications – £13.1m
(vi) Account takeover – £23.8m
Straight away we can remove ‘card not present’ fraud from these figures as ID cards will do nothing to tackle that kind of fraud. In the case of card skimming/cloning, lost or stolen cards and mail interceptions, is it not the case that these are all forms of fraud that ‘chip and pin’ is expected to address and with that in mind, where are the benefits that we are constantly being told that the move to ‘chip and pin’ will bring reflected in these figures?
In fact, as this press release shows, the figures quoted above appear to be from last year (2004) – although the government’s quoted figures for counterfeiting and lost and stolen differ somewhat from those quoted by the industry here, the total costs in each report (£244.1 million) are identical.
What this press release does show, however, is a drop in the level of card fraud for the first half of 2005 of £36 million against the same period in 2004, made up of a 31% drop in fraud by counterfeiting and a 27% drop in fraud using lost and stolen cards, a cut which, if extrapolated across the whole year at the same level, would give a total annual figure for last year of £173.3 million. However even the assumption there may be invalid and undervalue the impact of ‘chip and pin’ on fraud as it fails to take into account any growth in the use of the system during the second half of last year, which could result in further reductions in such fraud from its 2004 levels.
Chip and pin is by no means foolproof but it is having an impact and, interestingly, the press release includes this comment:
Other types of card fraud, such as identity fraud and card-not-present fraud, are being tackled by retailers and banks through a number of initiatives. These include verifying the cardholder’s address and cross-checking a card security code to combat fraudulent transactions made over the phone and internet; production of training manuals; multi-sector working groups to address practical solutions and research into hand-held readers that could be used in the future for card-not-present payments.
This appears to suggest both that, in the eyes of the industry, identity fraud is seen as being distinct from counterfeiting, lost and stolen card fraud and card not present fraud, casting further doubts on the government’s figures which lump all these kinds of fraud under the general heading of identity fraud. Equally, the industry is clearly – and sensibly – working on a range of anti-fraud measures which do not rely on any future Identity Cards.
On that basis, it would appear that the vast majority of the £504.8 million for card fraud included in the government’s figures is of highly dubious provenance and has been included to artificially inflate the headline figure for identity fraud as a whole
Audit Commission – £15m
Audit Commission not included in 2002 Study. Estimate of loss to pensions schemes due to identity fraud (extrapolated from Audit Commission National Fraud Initiative figures).
This one is interesting to say the least.
The fraud being highlighted here is, from the Audit Commission’s own report, which is based on 2002 data, is that of continuing to claim against occupational pension schemes after the death of the beneficiary. First and foremost, that is not identity fraud, rather it is a reporting fraud based on a failure to notify a change in circumstances.
Second, the actual figures quoted in the report for this kind of fraud are only £5.7 million, an increase over the previous year’s figures (2001) of 53% but one that is largely accounted for by an increase in the number of pension schemes participating in the Audit Commission’s review from 2.8 million (2001) to 3.8 million (2002).
The extrapolation here appears to be based broadly on the assumption of a similar level of growth in this form of fraud over at least the succeeding 2-3 years, which assumes both that rate of fraud are uniform across the board and across all such schemes.
It seem to me that here, the government is simply pulling numbers out of their arse
British Bankers’ Association
Figures for card fraud included in APACS totals. The BBA does not collect statistics on identity fraud. Figures from its members for card fraud are included in the APACS figures.
Already dealt with
Building Societies’ Association – £3.1m
A number of building societies representing just over 50% of the industry responded to a survey and estimated their financial loss due to ID fraud. The BSA extrapolated figures for the sector as a whole and estimate that this translates to approximately £3.1m losses due to ID fraud over the past year.
Again, no explanation of the nature of the fraud and therefore no basis on which to assess whether this is relevant to identity cards
CIFAS – The UK’s Fraud Prevention Service – £2.3m
This represents the cost of identity fraud to the retail sector. CIFAS figures have only been included with respect to the retail sector. This avoids double-counting on contributions made by other sectors directly.
I can only assume this to be losses to retailers arising from unsecured payments, i.e. where the retailer has been unable to recover their losses via chargeback from the payment verifier – again its not clear that identity cards would have any impact on this kind of fraud
Department for Constitutional Affairs
£29.9m – Unpaid fines due to “tracking