Is ID fraud insurance something you need?

Have you been given the ID fraud insurance hard sell? Is ID fraud insurance something you need?

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A couple of weeks ago I was contacted by a SavvyWoman user who said that he (yes, he!) had been given the hard sell on ID theft insurance by his card company. Now CPP, one of the big providers of ID fraud insurance, is being investigated by the Financial Services Authority (FSA) over concerns of alleged sales ‘failures’.

Is ID fraud insurance something you need?

I’ve always thought that ID theft insurance is something that’s rarely worth buying. And I have been on the receiving end of a sales pitch some years ago. So, is ID fraud cover worth the money and, if not, how can you protect yourself?

Why is CPP being investigated?

CPP is being investigated by the FSA over alleged failings in sales calls to customers. CPP’s shares fell sharply when it made the announcement that it was being investigated.

SAVVY TIP: In 2013, the FSA became two separate regulatory authorities: The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).

  • CPP has stopped selling identity theft insurance. The group says that while it contests some of the concerns by the FSA, it’s suspended telephone sales of ID fraud insurance.
  • CPP will redesign its product and start selling again. CPP said it would remove the ‘insurance component’ of its identity theft cover. It planned to start selling the redesigned product in around six weeks.

SAVVY TIP: CPP says it’s committed to running its business with the highest levels of integrity and treating its customers fairly. It also says that all agents undergo rigorous FSA compliant training.

What is ID fraud insurance?

Identity fraud insurance policies may vary slightly but work in a similar way. You’re generally not offered a refund of money you’ve lost (because that will be refunded by the bank or card company). It typically costs around £60 a year.

SAVVY TIP: Banks and card companies have an obligation to refund any money that’s been stolen from your account unless you’ve been grossly negligent with your details. Normally this means that you have to have given away your PIN details. If you’ve been a victim of fraud of theft, technically you may be liable for the first £50 before you tell them about the theft but most banks refund this as well.

  • You’re normally offered expenses cover. This pays for the costs you may incur in repairing your credit record and ‘clearing your name’.

SAVVY TIP: These days, you get more help from the credit reference agencies than was the case in the past. You only have to contact one of the four credit reference agencies (CredivaEquifaxExperian, and TransUnion) and they will tell the other three agencies. All the credit reference agencies have ‘victims of fraud’ teams. They will help you repair your credit reference file and will deal with lenders direct on your behalf.

Useful links:

Identity fraud explained — guide from Experian (opens as a pdf).

Preventing identity fraud

It’s important that you keep your personal details safe but there are other steps you can take:

  • Keep your personal details safe. Don’t pass on your personal details to anyone you’re not familiar with or can’t check out — especially online. If you get a suspicious email, hit the ‘delete’ key.

SAVVY TIP: Many of us are familiar with ‘phishing’ scams, where fraudsters send emails that look like they’re from a bank or finance company. In the early days, many were decidedly amateur but now they’re much more convincing.

  • Don’t give away your pin or password details. Banks quite often ask customers for part of their password over the phone (even if it’s the bank that’s called them!). So, I can completely understand why some people end up giving valuable information to fraudsters over the phone. But banks will never ask for entire passwords (normally only two characters from it). And they certainly won’t ask for your PIN.

SAVVY TIP: If you’re not sure whether you’re talking to someone genuine, ask for a number. Check that the number is genuine and call them back.

  • Install an anti-virus software package and firewall on your computer. You don’t have to spend money on them, providers like AVG offer free software that you can use for a limited time.

SAVVY TIP: Try the website Action Fraud for more useful tips.

  • Be protective of your personal details. Social networking sites are a great way of keeping in touch with your friends, but they’re also popular with fraudsters (and not because they want to improve their social lives!).
  • Unless you use privacy settings, up to a billion internet users could see your information.
  • Be wary of new ‘friends’ who seem to take an unhealthy interest in finding out personal details about you and don’t accept connections from people you don’t know.

Related articles:

5 steps to take if you’re a victim of ID theft or ID fraud

Contactless cards – how to avoid contactless card fraud

Paying by bank transfer – are you protected if there’s a problem with a phone or online payment?

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