By Andy McCue, 2 February 2006 16:30
NEWS Government claims that identity fraud in the UK costs £1.7bn a year have been exposed as inaccurate, with the real figure less than a third of that total, a silicon.com investigation has found.
The Home Office claims ID fraud "puts a £1.7bn hole in Britain's pocket" but many of the figures used to come to that amount either have little to do with ID fraud or have been exaggerated.
The first misleading calculation is the inclusion of figures from card payments body APACS totalling £504.8m. The number equates to the simple theft of a credit or debit card as well as genuine ID fraud.
APACS spokesman Mark Bowerman told silicon.com that ID fraud actually cost the payments industry just £36.9m in 2004 and that for the first six months of 2005 it has actually dropped by 16 per cent, mainly due to the introduction of chip and PIN.
He said APACS classes ID fraud as when someone's account is actually taken over by a criminal or a new account is opened up using someone else's name.
"The Home Office's definition of ID fraud doesn't match our definition. We class it as a more serious crime that involves a great deal more hassle than just having your card stolen and having to phone up the bank to cancel it," he said.
Today's figures include a total of £395m for "money laundering" despite the Home Office report admitting the overall size of money laundered in the UK is not known and that "no figures are available currently on the proportion of money laundering that relies on identity fraud".
Missing trader VAT fraud totalling £215m a year at HM Revenue and Customs (HMRC) has also been included in the grand total by the Home Office. But a HMRC spokeswoman told silicon.com that the figure was only "illustrative" as it is difficult to put a value on the actual ID theft element of the offence.
Another figure included by the Home Office is £1.73m for the Police Service, despite an admission that "it is not possible to estimate the overall cost of identity fraud to the Police Service". But the Home Office has decided that the 15,000 to 20,000 days it takes police to deal with anyone they term a 'bogus caller' - such as conmen trying to gain entry to homes - can be classed as identity fraud.
The cost of administering security and ID checks and combating fraud on passport applicants by the UK Passport Service (£62.8m) is also included by the Home Office, despite that being a preventative measure and not ID fraud in itself.
When all these non-ID fraud figures are taken out of the Home Office calculations the actual total annual cost of ID fraud to the UK is just £494m, although £372m is an undefined figure given for losses due to ID fraud across the telecoms industry.
A Home Office spokesman defended the figures. He said the exercise is not about justifying the introduction of ID cards. He admitted the figures are not an "exact science" and that the methodology has its limitations but said the £1.7bn is still a "conservative estimate".
He said: "We do need a better way of looking at the cost of ID fraud but these are still big numbers and no one would deny that it is a problem. People do need to be more careful about looking after their personal details."
Comments
There are 17 comments. Join the discussion
1. anonymous
Will Home Office Minister Andy Burnham resign if the "cost to the economy of identity fraud", as calculated for the 2002 £1.3 billion and the 2006 £1.7 billion figures rises to say say, over £2.3 billion a year ?
Astonisshingly, the Home Office is counting the
£56.2 million "Approximate cost to IND of undertaking enforcement
activity against individuals who may be involved in
some form of identity theft or identity fraud,
potentially involving document abuse."
and the £62.8 million "The cost to UKPS of measures to counter identity fraud when processing applications for UK passports
issued in the UK."
which the proposed ID Card / National Identity Register will not reduce: there will still need to be people and resources available to check *foeirg* passports and identity documents.
as part of the £1.7 billion total.
If these fixed , overhead costs enforcement costs are to be counted in this way, then the total figure will rise to at least £2.3 billion aa year, due to the cost of the ID Card scheme itself.
Why have the Home Office not conducted proper quantitative research using actual crime statistics relating to actual cases of fraud ?
2. Richard
Cost of bogus government figures?
First we pay for civil servants to compile these bogus figures: We then waste precious time and effort refuting them: Soon we'll have to fund crazy ID cards: We have those ridiculous credit card adverts on TV...
All from the bogus 45 minute government.
3. Ruth
What's the old phrase 'Lies, damned lies and statistics'? Now to be replaced by 'Lies, damned lies and Labour lies'? No change there then!
4. Hugh Turner
At £35 per person pa, fraud sounds like a cheaper option than ID cards at £50 per person per year.
5. David Bridle
It's obvious the figure has been grossly inflated to justify ID cards. A credit card of mine was used fraudulently after the provider changed the address and sent a statement to someone I'd never heard of 250 miles away. They managed to spend £6,000 with it just by having the number and my name - no expiry date, no security number. Not sure how me paying through the nose for an ID card to prove who I am would have done anything to stop that - or any other form of online/remote ID theft crime.
6. John Macmillan
If these clearly incorrect figures are not deliberate it means there is gross incompetence on the part of the government body that provided them.
Assuming it is not incompetence then this is obviously a deliberate attempt to generate more fear to justify the ID card.
No statement from this government on any law and order, `freedom' or security issue can be trusted.
Keep the people afraid.
7. Noeid Kaard
Will the National ID Card replace the Digital Cert needed for electronic Filing of Tax returns etc?
If it does not that mean that the Government charges people twice just to prove their identity. The digital certs from Equifax and the like for web browsers only last a year and cost around £30 a go.
If the Nat Id card can replace digital cert then that might be a selling point.
8. Jerrold Baldwin
‘Fraud’ – an interesting word, according to Wiktionary: ‘an act of deception carried out for the purpose of unfair, undeserved, and/or unlawful gain, esp. financial gain’; ‘such an act injurious to another’; ‘one who performs such an act’.
So in this case, it is the Government that has attempted to perpetrate a fraud. It is yet again trying to make political gain by deceiving the electorate. The potential cost of this fraud: the waste of £30 billion of taxpayers’ money to be spent on ID cards that will be used to bolster Blair’s unnecessary, yet worrying, police state.
New Labour’s propaganda machine makes the cost of the criminals’ activity seem quite trivial. As he is ultimately responsible, Charles Clarke should resign.
If this new ‘bombshell’ statistic is so important, why does it not appear on the home page of the Home Office website (whilst it is doing the rounds of the TV stations)? The mass media (especially the BBC) should be responsible enough to test Government ‘information’, and if necessary produce caveats, before they circulate these distortions to an audience that may not be able to discover a fraud by itself.
Qui custodiet ipsos custodes?
9. anonymous
Is it just me, or has no one realised that there are pseudo identity systems already out there? Driving licenses, National Insurance; wouldn't it be more efficient and cost effective to improve one of these already existing forms of ID to provide the type of information being suggested? Why re-invent the wheel, when there are systems already in place that are probably 80% there?
10. Mike Bibby
These figures are an obvious fraud.
If the lie is deliberate then the government deserves a vote of no confidence followed by an election.
If it is not a deliberate lie then the government are so stupid that they need to be locked up for their own protection.
11. James Button
So ID cards will increase identity theft costs by several billion pounds, because their cost ( issue, admin, and checking ) will be included in the government calculations.
And what about all those tax credits paid to those tax office 'employees'
is that included in the government figures.
12. Peter Croft
Well done for exposing this - excellent journalism!
13. Jim Davies
The main identity fraud here is in the fraudulent misidentification of the crimes and figures as £1.7bn of identity fraud.
Burnham - Go directly to jail. Do not pass Go. Do not collect £200.
14. Ian T.
Having been a victim of ID fraud - 4 new credit cards, 2 new contract mobile phones and £25,000 credit card bill later - I know what a real pain in the proverbial it can be.
But the government adding any figures it thinks are related to fraud to the actual figures is just wrong - no matter what the reason. We are meant to live in a democracy so information should be available untainted so we can all come to our own conclusions.
Unfortunately I think that ID cards will come into being, but as David Bridle states it won't put a stop to remote ID theft.
15. anonymous
In the report yesterday about this same Home Office the head of the NAO said the department had not maintained proper financial books & records and hence could not reach an opinion on the "truth & fairness" of the HO accounts.
Perhaps the NAO should investigate any so called facts and figures that emanate from the department......!!
16. Drew Edgar
Where has all this alleged money gone .......
AH! .....
With the "WEAPONS OF MASS DESTRUCTION" no doubt?
17. zakala
Not one of the instances of "ID fraud" that I know of personally (either I, my family of a personal friend we're victims) would have been defeated by the ID card.
Nor do I see how most of this fraud, eg bogus phone contracts to old addresses or suspect credit card transactions, could be stopped unless, of course, the govenment is going to force retailers to refuse any transaction unless the ID cards is seen. That might be difficult for distance purchasing though...
I'd agree with a previous commentator on this site who suggested that providing everyone with a digital certificate would probably do far more to cut fraud costs.