Inside Money: It’s A Steal Presenter: Lesley Curwen Listener: Robert Scott Producer: Jessica Laugharne Tx: Saturday 5 August 2006 at 1204 BST Rpt: Monday 7 August 2006 at 1502 BST THIS IS A TRANSCRIPT OF THE LONGER REPEATED VERSION CURWEN: This is a tale about a type of fraud where you, as the victim, suffer damage to your reputation. It’s also the story of one man, badly let down by the apparatus which dictates our financial standing and our ability to borrow money. He’s one of a hundred thousand people every year who find out that somebody has used their identity, to steal money in their name. The man in question is our listener, Robert Scott who works as an artist on the Isle of Wight. SCOTT: We’re just entering my studio which is where I work and sell paintings from. CURWEN: Robert, a father of two and a volunteer crewman on a lifeboat, is well respected in his island community. Two years ago, his tranquil life was shattered. SCOTT: I’ve had my identity stolen. The person who stole my identity has borrowed thousands and thousands of pounds in my name. I haven’t lost money directly but I found that my credit record had been left in ruins. Practical effect is I can not take out a credit card, my bank won’t offer me a loan. I’m financially closed down. CURWEN: Robert’s financial reputation was in tatters, and that had serious knock-on effects. It meant he couldn’t re-mortgage, and when he needed to buy a car, lenders gave him the brush-off. His only option, and a very expensive one, was to pay for it with a little-used credit card. He reckons, in all, he’s had to pay £2,000 in extra interest charges, because of his battered credit record. This experience made him so angry he decided to join Inside Money, to investigate the aftermath of ID fraud and the struggle to restore one’s status. SCOTT: It felt horrible, it felt dirty. I’ve been financially careful all my life and then to have this happen - well - it’s unspeakable. When your identity is stolen, the whole system lets you down. I’ve had this awful battle, I want to see things change and I’m hoping this programme will go a small way to doing that. CURWEN: Let’s first spool back through Robert’s story, to 2004. Out of the blue, he got a letter from a debt collection agency, working on behalf of a loan company called Private and Commercial Finance. Robert had never heard of it. And he’d certainly never borrowed the thousands of pounds the letter claimed. SCOTT: It was total disbelief and denial when I read it which rapidly goes to anger when it sinks in that these people are chasing me for real hard cash. I wrote them a long letter and I’d proved to them beyond reasonable doubt that it was not me who owed them the money. And they told me then and there that I had nothing further to worry about. CURWEN: But it wasn’t that easy. Over the next 12 months a flood of worrying letters kept coming from solicitors and debt collectors. One even threatened to send collectors to his house. EXTRACT FROM LETTER: “We intend to arrange a doorstep call by one of our representatives, unless within 7 days you respond to this letter and make specific proposals which are acceptable.” CURWEN: Robert Scott began to realise the awful truth: someone was pretending to be him, using his name to take out loans, from various firms including Private and Commercial Finance, leaving him to face the music from doorstep debt collectors. SCOTT: I’ve got children, what if these people came to collect when I was not at home and it was just my youngsters who had to deal with them. I phoned these people back, I did everything I could to convince them that it was not me which they should be seeking the money from and they answered: “everyone says that sir.” CURWEN: Now deeply concerned, Robert went to the police but the police said they couldn’t do anything without evidence on paper of the fraudulent loan applications – evidence Robert didn’t have. As far as he knows, the fraudster has never been caught. Eventually, he was advised to contact another company he’d never heard of: Equifax. It is one of three credit reference agencies in the UK. Each stores data on how well or how badly you’ve kept up payments in the past. They get paid by lenders like banks, credit card and loan firms, or mobile phone providers who will look up your credit record, when you sign up with them. You too can get a copy of your record from any of the agencies, by paying £2. Robert did just that. SCOTT: This is the credit report I’ve got back from Equifax and I’m leafing through the pages and my initial reaction was complete disbelief. There are things on here which I’d never even heard of, I’ve not seen before. CURWEN: There’s a loan here - payments one month in arrears - current balance £3,000 on that one. SCOTT: Yes £3,000 on that one. The next one down here is £5,600. I was being chased for approximately £20,000 from different sources at one time here. CURWEN: Despite being an innocent victim, it took Robert Scott a full year to persuade the loan company Private and Commercial Finance to do its part to wipe the slate clean on his Equifax report. Why had it not acted immediately? And why had it allowed the fraudster to borrow money in the first place? Robert really wanted to put these questions to the loan company himself. He was dismayed when it turned down our request for an interview and sent a statement instead. COMPANY STATEMENT: “Fortunately it is rare for a case to get through our anti-fraud measures as happened in Mr Scott's case. As soon as we were able to satisfy ourselves that this was indeed a genuine case of identity fraud, we took the necessary measures to ensure Mr Scott's credit history was not adversely affected by the activities of the fraudster.” CURWEN: This left Robert distinctly unimpressed. SCOTT: I’m disappointed that they weren’t able to come and talk to me. It took a letter from myself to their Managing Director to get action on this case. My opinion of them as a company isn’t very high and they’ve caused me a lot of harm, financial harm, upset, worry, lost sleep. It goes on and on. CURWEN: For a year, Robert had been shuttling back and forth between the lender and the credit reference agency, Equifax. At last he thought it was all sorted out. But no. His file was still showing one of the Private and Commercial Finance loans, because of a mix-up over a false date of birth given by the fraudster. To add insult to injury, Robert was asked to pay another charge to check his record had been updated. So how did Equifax respond to all this? Robert spoke to Neil Munroe, its Head of External Affairs and asked him why alarm bells hadn’t rung. SCOTT: On my credit record, there were two dates of birth against my name. Surely, that should have screamed to you that there’s a fraud taking place. MUNROE: I have to probably ask you to put that question to a lender in a way. We do our best when we receive data to actually make sure that it is consistent. But the problem we do have is that the data is provided by the lenders in a large number of cases and if they provide that information, for us to amend it would cause us to have problems under the Data Protection Act. CURWEN: But you can query it, you could have queried the fact there were two different dates of birth. MUNROE: We could do, but when we’re processing as many millions of transactions as we are processing, it’s a very difficult thing to do. SCOTT: Why is it my responsibility to correct the files, for me to do all the leg work. I’ve used your system and then I’ve gone back to you afterwards and said, “It’s still not right, I’ve still got wrong information on my file” and your customer service team’s answer to me was to, “go away and talk to the lenders.” MUNROE: Well I’m surprised and apologise for that response because you should have been offered a dispute process to be able to raise that. And as I say, I can only apologise. We do have a very large dispute team that is regularly in dialogue with all manner of different lenders for credit rejection, for ID theft and for ID fraud. So I can only offer my apologies for that. SCOTT: I’d paid for the original credit record and then to see the alterations your company asked me to pay a second time, do you feel that’s fair? MUNROE: I do understand that you did raise that query with us and we do in a number of cases when we hear that, we do respond and I think we did offer you a free second report to actually confirm they were done. SCOTT: I had to be very assertive with your team members to get that report. It wasn’t instantly offered. I feel that the moment there’s a problem raised on the credit record from thereon in you should be looking after me, the victim, by not charging me more money. MUNROE: I take that point. I’m sorry you had to argue so strongly about that. We normally try to be as sympathetic as we are but obviously that wasn’t the case and I do apologise for that. CURWEN: Shouldn’t it be automatic? MUNROE: I think that’s something we need to look at again because of this increase in the ID theft and fraud, that you know, we probably do have to look at those type of things. CURWEN: It’s a triangular relationship, isn’t it, between you and the lenders and the consumers. Do you think at the moment, the consumers are the ones finding it hardest to make their voices heard? MUNROE: I think that’s a fair point. I think there’s been a change in society really. I think because credit now is so much more important for people’s life styles so that when things do go wrong it has a greater impact, and I think therefore yes, consumers are probably the ones that are struggling in the three-way relationship, as you, as you put it. CURWEN: Robert Scott was beginning to see where consumers like him fitted into the picture of the credit industry. He had little control over his own data, and he even had to pay to see it. By the end of last year, Equifax had repaired Robert’s record. So, full of optimism, having seen an attractive credit card deal at HSBC, he went into his local branch to apply. SCOTT: I sat down with the manager opposite me, he turned on his computer, put the information in regarding a credit card which had 0% interest. It went very quiet, he just looked up and he said, “I’m sorry there is so much information here which is bad, that you will not be offered a credit card here today.” And at that point I nearly fell through the floor. It had taken me ages to sort out Equifax. He told me that there’s damaging information on another credit reference company called Experian. My heart sank. I had all that to look forward to all over again and I was feeling an inch tall. CURWEN: Remember I told you there are three credit reference agencies. Lenders can choose which one they deal with, so each of the three agencies has only part of the jigsaw of your credit record. They don’t all show the same information. Robert’s Equifax record was clean now and he also had an industry warning attached to it, which alerts lenders that he’d been the victim of fraud and they should be extra careful. That red flag was on his Experian record too - but so was something else - damning evidence connecting Robert to various addresses the fraudster had used. We took Robert to see Jill Stevens, the Director of Consumer Affairs at Experian. SCOTT: Jill, my credit report shows a huge list of addresses. What are linked addresses? STEVENS: When you apply for credit, a lender will look at everything on your credit report so that they can see whether or not you are going to repay what you’re asking to borrow. Now if you have lived at another address within the last six years, that will be linked on your credit report, but also, if you apply for credit from a different address, that is another way that a link will be created to that address and this is what’s happened in your case. CURWEN: So all these addresses were addresses that the fraudster used? STEVENS: Certainly, they were nothing to do with Robert himself, no. They were created by fraudulent applications for credit in Robert’s name. CURWEN: But why are they still there on his credit report? STEVENS: Well I’m pleased to say they’re not because I checked this morning and they’ve all been removed and Robert’s being sent a new copy of his credit report. SCOTT: Would it be coincidence that Experian have finally responded to my request after the BBC got involved? STEVENS: Well funnily enough yes it is a coincidence. When you first wrote to us in November, you should have been referred to our special victims-of-fraud service. You weren’t and I can only apologise for that. What’s happened is, you wrote to us again a few weeks ago, and this time your case was referred to the victims-of-fraud service who have sorted it all. They all have specialist training and will liaise on your behalf with the lenders involved and remove everything that relates to the fraudulent accounts from your credit report. SCOTT: So really what you’re saying, there was an oversight by Experian back in November, that my case wasn’t picked up and wasn’t sorted out then? STEVENS: Yes I am yes, and I’m saying I’m very sorry for it. SCOTT: Is it possible that credit reference agencies could notify people the moment a black mark appears against their record so that we’ve at least got a fighting chance of catching the people perpetrating fraud? STEVENS: We do actually do this but it’s a subscription service and it costs £5.99 a month. And we then notify you that there has been a significant change in your credit report and you can then go on-line and check it immediately and that is a fantastic way of being one step, perhaps not ahead of the fraudster, but certainly being such a small step behind them that you can do something. CURWEN: But would you be prepared to pay £6 a month Robert for the special alert? SCOTT: I feel that if I’ve paid all my bills on time, I’ve not defaulted on any loans, I shouldn’t have to pay to get information about myself. If I’ve not done anything wrong, why must I pay to get it put right? STEVENS: Well the statutory fee for getting a copy of your credit report is £2, that’s set down by the legislation. We obviously don’t make a lot of money out of this, we don’t make any money at all because it costs us more to send out credit reports and answer all the queries than the £2 we receive. CURWEN: So how do you make your money? STEVENS: We make our money from the lenders who actually use the information on our database. CURWEN: So really the lenders in effect are your customers. Does that mean that the consumer who’s caught up in the middle loses out? STEVENS: I certainly hope not because we actually spend a lot of money trying to make sure that consumers know what information is held about them. Yes we’re a business-to-business company in the main, but we do have interaction with the consumer through the consumer help service which is nearly 300 people who work there sending out credit reports, certainly answering lots and lots of queries and if information’s on your credit report that shouldn’t be there, it is in absolutely everybody’s interest to make sure that we remove it, and I promise you that is what usually happens. CURWEN: It was another dose of humble pie handed out to Robert Scott. STEVENS: I’ve now had an apology from Equifax and from Experian – for which I’m very grateful. Both are saying that I’ve slipped through the net. It might be more than a coincidence that there’s two separate companies both saying sorry, both saying that something has gone wrong with their systems. Perhaps both companies need to go back and assess their systems again. CURWEN: Well thankfully, the third of the three credit reference agencies, CallCredit, came up with a clean slate for Robert. But having to repair your ruined credit report is a symptom of a more fundamental problem – the way fraudsters can deceive lenders into lending the money in the first place. Certainly identity fraud is growing: the Home Office estimates it is costing £1.7 billion a year. The National Consumer Council recently produced a big report on this type of fraud. Robert heard from Anna Fielder at the NCC, about how lax some lenders can be. FIELDER: I was talking to a victim last week and she was defrauded and the fraudster went to the lender and gave his or her place of birth as Narnia and his mother’s maiden name as Aslan. Well what was that company doing? What sort of checks were they were doing? A lot of them now have this cavalier attitude that because when compared their loss with their vast profits, they’re not actually losing so much money, they don’t take proper action. But they should do because in the end we, consumers, pay the cost. SCOTT: What do you think is the role of the lenders in this huge mess? FIELDER: When a company is very good, which does happen, they immediately tell the victim, please go and check your credit record. But in a lot of cases, particularly in the cases of mobile phone companies, utility companies, that are not so experienced in this crime, the victims don’t get any advice or any support at all. They’re just told to go away or even worse, they can be told that they are lying, that they really did it but they are trying to get away with it. SCOTT: It’s a nightmare. I was completely out of control and there wasn’t anybody to go and give me assistance. FIELDER: Well I totally agree with you it’s a nightmare, you feel completely powerless against the system, nobody’s there helping you. So this is why we the National Consumer Council, are calling for a national victim support centre and what should happen under that, when it happens to you, you are referred by the relevant company to this centre and their job is to ascertain that you really are who you say you are and then give you a case worker that holds your hand, they contact each affected company on your behalf and then they have the power to obliterate the bad credit from your credit record. CURWEN: Who would fund it? FIELDER: What we are asking for is for the industry to fund it. The industry makes billions and billions of pounds in profit out of consumers. Such a centre will be a fraction of their total costs of what they lose. There is such a centre in the US. They’ve had a one-year pilot programme. It was so successful that they were permanently established and they now say that they’ve helped some 7,000 victims. So if they can do it over there, we can do it over here. CURWEN: Let’s examine that US organisation in more detail. Its director Anne Wallace went into a studio in Chicago to talk to Robert. SCOTT: Anne, when this happened to me I had no assistance from the industry here. What would have happened if my identity had been stolen in the States? WALLACE: Well here in the United States we have a new programme, an initiative called the Identity Theft Assistance Centre. It was started about three years ago as a consortium of the big financial services companies. It is essentially a call centre that talks to victims of identity theft who are customers of these member companies and helps them restore their financial identity. So, I’d like to think that if you had gotten a collection call say from this loan company, or you found out that the fraudster defaulted, you would have contacted that company, that lender, and if that lender was a member of ITAC, they would have referred you to our victim assistance centre. And what would happen at that point is we would pull up your credit report and walk you through that credit report and anything that you spotted that appeared to be fraudulent, we would have notified all of those companies of the apparent fraud. CURWEN: Is it right that Robert would only have had to fill in one piece of paper, a legal sworn document, to establish his identity and then the rest of the foot work would be done by ITAC? WALLACE: We have what’s called a uniform affidavit that our member companies have agreed to use. Now we have what, 48 member companies and they represent the biggest financial service companies in the United States - probably 60 % of the number of accounts in the country - and our member companies have agreed to use this uniform affidavit. So that once Robert had told his story to one of our members, he would not have to repeat all of those facts to another member. Is it a perfect nationwide system? No. But it is a huge step forward. SCOTT: That’s a fantastic service because when it happened to me I was left very much on my own and I had to catch up very quickly about the finance industry and credit records and fraud services. WALLACE: That’s exactly why ITAC was created because our member companies recognised that this was a terrible problem that each bank can help its customers internally but you can’t help them outside your own four walls and the companies in this country realised that they had to reach out and form this sort of circle and hold hands and work together to help their customers. CURWEN: So they’re footing the bill for ITAC. WALLACE: Yes they are. SCOTT: Most of the fraud against me was through a smaller loan company, would you still have been able to help me if this was a case in the States? WALLACE: Consumers can’t come to ITAC directly; a consumer has to be referred to us by one of our members. CURWEN: But could he actually use ITAC if the company wasn’t a member of ITAC? WALLACE: No. CURWEN: So, if the fraud occurred through a small loan company, which was not a member of ITAC, the victim would still have to cope on his own. But, at least America’s lenders have set the ball rolling to help consumers. Robert really wanted to talk to lenders here in the UK. In his mind they stood at the heart of the story - they unwittingly lent the money to identity thieves, and they had to sanction the change of records when fraud was revealed. He was still bitterly disappointed that the main lender involved in his case had refused to talk to him. Instead we talked to APACS, which represents the UK’s biggest credit card companies and banks, but not the smaller loan companies. Robert met Sandra Quinn, Director of Communications at APACS. SCOTT: Sandra. I’ve been the victim of identity theft and I’ve had no support from the lender do you think this is acceptable? QUINN: Obviously, I can’t talk about the very specifics of your case, Robert, but in general obviously not. We always say to customers, if you have a problem with fraud, fraud is being committed in your name, you know that you can come to your bank and they will help you sort it out. It’s one of the things that we guarantee under the banking code. We are extremely good at helping customers with any fraud problems. So to hear your case isn’t encouraging. CURWEN: You represent the biggest credit card lenders in the UK. It’s the lenders who are making the mistakes, aren’t they, they’re basically allowing fraudsters to get away with money but not helping the consumers whose ID’s have been stolen. QUINN: I think firstly, we have to look at the facts and on the credit card side the key thing is that application fraud there is down and has been down over the last two consecutive years. So increasingly our systems are working. We are being much more robust in how we review applications. Now that doesn’t help Robert’s case in any shape or form and I don’t want to shirk the issue. I think you’re absolutely right, lenders lend a lot of money. They have very close relationships with their customers and they can affect a customer’s credit record. SCOTT: I need to tell you that we’ve spoken to the Identity Theft Assistance Centre in the States. Shouldn’t there be a system like that in this country to help people with identity fraud problems? QUINN: Well interestingly, we’ve been looking at this type of solution ourselves. I think the thing to say about identity theft is it is incredibly pernicious. It doesn’t just affect your ability to obtain money; it affects a whole load of things: mail order companies, mobile telephone companies. The Home Office has a committee which is the ID fraud steering committee that’s been running for a few years. This is an ideal type of forum to consider whether the UK should have a similar set up as in the US. CURWEN: So are you saying that it’s something that you, as APACS, would support? QUINN: Well I think we need to look at it. It’s certainly worth investigating because Robert’s case isn’t unusual in the fact that if you’ve been a victim of ID theft, you do spend a lot of time trying to sort out the details of the problem. CURWEN: In the US, this system is paid for by the banks, by the lenders. Is that something that you would consider? QUINN: Well it’s one of the things that we’ve been asking UK- based banks who have subsidiaries or relationships in the US and who do, through those subsidiaries, contribute to ITAC. We’ve been asking them what kind of value they find from this arrangement and let’s see where those discussions go. LC: No promises, but it sounds as though the American model will at least be seriously considered here in the UK. That’s for the future. If you’re worried right now about identity fraud, or think you may have been a victim, there’s lots of useful information and links on our website, bbc.co.uk/insidemoney. Where did all this leave Robert Scott – who had suffered stress, hassle from debt collectors, and financial losses, through no fault of his own. He had been given profuse apologies. But what impact had the experience had on him? SCOTT: You are found guilty and tried and you have a sentence passed against you, even without your knowledge. It is extremely stressful. The lost sleep, the time thinking about it, the worry when threatening letters drop on your mat, it really, really isn’t nice and I don’t recommend it for anybody. CURWEN: How confident are you that your record is now completely clear? SCOTT: I’m fairly confident. It’s taken a long time, a lot of hard work and a lot of heartache, but I can see the light at the end of the tunnel now and all that remains is for the credit reports to arrive with a clean bill of health which I am thoroughly looking forward to. CURWEN: What would you say to anybody who like you suddenly discovers somebody’s been using their identity to commit a fraud? SCOTT: Don’t ignore it. Get straight on to the case, contact the lender immediately. It’s going to be a long struggle, because at the present in this country you are on your own, basically it’s down to your own tenacity to see the problem through. I’d like it if people didn’t have to go through that.