The government's comments on identity theft
deserve special attention.
- They omit important facts
is the UK trade association for payments and for those institutions
that deliver payment services to customers. According to APACS, plastic
card fraud, just one component of ID fraud, stood at £411.4m
in 2001 and £439.4m
Is plastic card fraud going up? It depends how you measure it and when
you measure it from:
- The 2005 figure is 13%
down on the 2004 figure.
- The Retail
Prices Index for December 2001 was 173.4 and for December 2005 it
was 194.1. There was, thus, 11.9% inflation between those two dates.
For 2001's plastic card fraud to have kept pace, it would have had to
rise to £460.5m in 2005. As it had only reached £439.4m,
in real terms, it had declined.
- Spending on plastic cards in the UK amounted to £292.1bn
in 2005. Plastic card fraud in 2005 amounted, therefore, to just 0.150%,
down from 0.183%
in 2001 and 0.330%
UK spending on plastic cards amounted to around £188bn in 2001.
So, while spending increased by 55.4% over the next four years, the rate
of plastic card fraud fell by 18.0%, from 0.183% to 0.150%.
To quote APACS, "the biggest fraud type in the UK is card-not-present
fraud, which cost £183.2m
in 2005. This is fraud on cards used over the telephone, Internet or for
ID, ID cards can do nothing to solve the card-not-present problem.
They use the wrong technology. And they are, anyway, not payment cards.
- ... they include false statements
- In the Prime Minister's Daily Telegraph article
of 6 November 2006, he states that: "... the problem of identity
fraud, which already costs £1.7 billion annually – a figure that has
increased by 500 per cent in recent years ...".
That is false.
The Home Office's July 2002 consultation paper gives the 2000-01 cost
of ID fraud as £1.3bn. If you grant that 2000-01 is recent, a 500%
increase from then, would imply a level of identity theft now, of £7.8bn,
If you investigate the make-up
of the £1.7bn figure, you find that it includes four items which
were not included in the 2000-01 measurement of identity theft. These
items, such as the hire purchase of cars, not exactly a new invention,
happen to add up to £400m. Take that off £1.7bn, or add it
on to £1.3bn, and the Home Office's figures could be taken to imply
that, far from going up sixfold, the level of identity theft is static.
- ... and guesswork
- And you find that it includes items like £215m for carousel
fraud, the note against which says: "It is not possible to determine
if the scale of this problem has changed since 2002. The figure from
the original study has been included for illustrative purposes to help
estimate any comparative changes to the overall cost of identity fraud
There is also a £395m contribution from money-laundering, the note
against which says: "The overall size of money laundered in the UK
is not known currently but is believed to be substantial ...".
This is no way, surely, to compile the figures on which an important
public debate depends.
- ... and impressive-sounding but imprecise
- In the October 2006 Section 37 cost
report, there is a section entitled "Preventing fraud",
which includes the claims that: "Tax payers will save money and
thousands of individuals will be spared the trauma and cost of being
victims of fraud" (p.6).
ID cards might help to reduce some forms of fraud but it is going too
far, surely, to claim that they will prevent fraud. How much money will
taxpayers save? The government's claim is imprecise. They are not committed
to any achievement. How many thousands of individuals will be spared?
Again, the claim is imprecise. There is no target that the government's
performance can be measured against.
The report also states that "1 in 5 companies could be hit by identity
fraud, 1 in 4 individuals are touched by identity fraud". How many
companies would be "hit by" identity fraud if ID cards are introduced?
And how many individuals will be "touched by" it?
Given that the ID card is not a charge card or a credit card or a debit
card, or a cheque guarantee card or a cash withdrawal card, how will its
introduction reduce the incidence of lost or stolen credit cards being
- ... which do not amount to a convincing case
to spend between £5bn and £20bn on ID cards
- The slapdash and careless standard of argument seems to be well below
the level we have the right to expect and well below the level required
to justify spending billions of pounds of taxpayers' money.
- ... particularly when you consider that
there is no such thing as identity fraud or identity theft
- There are no laws against "identity fraud" and "identity
theft". Legally, these concepts do not exist. The government seem
to be talking about something that doesn't exist. Fraud exists and theft
exists but not identity fraud or identity theft. At the moment, if a
criminal runs up a bill on your credit card, the victim is the bank,
not you. So, what are they talking about?