By Max Clarke
Over 97,000 Brits have fallen victim to criminals setting up fraudulent direct debits from their accounts, with this number set to escalate over the next three years, according to new research carried out by LV Insurance.
The findings from the home insurer, conducted by the Centre for Economics and Business Research (CEBR), show that so far this year 26,000 Brits found fraudsters taking out regular direct debit payments in their name, with an average of £540 going missing before they noticed and stopped it.
Over the last four years, the number of criminals gaining access to victims' bank accounts directly in order to set up regular payments has risen by 288% from just 6200 reported cases in 2006. This huge increase has been driven by the introduction of Chip and PIN meaning it's harder for fraudsters to steal someone else's card and pass it off as their own.
Direct debit payment fraud now accounts for around 10.6% of all identity fraud cases, rising from 0.01% of all cases in 2001. And the LV= report reveals the problem is set to grow to 41,000 cases a year by 2013, equating to a 57% rise in the coming three years.
Reflecting the increased likelihood of people now becoming a victim of fraud, LV= includes an identity fraud helpline service as part of its home insurance policy.
Experts believe one reason for this rise is the difficulty in obtaining credit as a result of the recession, leading to a surge in fraudsters attempting to use other identities in order to obtain goods and services.
Fortunately under the direct debit guarantee system, victims will get their money back if they are a victim of this type of fraud, however consumers may unwittingly be adding to the problem as many continue to be lax in checking their bank balance with one in five (21%) admitting they only check their balance once a month.
LV= is therefore urging people to keep a watchful eye on their bank statements to ensure they haven't fallen victim to direct debit fraud.
John O'Roarke, managing director of LV= home insurance, said: "The past few years have been financially challenging for many and an indirect result of these struggles has been a increase in personal and identity fraud. Yet while most of us are aware of the need to protect our card details, the increase in fraudsters setting up direct debits in victims' names proves the need for everyone to regularly check their banks statements and ensure they're not paying out for someone else's mobile phone account or gym membership or any other direct debit they don't recognise. And with the number of direct debits being paid unnecessarily at an all time high, we'd urge account holders to check they're not making duplicate or out of date payments.