Catching and preventing familial fraud

By Marianne Curphey

It's an uncomfortable thought, but the people who know the most about you and whom you trust -- your family and friends -- also have the potential to misuse that knowledge and trust for financial gain. And, unfortunately, it's not as rare as you might hope.

Credit reference agency Experian helps people who are victims of fraud, and one of the categories of fraudsters they include in their statistics is "friends and family".

"These days, people share a lot of information online and with friends via the Internet and social media," says James Jones, head of consumer affairs at Experian. "A lot of identity theft comes from people eavesdropping online. The practice of criminals raiding your dustbin to find your personal information is much less common." familial-fraud

Why it's so easy to fall victim
Failure to ensure proper privacy settings and protections, along with weak passwords to online accounts leaves people vulnerable. Or it may be a simple case of keeping your passwords in an easily accessible place.

"If you leave them in your diary, as many people do, don't leave your diary on display," says Philip Pearson, independent financial adviser at P&P Invest.

Jones says that on average it takes someone eight and a half months before they notice any suspicious transactions on their credit card or bank statement, and by that time the trail has often gone cold.

Signs of familiar fraud
It can be hard to spot fraudulent transactions, and even harder to come to terms with the fact that someone close to you is defrauding you. Some warning signs include unexplained transactions on your bank or credit card statement or lots of spam emails.

"If you are getting a lot of unsolicited email or cold calls, then it is a warning sign that someone has your personal information," says Pearson.

Invitations from credit card companies to take out new cards can be another indication that someone passed your details to third parties without your permission.

"If you notice anything unusual on your statement, then ring your bank or credit card company to discuss it," Pearson says. "They can explain the transaction to you and that will either jog your memory or confirm that it is suspicious or fraudulent."

Question even small, seemingly insignificant transactions -- fraud starts small, then the thieves progress to bigger purchases once they determine you haven't noticed.

How to protect yourself
"You should always protect your passwords and keep your details confidential," says Pearson. Discussing them with anyone could be a potential hazard -- even a spouse, in some cases, such as if you're having relationship issues or if your partner has money problems.

If you want to have your passwords written somewhere in case of emergency, Pearson suggests putting them in a safe or other form of secure storage.

"Do not leave them lying around or in a drawer where people can stumble across them," he says.

In addition, "change your passwords regularly -- every six months as a matter of course -- and never give information by telephone or email," Pearson adds.

Pearson also advises against letting young children know account details or PINs and passwords. The same goes for your online shopping accounts. If your bank details are saved with your account, tech-savvy teens could easily be ordering goods and services in your name without your permission.

"It's important to explain to your children how to use the cash machine, but not to let them know your PIN," he explains. "Children can be under pressure from other children in school, so don't take a chance."

Pearson suggests that minimising the number of credit cards you have can protect you as well.

"Often people open an account, stop using their card, and it becomes redundant but it is still open and could be used fraudulently," he says.

Finally, remember to review your credit card statement every month line by line and look for unusual transactions.

If you have assigned Power of Attorney to a family member, which may be the case if you are older or have an illness that prevents you from taking care of your own financial affairs, you don't need to give them your credit card details.

You may have to give them authority to operate your bank account, for the purposes of paying bills and other financial duties, but they don't necessarily need total control over your money.

What to do if you're a victim
If you have not taken proper precautions, you could find yourself liable for any debts taken out in your name, a spokesman for National Debtline said.

"We would advise anyone who suspects a family member or friend of using their information in these ways to firstly contact the bank or lender concerned to get the account frozen, and then contact Action Fraud, who will deal with the initial fraud reporting," the National Debtline spokesman explained.

Be warned, however: Action Fraud will then pass the complaint on to the police, or may require that you have already contacted police and have a crime number. It is up to you whether you want to take police action. Many people in this situation do not want to. Keep in mind that not involving authorities will leave you with fewer options, but not optionless.

"We have a ‘victims of fraud' team in our control centre [at Experian] that helps people sort out problems with fraud," Jones says. "If you have been a victim of fraud, then the team will go through your report with you, look at the entries and establish which ones belong to you, and raise questions about the other transactions with the lenders. The lenders might ask for a crime number or incident number and it is up to you whether you report it to the police. If it is a family member people might not want to and we don't make that a requirement."

If you have not taken precautions to protect your details but refuse to accept liability for fraud, then matters can become a lot more complicated.

The National Debtline spokesman explained that if you're in this position, you can make a complaint to the lender involved, and if this is not resolved to your satisfaction you can report your complaint to the Financial Ombudsman Service for further investigation. However, there is no guarantee that the ombudsman will decide that you do not have to honour the debt.

The National Debtline spokesman also said lenders will only put an account on hold if they are given a crime reference number, which requires police involvement.

"If someone else has taken out credit or another product in your name, it is important that that you report the offence as this is the only way to prevent yourself from being liable for any repayments," the National Debtline spokesman said. Otherwise, you will be expected to make the repayments and will be pursued for the debt if you do not.

See related: Bank rules may allow rejected claims of account fraud, 6 ways to reduce your risk of financial fraud

Published: 29 April 2015