Departmental Influences

on Policy Design

How the U.K. is confusing identity fraud with other policy agendas.

Problems of identity fraud are becoming common in all countries and increasingly governments are expected to be taking action to address these problems. Yet we understand little about the nature of the problem, and even less about proportionate solutions.

In many cases, identity fraud arises in relation to financial transactions, for example, when an individual’s identity is used to fraudulently open a bank account or withdraw money. Occasionally, however, it is more than just financial inconvenience that results. For example, Derek Bond from Bristol, U.K. was arrested in Durban, South Africa in February 2003 for crimes committed by a Las Vegas criminal who had stolen Bond’s identity documents. Bond spent three weeks of his vacation in jail at the behest of the U.S. Department of Justice before the truth was uncovered.

Individual cases capture our attention but figures are often better to focus our concerns. The scale of identity fraud is often difficult to measure, in part because a variety of definitions of identity fraud (or identity theft) exist [ 2]

and there is no certainty that different reporting organizations are using the same definitions of identity fraud in compiling their figures. In addition, it is often unclear as to whether the reported fraud is due to problems of identity or other matters [ 8]. For example, in 2006 the U.K. government announced that the cost to the U.K. economy of identity fraud had risen from £ 1. 3 billion in 2002 to £ 1. 7 billion per annum¹ with part of this difference arising from the inclusion of approximately £400 million from sources “not included in the 2002 study.” In addition, it was claimed that losses from fraudulent use of payment cards, or using a fictitious identity to obtain such a card, was £504.8 million per year. The government had attributed that figure to the U.K. Payments Association, APACS. However, when approached by the media, APACS reported that this form of identity fraud had totalled only £ 36. 9 million in 2004, and in the first six

¹Cabinet Office, Identity Fraud: A Study, 2002; www.ips.gov.uk/identity/downloads/id-fraud-report.pdf. Home Office, Updated Estimate of the Cost of Identity Fraud to the U.K. Economy, 2006; www.ips.gov.uk/identity/downloads/FINAL-estimate- for-annual-cost-of-fraud-table-v1-2.pdf.

months of 2005 they had already experienced a 16% drop in fraud, principally as a result of the introduction of chip and PIN technology for point-of-sale verification (replacing signatures), according to APACS spokesman Mark Bower-man. ² In 2006, there was a further 3% drop in the amount of money lost to credit card fraud. ³

Given this complexity in even identifying identity fraud, it is not immediately obvious which branch of government should be responsible for implementing measures for combating the problem. As the table here indicates, different countries place responsibility for addressing identity fraud within the scope of different government departments (see [ 7]). The choice of government department that designs the policy on this issue directly influences the kinds of approaches and other policy agendas enrolled in the solution. The response and emphasis of a department of consumer affairs is likely to be very different from that

²McCue, A. Government ID fraud claims: Are they what they seem? Costs UK £ 1. 7 bn a year? Figures “not an exact science”... Silicon.com 2006; www.silicon. com/publicsector/0,3800010403,39156140, 00.htm. ³BBC News, Reduction in card fraud in 2006, 2007; news.bbc.co.uk/1/hi/business/6445409.stm.