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ID theft scare tactics are a step too far

Bank card with padlock

Identity-theft insurance is a waste of money. That’s long been our opinion here at Which? But we think that the latest scare tactics employed by some banks are treating customers even worse.

While it’s admittedly distressing if you end up being the victim of ID fraud, true identity theft is not nearly as common as card providers would like us to believe.

Furthermore, the protection for those who are caught out is already pretty good. As long as you’re not negligent, banks and card providers are obliged to pick up the bill if you’re a victim of fraud. So the £60,000 worth of cover that most ID theft insurance policies offer is not necessary.

While there is arguably some merit in having an expert help you out if you’re a victim of ID theft, it’s simply not worth the £60 a year or more that most policies cost.

CPP, which is the dominant player in the ID theft insurance market, says just 0.5% of people with these policies actually make a claim – a good indication of how small the real threat is.

Banks’ tactics treating customers badly

Banks have long been trying to scare their customers into buying ID theft insurance, but the latest tactics are, in our view, a step too far.

Card providers such as Barclaycard, Santander and NatWest are diverting callers who want to activate their new credit card directly through to CPP. Once the call handler has activated the card, they then get the chance to try and sell an ID theft insurance policy to the caller.

To my mind, this is a breach of confidence by the card providers. Their customers have no choice but to call up to activate their card – a call which they quite rightly expect to be handled by the provider with whom they have a contract, not by an insurance company salesman. It’s yet another example of banks simply not understanding what treating their customers fairly really means.

There are plenty of products that banks could push that would be good for both customers and their profits. Most people don’t save enough or have enough income protection or life insurance. But we still seem to be a long way from a world where banks work equally as hard for their customers as they do for their shareholders.

Comments
Member

Exactly

It’s also almost impossible to prove and therefore claim under any policy you may buy – so don’t waste your money.

Member
John says:
6 August 2011

As an ex employee at CPP I can tell you exactly how this works. CPP activate credit cards for most of the main banks, and also confirm safe receipt of a lot of cards (by the way, you don’t even need to call if it’s a safe receipt because they don’t do anything to even confirm that you have called). They then try to sell you either card protection or Identity theft protection using high pressure sales techniques. All the sales are made from the use of a script designed to over hype the dangers involved.

They have to have a thing called permission to market before they can start the sales pitch and because most people believe that they are talking to an employee of their particular bank, give it.
Sales agents are pressurised into selling as many policies as possible and also to handle objections. In my opinion the policies are worthless and the firm plays on the fact that some people are easily talked into a purchase.

Most of the main banks are in cahoots with CPP and get a cut from all the profits, it is a shocking rip off.

Member

Thank you for being upfront about this.

Member

Banks had better be careful. This is deception. It could end up costing a fortune, just like the mis selling of PPI has done. If I call to activate my card (a reasonable security measure), that’s all I want to do. CPP should not put its employees in such a difficult and high pressure position.

This sort of selling does nothing to raise the profile of banks, who already have a bad reputation amongst the general public.