ID theft insurance The problem
We're not afraid to tell consumers when we believe a financial product is useless. ID theft insurance is high on our list – in fact we named and shamed it in our top 10 useless financial products of 2010.
We have been in contact with the Financial Conduct Authority (FCA) to explain our concerns with ID theft insurance, namely that it's an unnecessary product and is often sold via scare tactics. We believe there are cheaper alternatives, such as checking your credit report yourself, and that you can take steps yourself to protect yourself from identity theft.
We're unhappy that consumers calling to activate their new credit cards are frequently put through to a third party sales team on a mission to flog ID theft insurance or Card Protection plans – and consumers are not always aware that they're speaking to a third party.
CPP fined by FCA for mis-selling
'I called the telephone number attached to the new card to confirm receipt only to get involved in what I regard as a 'con' as the 0800 number provided was actually Card Protection Plan Ltd who after I gave my new card number commenced their 'hard sell' of ID theft insurance.'
On 29 March 2011, media investigations revealed that Card Protection Plan (CPP), the leading provider for ID theft insurance, were under investigation by the FCA over allegations that it may have overstated the risks of identity theft.
On 15 November 2012, the FCA fined CPP £10.5m for the widespread mis-selling of identity theft insurance and card protection plans.
According to CPP's own figures, only 0.5% of its customers claim on their identity theft policy.
In April 2013, the FCA announced it was working with CPP and some of the banks and card issuers that sold the protection policies, to finalise an agreement to compensate customers that were sold a policy.
Which? ID theft insurance research
'Her script was so aggressive that I told her she was scare mongering'
Behind the scenes we've been gathering our own evidence in the hope we can highlight some of the issues with sales tactics and share these experiences with the regulator.
Which? research suggests that people are unlikely to ever claim on ID theft insurance. Of the 18% of our members who have ever had ID theft insurance, only 3% have made a claim.
We provided the FCA (then the Financial Services Authority or FSA) with our dossier of customer complaints on the hard selling tactics of ID theft insurance provider to encourage them to investigate further and explain the breadth of the problem.
- View Which? Briefing on ID theft insurance - March 2011 (PDF: 518kb)
- View ID theft insurance dossier - consumers have their say March 2011(PDF: 538kb)