Smart Money - Sam Richardson: Make sure you take steps to avoid becoming a victim of identity fraud

Q Our son was away at university when a letter arrived at our home, addressed to him, from Nationwide. It revealed that he had taken out a loan for £10,000 and that he was two months in arrears. After a tearful conversation he explained that he had been scammed on Snapchat, threatened and that he was feeling suicidal. The loan was paid to his Santander current account, from which he then sent money to the fraudster’s account. What can we do?

Answer: I’m very sorry to hear this. It’s a reminder of the devastating impact that fraud can have on both the victim and their family.

It is also a stark reminder that, due to the increasingly sophisticated and evolving tactics of fraudsters, any of us can be at risk. Scams can begin in unlikely places: your son was first approached on social media app Snapchat, by a fraudster claiming your son could make money through a bitcoin trading scheme.

At this point you’d expect the fraudster to ask for money - but what they were interested in were details, specifically the personal details they would need to apply for the £10,000 loan in your son’s name. They used threats of violence to make your son transfer the money to the fraudster’s account, and pressured him not to talk to Santander despite the bank’s attempts to contact him about the unusual transfer.

Cifas, the financial industry fraud-fighting association, reported that identity fraud went up by a fifth last year.

Thankfully, after you learnt what happened and approached Santander, they returned the £10,000, and Nationwide agreed to write off the interest on your son’s loan and remove it from your credit file. But questions remain over why Nationwide was willing to lend the money. The fraudster claimed your son was a Lloyds Bank employee earning £1,400 a month with no outgoings. Neither a check of your son’s credit report nor his personal details would necessarily have revealed this to be false, but you’d hope a 19-year-old attempting to borrow £10,000 – not to mention the curious lack of outgoings – would prompt extra checks.

Your son isn’t the only victim - Cifas, the financial industry fraud-fighting association, reported that identity fraud went up by a fifth last year. If you struggle to get the money back because your bank is refusing your claim, you can take your case to the Financial Ombudsman Service (FOS). The FOS will act as an independent arbiter between the complainant and the bank, and is used to settle disputes.

There’s several steps we can take to avoid becoming a victim. Don’t share any personal information with anyone unless you can verify their identity: banks will never ask customers for your PIN or security passwords over the phone. Put the phone down, take five minutes to consider what you’ve been told, and call the organisation back using a trusted phone number (such as the number on the back of your debit card).

Check which personal details you’re sharing on social media, and with whom, and be suspicious of any friend or connection requests from people you don’t know. When discarding paper documents, consider shredding those containing personal information. If you move house - and seeing as your son is a student, this might be quite frequent over the next few years - then request that Royal Mail redirects your post for at least a year.

Sam Richardson is deputy editor of Which? Money