Britain's identity crisis

There are fears that identity fraud could hit Britain in the way that it has already caused chaos in the US. Credit reference agency Experian says that it has been tracking incidents of identity fraud since the autumn and the problem is escalating.

The big worry is that so far we have only seen the beginning and that we could face an extraordinary surge in identity theft of the scale that is sweeping the US.

Identity theft, such as ap plying for a loan or credit card in someone else's name, has been one of the fastest-ever growing crimes to affect the US. Federal surveys found that as many as 10m people were victims of identity theft last year.

The largest number of these had suffered from someone dishonestly taking funds from their banks accounts or credit cards, while more than 3m people had had their names mis-used to open entirely new accounts.

And there have been nightmarish cases where identity thieves emptied all the bank accounts, and even re-mortgaged the homes, of their unwitting victims.

All this has set off a wave of consumer anxiety and virtually every week the US press has been carrying new stories on this crime wave of the information age. These show the type of methods being used by fraudsters, such as the Boston student who put software into university computers which could read every keystroke and had used this to collect online banking details and passwords from other students.

Elsewhere a computer worker had stolen information from 30,000 people which was used by fraudsters to run up over $2m in debts and an even more ambitious restaurant worker tried to steal $80m from other people's accounts.

With holidays approaching, there are reports warning that a pile up of mail when people are away could be an invitation for thieves to steal your letters and then start stealing your identity.

There's even a grim-sounding murder movie just released which plays with the themes of identity theft.

The reports also show how businesses are having to respond, such as airlines putting disclaimers on their websites saying that they won't be liable for identity fraud losses if the data customers give them is stolen or misused.

Banks are now offering identity theft insurance as a freebie to customers, in the way that in Britain some ac counts might come with travel insurance.

Among the blizzard of statistics about the growth of identity fraud, perhaps one showing the scale of public interest in the US is that there are more than 300 books about identity theft already published or in the pipeline.

Because while many identity fraud cases are the result of everyday petty dishonesties, such as credit cards stolen in the post or people raiding dustbins for documents, there are other cases that make people suspicious of everywhere they have to give information about themselves.

The US Treasury has highlighted a case where an identity fraud ring was targeting patients seriously ill in hospital - and who presumably were not in a position to be checking their bank statements every day. The inside operator in this gang, which stole $2m in fake mortgages and car finance, turned out to be a nurse, who had access to the details of the patients in hospital.

The US Treasury also highlighted the practice of fraudsters targeting elderly homeowners who were likely to have plenty of equity in their houses - with identity thieves stealing their post or searching records to get personal information - and then posing as the home owner to carrying out a remortgage, using a direct mortgage lender who they will never meet.

In an age when we give so much financial information to so many people, it's not easy to put the genie back into the lamp if this data starts to be mis-used. Organisations that hold vast amounts of information about us - whether it's an online retailer or our employer, a mobile phone com pany or an insurer - are all vulnerable to a hacker or rogue employee.

Less than half of identity fraud victims ever find out the source of the deception. And that's not surprising when tens of thousands of people's details might be stolen in a single data raid and that these can pass through many hands before they are used to obtain credit.

There are robberies now where the target is the information inside a computer, rather than the machine itself.

But why has identity fraud suddenly become such a big problem? Claudia Bourne Farrell of The Federal Trade Commission says that on a simple level, it reflects that criminals have realised that identity theft is not that difficult.

Technology also allows for an acceleration of such crimes, where the speed and capacity for swapping information has allowed fraud to move just as quickly.