Identity theft? Flag it immediately

Fraudsters use someone else’s identity to apply for loans and do not repay it

Have you ever received calls from a bank asking you to repay a two-wheeler loan you never took?

Or has your application for a car loan been rejected due to an overdue personal loan in your name but one you had not taken? If yes, you have been a victim of identity theft.

According to a fraud report released by Experian India, a credit information agency, identity theft accounted for 77 per cent of the fraud cases during the first quarter of FY16.

This report analyses trends for the period between the first quarter of FY15 and the first quarter of FY16.

The report says frauds owing to applicants submitting fraudulent contact information have risen three per cent contributing to 18 per cent of all detected frauds.

Of all financial products, consumer loans or personal continue to record the highest fraud incidence rates followed by credit cards.

Mohan Jayaraman, managing director of Experian Credit Information Company of India and country manager of Experian India, says, “In case of point-of-sale credit products like consumer durables or two-wheeler loans, typically the turnaround time for credit processing is fast.

"Given this, the incidence of fraud or identity theft is higher.”

In case of identity theft, fraudsters use someone else’s identity to apply for loans and do not repay it.

These, then, show up as unpaid loans in the genuine customer’s credit report, impacting his or her credit score.

The easiest way to recognise this is to check your credit report regularly, maybe on a half-yearly basis.

This will show if anyone has used your information to apply for a loan.

If you have been a victim of fraud, the first step is to record it (the disputed transaction or loan) as a consumer dispute immediately with the credit bureau or bank and report it as something that does not belong to you.

Then, ask the bank to produce documents to validate that you have taken the loan.

If the signatures are not yours, then it is proof that you have not taken the loan.

The bank will have to remove the loan from against your name and show it formally as fraud.

However, in the interim period, it will still show as a credit line in your name.

“The process is to report the disputed transaction as a consumer dispute and follow it till resolution.

According to the Credit Information Companies Resolution, it has to be resolved within 30 days.

During this period, consumers can ask for a comment to be put in indicating that the underlying information is disputed.

"So, if somebody checks the credit report in that period, it will show up as a disputed transaction.

"This is within the rights of the consumer and he can ask the credit bureau or the bank to put in the comment,’’ says Jayaraman.

"As of now, you have to do this across credit bureaus.

Some other ways the bank can verify is to check its CCTV footage to determine whether the borrower was present in the branch at the time when the transaction took place.

Furthermore, they could also verify signatures on the cheque or loan documents, says Mukul Shrivastava, partner, fraud investigations and dispute services at EY.

“If the customer has not signed the said document, then the bank would need to assume liability.

"However, if the customer signs a cheque or document and it gets stolen or is misplaced, the bank should be informed immediately,’’ he adds.

As a precaution, while handing over any document, write your name, date and the purpose for which you are giving it, across the document.

This way, even if fraudsters steal the documents, they will not be able to use it for any other purpose.

While signing any application, always put in some basic details.

Wherever possible, avoid handing over physical documents and apply online.

Anything that cuts down manual processing of documents will lower incidence of fraud.

If your loan is rejected, ask for the documents to be destroyed or to be returned to you.

The image is used for representational purpose only. Photograph: Steve Marcus/Reuters