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Friday, 22 April 2011

ID Theft Insurance: Bonfire Of The Gullible

I guess it started out as a reasonable idea - provide card customers with comfort that someone else will help if your credit card is stolen and your card issuer let's you down.

But your card issuer isn't allowed to let you down, unless you do that yourself through fraud or negligence - in which case why would an insurer help? Slow as they are, it's very much in the legal and financial interests of card issuers to invest in anti-fraud protection. And they're usually 'first-on-the-scene' in a card fraud scenario, as you'll be aware if you've ever been called to confirm you weren't standing at a point of sale in both Brazil and Bulgaria in the past few hours.

If you're an ID theft policyholder and you don't agree, are you are among the 0.5% who've actually made a claim?

Cue the FSA probe into CPP, purveyor of fine ID theft protection at £80 a year. The investigation was prompted by Which? who have campaigned against this rort for some time. A glance at the fund managers who backed the IPO tells you all you need to know. Those people have no right to complain. Either they knew the drill or they were gullible enough to think this product had a real future.

As for the attitude of the card issuers: the FT cites at least one analyst's view that:
"You could argue that half the companies on the high street shouldn't exist because the things they sell are vulgar, tasteless or tacky... Which may be true, but it's irrelevant. The point is, there's demand there."
Demand or gullibility?
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