'Monitor your spending’ scheme raises risk of ID fraud identity theft

Consumers face a greater risk of identity theft and burglary under a Coalition scheme that would allow them to see all their personal spending data, the Government has admitted.

Officials have raised a number of potential problems with the “Midata” initiative, which will give customers the right to request information from companies on their household utility use, banking transactions, mobile phone calls and high street loyalty cards.

Business ministers hope that allowing people access to data about their spending patterns will help them save money and make better shopping choices.

But the Government’s official impact assessment of Midata has raised concerns that making personal spending details more widely available could mean it is “misappropriated”.

It said the Government received several warnings about privacy and data security during a consultation on the scheme, particularly over the potential for banking details to be stolen.

One major fear is that consumers will hold more sensitive information about themselves on insecure home computers. Another risk is that they will give details of their bank transactions, mobile phone calls and energy usage for price comparisons or analysis to companies which may not have strict web security.

“With increasing amounts of this data held on home computers or with third party intermediaries, it may increase the likelihood of identity theft or fraud,” the document said. A third area of concern is that fraudsters may impersonate people to gain sensitive personal data.

Once the detailed information has been stolen, officials said it could be used to carry out a range of crimes. For example, data on gas and electricity usage could allow burglars to know when homes are empty.

The Government still believes the potential benefits of the scheme outweigh the risks. It thinks people will be “nudged” to make changes to their lives after analysing their data, such as working out the nutritional content of their shopping or how “green” purchases are.

People may also be more likely to switch their mobile phone, energy or banking services if they realise they are not getting a good deal.

Consumer Focus, a watchdog, is generally supportive of the Midata scheme and welcomes its “positive potential”. However, it also warns that there must be protections against companies seeking to gather data “with malign intent”.

The Department for Business, Innovation and Skills said it has set up working groups comprised of businesses, consumer protection groups and regulators to examine the issues. Sources said the department is taking the concerns “very seriously” but believes privacy and security issues can be resolved.

Plans to implement Midata on a voluntary basis are under way but if not enough access to information is given the Government could make it compulsory for companies to comply.