MILLIONS of consumers who use call centres have been alarmed by the news that Norwich Union Life, one of Britain’s biggest insurers, has been fined a record £1.26m for failing to protect customers from identity fraud.

The insurer’s telephone checks were so lax that fraudsters were able to steal the identities of 632 customers in the middle of 2006, and successfully cashed in 74 policies worth £3.3m.

All the victims are thought to be directors because the criminals initially used the Companies House website, which carries names and addresses of company bosses, to perpetrate their fraud.

The firm has fully reimbursed the 74 victims and has worked with the others to make sure they cannot become victims in future, but the crime has raised security fears among all consumers who use call centres.

We answer your questions.

How were the fraudsters able to cash in customers’ policies?

They used publicly available information (such as names, addresses and dates of birth) to impersonate Norwich Union Life customers and, in a series of telephone calls, sought additional confidential information. In some cases, they succeeded in changing the customers’ addresses and bank details.

The fraudsters then instructed Norwich Union Life to surrender the proceeds of customers' policies to bank accounts that they had set up.

How could fraudsters get into customers’ policies so easily?

At the time, Norwich Union required callers to provide their surname, first and any middle names, first line of the address, date of birth and policy number.

If the caller did not have the policy number, call centre staff could ask for one of the following: postcode; policy type; policy term; bank details; mortgage provider or premium amount and method of payment

As a result, callers could get through the security checks without quoting a valid policy number by correctly providing just their surname, first and any middle names, date of birth, first line of the address and postcode – all of which can be obtained from public sources such as Companies House.

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