Unregulated ‘identity tracers’ harass people for debts they do not owe

🌈 Abstract

The article discusses the issue of "identity tracing" in the debt collection industry, where investigators are hired by creditors to locate individuals who have moved homes without paying their bills. It highlights the unregulated nature of this sector, where mistakes in linking individuals to debts can have serious consequences, including court action, bailiffs, and ruined credit ratings.

🙋 Q&A

[01] The Shadowy World of Identity Tracing

1. What is "identity tracing" in the context of debt collection?

• "Identity tracing" is the practice where investigators recruited by creditors seek to locate individuals who have moved home without paying their bills.
• It is an unregulated sector where anyone can set up as an agent without a license or scrutiny, and use fair or foul means to identify debtors.

2. What are the consequences of mistaken identity in identity tracing?

• Individuals who are erroneously linked to a debt can face court action, bailiffs, and a ruined credit rating.
• At best, they can endure weeks of stress and paperwork to prove they are not the debtor.

3. How are personal data obtained and used in identity tracing?

• Personal data is often obtained from credit reference agencies, which record applications for credit.
• Details are supposed to be verified with several different sources before being used for debt enforcement, but this does not always happen in practice.

[02] The Case of Joshua Simpson

1. What happened to Joshua Simpson?

• Joshua Simpson received a demand from a debt collection agency for a £2,212 debt to Octopus Energy, even though his Octopus account was in credit.
• The debt was linked to his childhood home, which his family had sold 18 years previously.

2. How did the debt collection agency try to link Joshua Simpson to the debt?

• The debt collection agency insisted that Joshua provide a tenancy agreement to prove how long he had lived at his current address, even though he had bought his home.
• The agency claimed that a database from a defunct marketing company suggested Joshua had lived at the address in 2010, four years after his family had moved out.

3. How did the various companies involved respond to Joshua's complaint?

• The debt collection agency told Joshua that Octopus was to blame, and Octopus blamed the tracing agency.
• Octopus later removed Joshua's name from the debt after he complained.
• The tracing agency, GBG, stated that they take privacy obligations seriously and test the quality of data as part of their due diligence.
• The other tracing company, USM, did not respond to questions about whether they used data obtained from direct marketing and prize draws for identity tracing.

[03] Regulation and Oversight in the Identity Tracing Industry

1. What is the current state of regulation in the identity tracing industry?

• The identity tracing industry is largely unregulated, with no mandatory compliance training for investigators and trace agents.
• Some reputable companies join a trade association with a code of practice, but membership is not mandatory.

2. What are the efforts to improve regulation in the industry?

• The Institute of Professional Investigators has been campaigning for many years to get all private investigators regulated.
• The institute, along with two other associations, has formulated a code of ethics that its members sign up to, and has a discipline committee to investigate complaints.

3. What are the challenges in resolving issues of mistaken identity in debt collection?

• The onus is on the individuals who are erroneously pursued for a stranger's debt to prove their innocence by providing documentation such as council tax notices, bank statements, or tenancy agreements.
• If the issue is not resolved within eight weeks of a complaint, they can take their case to the relevant ombudsman, such as the Financial Ombudsman Service.