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Unregulated ‘identity tracers’ harass people for debts they do not owe | Borrowing & debt


The letter from the debt collection agency arrived out of the blue, and it was intimidating. It informed Joshua Simpson* that he owed £2,212 to Octopus Energy, and accused him of ignoring previous requests to settle the bill. If he did not stump up within 14 days, he was told, further action would be taken to recover the money.

Simpson checked his Octopus account – it was in credit. Then he noticed the address where the debt had been accrued between 2022 and 2023. It was his childhood home – which his family had sold 18 years previously.

“Since I was only 16 when we left the property, I was astonished that they’d linked my name [to it],” he says. “The debt collection agency insisted I provide a tenancy agreement to prove how long I’ve lived at my current address. I couldn’t, since we bought our home.

“They are now actively pursuing me for this debt, causing me a huge amount of stress. We are about to remortgage, and if this debt prevents us switching to a better deal, we will face real financial hardship.”

Simpson had been sucked into the shadowy world of “identity tracing”, whereby 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 in a back room without a licence, or scrutiny, and use fair means or foul to identify debtors.

Reputable companies join a trade association that operates a code of practice, but membership is not mandatory, and mistakes are common.

Last year, a teenage boy was chased for a debt of more than £900 by debt collectors acting for the energy company Ovo. A “trace agent” had somehow linked him to the debt because his parents had previously rented the property in question. An investigation by the Observer established that the debt had been run up by a subsequent tenant.

The consequences of mistaken identity can be catastrophic. Individuals who are erroneously linked to a debt face, at worst, court action, bailiffs and a ruined credit rating. At best, they can endure weeks of stress and paperwork in order to prove they are not the debtor.

It is estimated that 20m identity traces are made in the UK every year, many on behalf of companies that are owed money. Personal data is often obtained from credit reference agencies, which record applications for credit, and details are supposed to be verified with several different sources before being used for debt enforcement. In practice, however, this does not always happen.

Simpson’s details had been passed along a chain of intermediaries before the demand was issued. Octopus had given the unpaid account to a debt collection agent, which had contracted a tracing service, GBG, to find the debtor.

GBG, in turn, hired a company called USM, which told Simpson that a database from a defunct marketing company suggested he had lived at the address in 2010.

Simpson’s family had moved out of the property four years previously.

The payment demand was then issued to Simpson, without prior warning, despite the fact that he had his own fully paid-up Octopus account at his current address during the period billed for.

“The debt collection agency told me Octopus was to blame, and Octopus blamed the tracing agency,” he says. “I feel like I went down the rabbit hole. I had no idea these companies could share data in this way.”

Octopus told the Observer that it acted quickly to remove Simpson’s name from the debt after he complained.

GBG says: “We take our privacy obligations extremely seriously. While we cannot comment on our relationship with individual suppliers, our supplier due diligence requires all our data suppliers to demonstrate they have gathered personal data lawfully, and we test the quality of the data as part of our onboarding due diligence. In this individual case, we promptly deleted data he identified as incorrect.”

USM’s website suggests that personal data is obtained via direct marketing activities, and is not shared with third parties without prior consent. It told the Observer that it could not legally comment on Simpson’s case, and it did not respond to questions about whether it used data obtained from direct marketing and prize draws for identity tracing.

Unfortunately for those erroneously pursued for a stranger’s debt, the onus is on them to prove their innocence.

They should send a council tax notice, bank statement or tenancy agreement to the debt collector proving that they did not live at the address in question during the billing period. If the issue is not resolved within eight weeks of a complaint, they can take their case to the relevant ombudsman.

The Financial Ombudsman Service, which investigates complaints about financial firms, states that debt collection agents have to produce convincing evidence to link an individual to a debt, rather than rely on names, addresses and birth dates.

According to the trade association, the Institute of Professional Investigators, an unknown number of investigators and trace agents are operating below the radar. Many more are merely inept, as data protection compliance training is not mandatory.

“We have been campaigning for many, many years to try to get all private investigators regulated,” says secretary general Glyn Evans. He adds: “We have, together with two other associations, formulated a code of ethics which our members sign up to. We also have a discipline committee which looks into any complaints made about any of our investigators.”

* Name has been changed

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