Katharine Viner: They Stole My Name

Identity theft is Britain's fastest-growing fraud. It's booming - 55% up in the last year - and even outstrips the parallel boom in credit. It's a crime that lifts the lid on the ineptitude, confusion and chaos of the banking and credit system, and sends shivers down the spine of anyone who has ever had a bank account. Or filled in a form. I should know: it happened to me.

Ten months ago, I decided to switch my current account from First Direct, owned by HSBC, to Smile, the more ethically minded Co-op bank's online branch. As I had received a monthly salary for many years, and am unfashionably keen to pay off debts, I assumed it would be an easy transition. But Smile rejected me; it said I was uncreditworthy, and that I had to send off £2 to a company called Experian if I wanted to find out why.

At that time in my life, like many still, I had never heard of Experian. Today, I know its address, phone and fax numbers from memory; I have come to dread its letters, each signed by a different "consumer service officer" or "department administrator" who knows less about my case than the one before; its booklet, with its smiley, anoraked, creditworthy team; its inoffensive, we're-really-so-straightforward logo with its irritatingly hopeful tick mark over the i.

Experian is the biggest credit checking organisation in the world - it is paid by more than 300 corporate clients and others, such as the police, to dig out information on all of us. Like a shadowy financial MI5, it has files on 40 million people in Britain (that's almost everyone over 18). It is worth £3.5bn and made a profit of £256m last year.

Having spent some time deciphering Experian's file on me, and hanging on the telephone to its helpdesk for (what I soon learned was the standard) 45 minutes, it emerged that I was the victim of identity theft. Someone had opened up bank accounts and credit cards in my name (spelled wrongly) and with some of my details (most wrong too) - and had racked up a portfolio of debts, including one for £5,832. Each debt was linked to me, via an old address - and even though I wasn't liable for them, their presence on my file meant I officially had bad credit.

I assumed it would be easy to clear my name. I told Experian that these debts were clearly not mine and should be removed from my file. But Experian could not help - it was up to the individual companies involved. Victims of identity fraud have to contact each separate company themselves, to try to persuade them that they are who they say they are; that they are not the fraudster.

In other words, the banking and credit system takes no responsibility; instead it loads the tiresome burden of solving problems brought about by its leaky inefficiencies on to the customer.

Thus clearing my name began to take up hours and hours of my time. There were six companies holding incorrect information on me. Some of them refuse to take phone calls; others claim that it is, in fact, Experian's responsibility, and you're passed back and forth; others simply refuse to believe you. It helps if you report it to the police, which I did; but this is just so you can get an incident number, because there hasn't actually been a crime committed against you, it is a crime against a bank. Ten months since I first sent off for my credit file, I still have not succeeded in clearing my name; one remaining company, I think through inefficiency rather than malice, continues to link me to the fraudster. (I have a last-ditch plan lined up involving camping with a trombone and drum kit outside the Nottingham offices of Capital One Bank (Europe), if my dignity can take it.)

During the time I have had a defrauded credit file, I have not been able to open up a bank account, or get a mortgage; if I had applied for a job or rented accommodation, I might also have been refused. Now even National Car Rental will not allow anyone to drive a hire car if they fail a credit check.

It is impossible to find out how my identity was stolen. A fraudster could have gone through my bins (53 out of 71 local authorities say their dustbins have been raided by thieves and one in five domestic bins contains enough information for an identity fraudster); a bank, desperate to entice us into ever more credit, might have sent one of its regular "pre-approved" credit applications, with my details already filled in, which was then stolen. Even cashpoint slips hold enough information for fraud.

But the only way now that I can try to protect myself is to take a minimalist approach to financial arrangements - which has the added bonus of denying banks the profits they don't deserve (HSBC's profits were up 26% in the first six months of this year). I have a mortgage and one credit card; I have cancelled every other kind of credit, store or loyalty card. I pay in cash; I have gone back to non-online banking; I try to avoid form-filling; I shred any bank information with my name on it, and then coat it in leftover hummus to piss off the bin-snatchers. (Think I'm bonkers? Sales of shredders are up 1,500%.)

But it's probably too late. The debate over whether to introduce government ID cards is a bit academic, when so many companies already have our details - and they're often wrong. There are even rumours that Experian's files would provide the basis for those very ID cards. Online shopping, loyalty card applications, store cards, standing order forms - every time we make any kind of recorded financial transaction, we give details which can be used to defraud us. And the details that are supposed to be secret, and once were, are hardly secret any more. To how many more people do we now give our date of birth? Our mother's maiden name?

I have been forced to opt out of the banking system as far as I can and have seen from close-up how easy it is to be defrauded and how catastrophically badly the banks are dealing with it. Last year 74,000 people went through the same experience. Each of them spends money (some estimates say £2,000) and time (hours on the phone, writing letters, deciphering the credit world's often obscure terminology) trying to clear their names. The Bank of England tells us to be responsible with our spending. But fear of the country's fastest-growing fraud, understanding we are at risk every time we hand over our personal details, and awareness of the complete ineptitude with which the credit agency and banking system deals with the victims of identity fraud, is far more persuasive. Could it be not thrift, then, which helps quell the credit boom, but chaos?