Experian and the Exchequer

This article was originally posted on Flash Says... on 17 August.


It emerged recently that the credit reference agency Experian is in talks to do a deal with the Government to try and unearth benefit cheats. It would earn a “bounty” for each person it exposes. To my mind, this is a pointless exercise and full of flaws.

Experian already have a contract with the government to check housing benefit claimants, and say they have saved £17m. Now, they are being more ambitious and claim they could save £1.5bn every year by checking up on those who receive other benefits.

Credit reference agencies keep a record of how much was spent on credit cards each month, and whether it was repaid on time. Presumably then, they intend to identify those on income-related benefits, and see whether their spending patterns exceed their benefit payments – then shop them to the Government.

There are so many reasons why this would not work. For a start, although the Daily Mail would have you believe otherwise, there are not many benefit fraudsters and so Experian would be looking for a needle in a haystack. The amount of work involved may be uneconomical, compared with the payment for identifying a cheat.

Credit card payments could genuinely exceed income, while still being paid off on time. For example, how many times have you slapped down your card at a group meal, then scooped up everyone else’s cash? Or filled your car up with petrol for a big trip, while collecting money from your mates for sharing the journey with them? Even grocery shopping can be organised in this way, perhaps shopping with your mum, putting it all on your own card, then sorting it out at home. I often add items to my weekly supermarket shop for an elderly neighbour, who then repays me in cash. These are common situations, but all that Experian will see is the amount that hits your credit card every month, no matter whether you received money back.

Even at work, this situation occurs. For example, I regularly buy website hosting and domains for customers at around £70 each. This is at cost price which the customer repays in full, and it's matched up in my accounts. But say I bought 5 of these packages for new customers each month – effectively just ordering the hosting packages with the customers’ own money, to make their lives easier – to Experian it would look like I was spending £350 more than the income I’ve declared receiving, because they only see one side of the story.

So what will Experian really be able to tell the benefits agencies, other than adding a level of confusion?

It is a serious concern that Experian would be paid a bounty for each case. This makes me worry that their staff will become overly suspicious – perhaps putting forward marginal cases – in the hope that they will strike gold. As Shami Chakrabarti, Director of Liberty, says, "What we must not do is create a benefit equivalent of parking attendants who are wanting to find people guilty ... because that is the way they get paid." The parking attendant analogy is a good one; in the past I have received tickets when I was doing nothing wrong. The attendant must have known I’d get off on appeal (which I did) but hoped that I would accept the fine and assume that I must have done something wrong, simply because an authority said so – thus lining his pocket in the process. Experian’s involvement is bound to promote an increase in fraud investigations, but it is critical that any approach to a benefit claimant should be gentle and presume innocence – at the moment very frightening letters are sent out to vulnerable people – in one case I discovered recently, the recipient was scared into giving up disability benefits to which they were genuinely entitled, just to be certain that they would never receive such a letter again.

At the moment, many people who legitimately claim benefits are worried about fraud allegations – you just have to read disability-related messageboards to see this concern. Newspapers such as the Daily Mail are quick to pounce on any genuine or high-profile cases that they can find, giving the false impression that there are many cheats and misleading people into being overly suspicious. I remember being worried when a neighbour, who I had spoken to a few times over my front gate, said “Flash, you’re not disabled are you?” – after all if he thought this, what might any investigator or passer by think, when seeing me walk unaided the few metres to my blue-badged car? Yet if they assumed I can walk far, or walk without pain, they would be wrong.

We are in danger of becoming a suspicious society, ready to shop our neighbours when the reality is that we know nothing about their situation. From what I can see, Experian’s involvement in detecting benefit fraud would reinforce that, without adding any value or detecting the genuine – but very few – cheats in the system.