The Financial Services Authority (FSA) has launched an investigation into card protection giant CPP over claims that it might have exaggerated the risks of ID theft when selling consumers one of its products.
As a result, the recently listed company’s shares plunged by more than half yesterday, before recovering slightly to 156p. CPP has suspended sales of all its ID protection products while the matter is investigated.
“The FSA has raised issues over the description and way the insurance product works and whether we have overstated the risks of ID theft,” said chief executive Eric Woolley.
The insurance component of the ID theft package used to recompense customers for up to £60,000 of costs associated with clearing up the aftermath of ID theft problems. It is possible that some consumers mistook this for an insurance against actual losses.
ID theft has become one of the major fears facing consumers as more and more transactions are carried out online. CCP has undertaken a number of studies, such as investigating which city is the card fraud capital of the UK and more recently investigating consumer ignorance of the threat of leaving data on an old mobile phone.
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