More than 25 per cent of all fraud reported to the Australian Federal Police involves false identities, and a 2001 Attorney-General's report revealed that identity-related fraud costs Australians more than $4 billion a year.

The simplest form of ID fraud is when individuals create one or more false identities using fake documentation. More sinister is the "true name fraud" or identity takeover: a criminal steps into the shoes of a real person, then runs up debts, bleeds accounts dry and sometimes commits other crimes in the victim's name. The criminal puts together a patchwork of personal information about his target and uses these details to manipulate the financial affairs of his victim. The victim often doesn't realise that an impostor has been tampering with his finances until he's lost money, been denied a loan or had debt collectors arrive on his doorstep.

While the general rule is that the customer is protected by the bank in acccount fraud - you may have to wait months to get your money back while the bank investigates. The Australian Consumers' Association's Catherine Wolzhuizen says that there are three main issues: the amount of time banks take to investigate, the amount of time it takes to rectify accounts, and the time and effort involved in restoring credit ratings.

What you can do to avoid ID fraud:

• Keep a close eye on your mail. Be suspicious if your account or credit card statements are more than a fortnight late.
• Contact Baycorp Advantage to get a copy of your credit file or subscribe to My Credit Alert.
• Don't share your personal information with telephone marketers, salespeople or even friendly strangers.
• ID fraudsters are not always strangers: it could be a friend, family member, neighbour or colleague.
• Review your bank account and credit card statements carefully. Check the balance when you withdraw cash from an ATM.
• Be paranoid about disposing of credit card receipts and other documents linking your name to specific account information. Shred or tear these up, as ID thieves commonly go through rubbish.
• If you believe your personal information has been used to commit fraud, act quickly. Report it to the police, and contact your financial institution and card issuer immediately to halt unauthorised access to your accounts.