If you have spoken to your credit card company recently, at the end of the call you may have received the hard sell for subscribing to a service to prevent identity theft. These subscription services have really taken off in the US with numerous banks and building societies pushing the idea - and many UK financial institutions are now following suit.

For over £100 a year, you are provided with insurance to cover the expenses of restoring your identity, credit report alerts and 'free' credit reports from a credit reference agency. But are they worth the money?

The truth of the matter is that UK consumers are not exposed to the same level of risk as in the US and if you do become a victim in the UK, you're unlikely to suffer any significant financial loss, as legally you cannot be held liable for transactions you haven't authorised. But there is the issue of how long it will take you to unravel the problem. According to research published in 2005 by CIFAS, the UK's Fraud Prevention Service, the average length of time spent undoing damage was 201 hours.

Stress, inconvenience and a feeling of victimisation are also factors to be taken into account when assessing the impact of falling victim to identity theft. A frequently-voiced complaint of identity theft victims is that you are unlikely to find sympathy for your predicament, as the usual reaction from lenders is that you are trying to avoid debt, and currently even the police aren't well equipped to help you.

But don't fall into the trap of paying an annual fee; you can take simple, preventative action which costs absolutely nothing. Here are my top ten tips on how to avoid identity fraud:

1. Don't carry identity documents around with you unless you need them.

You don't have to carry around your driving licence or passport unless you are hiring a car or flying abroad or domestically.

2. Clean out your wallet or purse and only carry the cards you need.

Do you really need your gold card for supermarket shopping? Don't ever carry your address in your wallet - simply put a note of your email address and mobile phone number instead.

3. Don't use the same password everywhere.

Don't be one of the six per cent of people who use 'password' as a password and then leave themselves wide open to identity theft.

4. Don't reveal your place of birth unless it's really necessary.

Banks and building societies often use your place of birth or your mother's maiden name to confirm your identity. As a result, identity thieves would love to get hold of your birth certificate so they can access this information.

5. Ignore all phone calls and emails purporting to come from your bank.

Your bank will always write to you regarding any important matters.

6. Go ex-directory.

Use the Mailing Preference Service, Telephone Preference Service, Fax Preference Service and Email Preference Service to reduce the amount of direct marketing approaches you receive and apply to BT for 'Anonymous Call Rejection'.

7. When going to high risk countries always use traveller's cheques.

Countries where there is a high risk of identity theft are the United States, Nigeria, Eastern Europe, Africa, Malaysia and Indonesia. If you have to use cards whilst you are there, check your statements carefully for duplicate or spurious transactions.

8. Don't give your home address and phone number when checking into a hotel.

If you're staying in a hotel, either at home or abroad, always use your work address and work telephone number or mobile number.

9. Check your bank statements and credit card statements carefully.

Always ensure that there has been no suspicious activity on your cards. Think about using a separate credit card to use in petrol stations and restaurants, where the risk of 'skimming' and credit card cloning is high. It's easier to thoroughly check a separate statement which contains only high risk transactions.

10. Check your credit report once a year at least.

You can obtain a report from credit reference agencies Experian and Equifax for just £2. www.annualcreditreport.co.uk also provides a completely free credit file monitoring service.

The free subscription service from annualcreditreport.co.uk was featured as a 'best buy' in March 2007 by the Good Housekeeping Institute. In contrast, Which? Magazine has awarded one identity theft subscription product (costing £84 per annum) as the worst financial product available. So don't be lulled into a false sense of security that you are being fully protected by these expensive subscription services. Think how daft you'd feel if you bought one and then fell victim to identity theft, just because you hadn't taken some simple precautions instead.

Barry Stamp is author of Lawpack's Identity Theft Kit, which lists a fully up-to-date and comprehensive action plan for both prevention and victim assistance. He is one of the UK's leading authorities on identity fraud, being the Joint Managing Director of Credit Reporting Agency, the organisation behind NITAC, the National Identity Theft Assistance Centre and market leading websites such as www.checkmyfile.com.

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