Businesses are being urged to be more careful about how they get rid of paperwork – because they could be putting their customers at risk of identity fraud.

Identity fraud usually involves someone stealing personal information to take out credit, loans and open bank accounts. It’s one of the fastest growing crimes and has risen 163 per cent since 1999. In some of the bigger cities, bin raiders are allegedly being paid £5 a time for every document they find which discloses valuable personal information.

A study by the Cabinet Office put the annual cost to the economy at £1.3 billion.

Businesses which fail to dispose of paperwork in a secure manner could risk a breach of the Data Protection Act. Nonetheless, research in London showed that many businesses ignore the problem and simply tip old files into skips or bins.