More borrowers at risk of losing their good name to fraudsters

The Australian Institute of Criminology survey also revealed 20.7 per cent of respondents had experienced identity misuse at some time in their lives, indicating this crime is now among the more common types of crime in Australia.

What impact could rising identity theft numbers have on the housing industry and brokers?

Possibly a significant one, when we look at those whose credit ratings were impacted. Fourteen per cent were refused credit following the stated event of misuse of their personal information, and five per cent had to commence legal action to clear debts and/or their name.

This isn’t an uncommon scenario. When someone loses their identity they can pay heavily, with many victims finding themselves locked out of mainstream credit for years. Unlike other types of fraud impacting bank accounts and credit cards, when the person’s credit file is misused, there is no ‘reimbursement'. The credit file holder is simply left with a trail of destruction that they have to clean up in order to take out credit again.

The key issue many victims of credit file misuse can have is proving they didn’t initiate the credit in the first place. This process of proof can be painstaking, particularly if the fraud was committed a long time ago, or was unknown to the victim until they applied for credit and were refused.

Often identity theft is committed by overseas crime syndicates that can be fairly difficult to catch. It can also be a crime with a fair amount of stigma attached, so victims don’t always report incidents of identity theft for fear of looking ‘stupid’. The dangerous thing is, sometimes the small incidents of identity theft can be just the tip of the iceberg – with fraudsters ‘testing out’ fraud in lieu of making a big play for significant amounts of money and/or taking out credit in the victim’s name.

Likewise, we know defaults or clear-outs don’t need to be for a large sum to impact someone’s credit rating and prevent them from obtaining a home loan.

So it’s important for your clients to know: it doesn’t matter how small or insignificant the crime appears at first glance, in instances where personal information has been stolen, they should report it to police.

In cases of identity theft, a police report is almost always required in order to validate the crime with creditors.  It’s almost impossible to fight on grounds of ‘identity theft’ without it.

The other advantage for clients to report identity theft is there are avenues of support available to victims from various government bodies.

I have 10 basic tips for identity theft prevention you might find helpful to share with clients:

1. Keep your virus software up to date on computers, install automatic updates and perform regular virus scans

2. Change passwords regularly and use a variety of passwords

3. Keep your privacy settings secure on all social networking sites

4. Subscribe to the government’s ‘Stay Smart Online’ alerts about viruses and security risks for your computer use

5. Check your credit card and bank statements for strange activity each time they come in

6. Shred all personally identifiable information that you no longer need

7. Buy a safe for your personal information at home and a lock for your mailbox

8. Be aware of who gets your personal information and for what purposes. For instance, is it really necessary for the site you are registering on to store your date of birth?

9. Visit the ACCC’s ‘SCAM watch’ website for the latest scams which could catch you out

10. Check your credit file regularly

One of the big things I would like to see more of in the finance industry is the encouragement of regular credit file checks just as a standard part of life for credit active Australians. This is something that should be performed once a year and before you apply for credit.

Your clients can do this for free through www.freecreditrating.com.au once per year.