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Fraudsters target brokers in Sydney hotspots

by James Mitchell5 minute read
Fraudsters targeting brokers in Sydney hotspots

Incidents of fraud through the broker channel are skyrocketing, according to Equifax, which has now revealed the top suburbs where fraud is most prevalent.

Speaking at the Pepper Money Insights Roadshow in Sydney yesterday, Equifax BDM Steve Arsinoski shared data from the Veda shared fraud database, highlighting a 33 per cent year-on-year (YOY) increase in fraud. Identity theft is the fastest growing type of fraud, with an 80 per cent YOY increase.

“Thirteen per cent of frauds reported were targeting home loans and there has been a 25 per cent year-on-year increase in frauds originating from the broker channel,” Mr Arsinoski said.

“What we have noticed is that fraud through the broker channel is increasing, and that may be because fraudsters are becoming more sophisticated in the way they are applying for certain products. With the technology they have available they can fabricate certain documentation,” he said.

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Equifax data found that 27 per cent of all mortgage fraud cases involved falsifying personal details.

While online is the preferred channel for fraudsters (57 per cent), 15 per cent of fraud cases are coming through the broker channel and 13 per cent through branches.

“Branch channel fraud is around 13 per cent, which showed signs of slowing down in 2015 but there has been a resurgence. We are finding branch fraud is continuing to increase,” Mr Arsinoski said.

“Broker fraud is sitting at 15 per cent. It is not drastically higher than branch fraud, but what is alarming is that we are seeing that 25 per cent growth form the previous year,” he said.

Over 72 per cent of all fraud cases are occurring in the Greater Sydney and Melbourne areas. Mr Arsinoski highlighted that Parramatta, in Sydney’s west, was a particular hotspot.

However, the fastest growing areas for fraud in Australia, with a 130 per cent increase in incidents over the second half of 2016, were Newcastle and Lake Macquarie.

Richmond, in Sydney’s north-west, recorded a 127 per cent surge in incidents over the half, while Baulkham Hills and the Hawkesbury region saw a 111 per cent increase.

Illawarra, Brisbane Inner City, the Sunshine Coast and Geelong were also named as fraud hotspots.

The four main types of mortgage fraud are falsifying personal details (71 per cent), identity takeover (19 per cent), fabricated identity (4 per cent) and undisclosed debt/serviceability fraud (4 per cent).

Mr Arsinoski urged brokers to report fraud as early as possible and suggested how it can be identified.

“If you could find or pickup fraud early on and identify any discrepancies, raise them earlier rather than letting the loan application go through. If the lender finds some inconsistencies and reports it to the originator, this is going to be a massive waste of your time and effect your commissions,” he said.

“The biggest impact on a broker is the loss of credibility. I’ve spoken to many brokers and they say reputation and their brand are the most important things in being able to generate leads and referrals.”

How brokers can combat fraud:

- Ask questions to uncover fraudsters. The face-to-face interview is the best time to get to know your customer and do a thorough needs analysis. It is also the perfect opportunity to find holes in their story. Use your intuition.
- Validate information via internet searches
- Ask the borrower to identify any C-level executives at the organisation they say they work for
- Get consent to record the interview
- Look out for an unencumbered property offered as security.
- Ask for original payslips or bank statements, or have the client download them in front of you.
- Use ZipID or MSA National's 'ID.me' for identity verification

[Related: ASIC slammed for 'persecuting' brokers over customer fraud]

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James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

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