Broker channel sees significant rise in fraud

by AB24 Nov 2016
The significant growth in fraud found in the broker channel is an ongoing concern, Veda’s 2016 Cybercrime and Fraud Report has revealed. 

The report showed broker channel fraud makes up 15% of all credit application fraud and has risen by 25% in the last half year period (H2 FY2016).  

Speaking to Australian Broker, Veda general manager, fraud and identity solutions Imelda Newton said it is in brokers’ best interest to take measures to detect fraud. 

“A lot of the activity we see through that broker channel is where people falsify their personal details to be able to secure the finance so things like altering payslips, bank statements, tax assessments,” said Newton.

The research found the falsifying of personal details has risen 27% per cent year-on-year and more than a quarter (27%) of Australians have been a victim of identity theft, which has risen 80% in the 12 months to June 2016. 56.94% of all credit application fraud  comes from an online channel.

“Even though they might not suffer the ultimate financial loss – the lender will – the thing for the broker is their reputation,” Newton told Australian Broker.

“Being associated with some fraud that’s happened is not a good thing for that sector and for those individuals whose reputation can be everything in terms of the credibility of their business.”

The data also found fraud occurrence has increased among bank branches, rising 13% on 2016, with branch channel fraud making up 12.78% of all credit application fraud. 

“Everyone is getting better at detecting the fraud – there’s a lot more quick investigation and detection going on, so that’s how we’re finding out more about these cases that are happening in the branches.”

She said the rise in fraud in the branch channel may stem from banks and other lenders using manual methods of identity verification.

“One of the downsides to these manual processes is the subjectivity of manual identity verifications. By using electronic verification the subjectivity is removed and a common standard set of rules can be applied.”

Newton said from the latest insights, growth in fraud shows no signs of slowing down this year.  

“This trend is likely to continue into the future, as individuals and businesses become more reliant on the internet for their banking, shopping and other financial interactions.”