​Fraud scams on the rise: What can brokers do?

by 04 Feb 2014
Tax fraud scams involving the sale and re-mortgaging of property without the owners’ consent are on the rise in Australia, and brokers have been warned to stay alert.

NSW Fair Trading Minister Stuart Ayres has issued a warning regarding tax scams in which property owners are duped into giving out their details, which are then used by scammers to assume the identity of the owners and sell or re-mortgage their property.

Ayres says the scam letter offers landlords living overseas the opportunity to a claim tax exemption on rental incomes. 

“The scam email advises agencies of managing landlords to forward forms to them to complete and return to the scammer,” he says. 

“The forms require detailed personal information as well as photocopies of passports and mortgage account numbers.” 

REINSW CEO Tim Mckibbin issued a further warning to members, stating the organisation had received a number of phone calls regarding scam emails aimed to collect information on property owners.

Peter Cutajar, legal counsel for insurer First Title, says recent years have seen a serious upsurge in this kind of property fraud – much of which goes unreported.

“There’s certainly been an increase. There are organised crime groups now involved in this whereas before it was much more disorganised,” says Cutajar.

“When there’s a bank involved they’ll often settle without it being reported because obviously this kind of thing could cause some reputational damage for the bank.”

While there have been a number of high profile cases in Western Australia, consumers in other states are generally unaware of the danger, he says.

“Brokers should know about this because they could be targeted. In some instances brokers and banks have been duped,” says Cutajar.

Brokers don’t have the technology available to them to verify identification documents are not forged copies, says Cutajar, which puts them at risk.

“At the moment there is certainly an upsurge in new transactions which will mean a lot of clients who go to brokers now and in future are not clients brokers have seen in the past, there are a lot of new players in the market. Also because of this market upsurge there are a lot of new brokers so that presents a new challenge.”

In a recent example in Perth scammers made off with nearly $500,000 after selling a defrauded property, says Cutajar.

“The owners of that property were left with defending a claim by the mortgagee for possession of the property at their own expense and with the uncertainty of not knowing whether they will recover or lose their home.”

Title insurance is a product available to both borrowers and lenders that aims to insure property owners against these kinds of scams.

“If [a property owner] had that policy and something like that happened it will bring them back to the position they were originally in before the fraud occurred,” says Cutajar.

“We pay your legal costs, for example fees that you incur or any other penalty etc you may incur as well as the actual fraud amount.

“Also the time period between us accepting a claim and paying is quite minimal compared to other avenues of you trying to recover those moneys such as trying to prove to a bank that it wasn’t you who did this. It could take months and in some instances it could take years, in those instances you will also be paying all your legal fees and paying interest whereas we’re simply paying all of that for you.”

By making clients aware of the prevalence of these scams in Australia and the insurance options available brokers can ensure borrowers are fully informed and protected, says Cutajar.


  • by Old joe 4/02/2014 9:15:27 AM

    “When there’s a bank involved they’ll often settle without it being reported because obviously this kind of thing could cause some reputational damage for the bank.”

    Let me get this right ... we won't report it but if it is a broker we will hang them publicly... this is incredredulous ....

  • by GC 4/02/2014 9:22:16 AM

    ASIC would probably try to state the Broker is at the middle of it all as the broker arranged the finance and then tell everyone all Brokers are dishonest. MFAA would run and hide - or stand behind ASIC beating their chest stating how good they are instead of assiisting the poor broker who wrote the loan.

  • by not so old broker 4/02/2014 1:35:46 PM

    are you people on the same planet as the rest of the world? How do you weave ASIC or the MFAA into what is obviously a criminal offence? It beggars belief - did either of ASIC or the MFAA discipline you for something "you didn't do"!