Recent trends show there has been a dramatic surge in consumer credit fraud, particularly in counterfeit credit applications.  In Australia alone, identity fraud is estimated to have cost around A$1.1 billion dollars in the fiscal year 2000 to 2001[i].  Identity fraud is complex and can involve any number of different approaches, from the use of false details to fabricate fictitious personas to the theft of real identities.

Speed, vigilance and specifically designed verification tools are critical to any organisation seeking ways to guard against potentially dramatic financial losses.

The following are some helpful tips to pass onto credit customers so they too can minimise the risk of becoming a victim of identity fraud:

SCAM[ii]

S     Be selective when giving out your personal information to others.  Do not divulge personal data unless you completely trust the concerned party, whether you are at home or travelling. 

C    Check your financial information regularly, and look for the details you know should be there and those that should not.

A    Ask periodically for a copy of your credit report and register with My Credit Alert in Australia or My Credit Monitor in New Zealand to ensure you are notified when someone accesses your credit file.

Your credit report lists all bank and financial accounts under your name, and will indicate whether someone has wrongfully opened or used any accounts in your name.

M    Maintain careful records of your banking and financial accounts.

You should retain your monthly statements and cheque details for at least one year, if not longer.  If you need to dispute or check a transaction, ­your original records will be more immediately accessible and useful to the institutions that you have contacted.

One way credit providers can reduce application fraud is to manually complete a check on their applicant’s details.  For example, contact the individual’s employer to see whether both the applicant and employer do in fact exist.  This is easy to do in principle, but can be difficult practically for organisations, as the exercise can become extremely costly and labour-intensive.  Baycorp Advantage offers Australian companies several identity verification products such as VeriCheck, and FTRA Bureau Check which all look to determine the legitimacy and existence of an individual.  Another important service available in both New Zealand and Australia is FraudCheck, which assists in preventing any further fraudulent applications being made.

The most important goal for financiers is to be able to react as rapidly as possible to potential deception in order to reduce losses.  With this objective in mind, Baycorp Advantage continues to develop products to address the issue of application fraud.  The company recently won an Australian Research Council grant to jointly research this problem with MonashUniversity in Melbourne.  The two organisations will be investigating techniques for detecting application fraud as rapidly as possible.

For more information on how BCA’s FraudCheck or identity verification products could improve your risk management process, please contact your account manager.  

To learn about your personal credit file in Australia visit www.mycreditfile.com.au
and in New Zealand www.mycreditfile.co.nz.