$1.9 billion of credit applications red-flagged as potential fraud in FY2014

Sydney, Australia: Monday, 25 August 2014 – Almost $2 billion worth of credit applications in the past financial year were red-flagged as being high risk, with potential links to known fraud events, according to Veda data released today.

Veda is Australia and New Zealand’s leading credit bureau and data insights company, with more than 20 million credit records and the only company with the capability to see the connections between credit applications and past fraudulent activity.

To highlight the risk to credit providers, Veda ran an analysis of $1.6 trillion worth of credit applications checked by Veda’s Credit Bureau in the year to 30 June 2014.

The analysis found $1.9 billion worth of red-flagged applications, but alarmingly, not all lenders assessing the applications were aware of the risks. Red-flagged applications have grown 52% in just two years and are rising as a percentage of all credit applications.

Credit applications are red-flagged, or highlighted for further investigation by credit providers, if there is an association of details such as address or drivers licence with a previous known fraud event, said Imelda Newton, Veda’s General Manager of Fraud and Identity Solutions.

“While most major credit providers in Australia conduct fraud checks on credit applications, there are a number of lenders who process high risk applications unaware of possible links to fraudulent activities,” she said.

“These lenders, including telecommunications providers,  utilities, credit unions, banks, payday lenders and auto finance providers, are exposing their business to unnecessarily high risk applications.

“Credit providers who are subscribers to our FraudCheck service are alerted to possible fraud, and can then determine the right course of action,” Ms Newton said.                                                                   

Veda’s FraudCheck uses elements of information provided in a credit application to check against information associated with confirmed investigated fraud events. 

Lenders who subscribe to FraudCheck are then alerted to any fraud links with a red flag on that particular application.

In the financial year to 30 June 2012, $1.25 billion was red-flagged for potential links to known fraud events.  Two years later this has grown to $1.9 billion, a 52% increase. Over the same period of time, credit growth was around 40%.

Veda data released in June 2014 showed that identity takeover is the fastest growing form of credit application fraud, increasing 103% from 2012 to 2013.

Ms Newton said fraudsters were constantly changing their points of attack on credit providers.

“While the mode of fraud may change, the individuals perpetuating fraud are often the same.  The depth of our data and sophistication of FraudCheck helps protect lenders from potential fraud,” Ms Newton said.