Mortgage lending application fraud
Loan application fraud has significant consequences for financial institutions, creating financial instability and eroding customer trust in the mortgage loan process.
Mortgage fraud refers to the intentional misrepresentation or omission of crucial information during the mortgage process and its growth is a worrying trend in South Africa. It is on the increase with income fraud and identity fraud. Income fraud includes the misstating of employment or income information and identity fraud is the use of stolen or fabricated identity information to apply for a loan facility.
Red flags to be on the lookout that could suggest loan application fraud is taking place
- Identity fraud includes inconsistencies in personal information: in names and addresses, or other identifying information on documents that appear altered, forged, or tampered with.
- Forged or altered documents, including payslips and bank statements – be on the look out for:
- Inconsistent fonts, signatures, formatting, rounded salary amounts
- Incomplete or blank sections on the documents indicating the concealment of information
- Inconsistent information highlighting contradiction in the information across multiple documentation received, such as the salary amount on payslip differing from to the amount in the bank statement.
- Exaggerated and inflated income not aligned to the applicant’s occupation or industry
- Verification of income sources is essential to detect fraud
- Insufficient or missing documentation can be a sign of fraud.
- Credit history, especially repeated loan defaults, late payments or being under debt review raises concerns about an applicant’s financial wellbeing and ability to honour a loan obligation
- Falsified employment information: Such as the listing of a non-existent company on an application
- Verify employment details through official channels such as credit bureaus including XDS and Transunion, CIPC and Google searches
- Urgent and rushed applications where the applicant displays impatience or exerts pressure to expedite the loan approval process to avoid close scrutiny of the application information
Tips for preventing loan application fraud
Proactively protect personal information to minimise the risk of falling victim to identity theft. This includes:
- Secure Account: Ensure that online accounts are secured
- Passwords: Create unique and complex passwords for each online account
- Verify Requests: Always confirm the identity of anyone asking for personal information. If you receive a suspicious email or call, don’t hesitate to contact your bank or institution directly using a verified number obtained from a search engine like Google, never share personal data.
- Added protection: Enable two-factor authentication (2FA) on accounts, adding an extra layer of security beyond just a password
- Report: Where the identity is compromised, list the details for Protective Registration with SAFPS and inform all financial institutions to exercise caution when processing applications presented in the victim’s name
- Monitor your accounts: Regularly check your bank statements and transaction history and report any unauthorised transactions immediately
- Stay informed: Knowledge is power! Familiarise yourself with common scams and tactics used by fraudsters and promote a culture of vigilance across the organization. Awareness is your first line of defence, you can get detail on the absa.co.za website and websites can be checked to confirm if they have been reported as scams on YIMA (https://www.yima.org.za)
- Multi layered protection: Implementing a multi-layered control approach that includes a robust document review process to detect and prevent fraudulent loan applications
- Don’t Click on Suspicious Links: Be wary of links in emails or messages, especially if they seem unexpected or come from unknown sources. Fraudsters often use these to gain access to your information
- Where feasible, make use of advanced analytics solutions and AI-powered solutions to detect fraudulent documents, patterns and anomalies in behaviour and data
- Ensure that documentation submitted by potential applicants contain the all the relevant information required by the financial institution to process the application, for example: name, ID no., address, contact details, employer, etc.
- Where possible, invest in or leverage off document fraud detection technologies and tools to identify altered, forged, or counterfeit documents
Stay informed, keep up with the latest fraud trends and tactics.
SAFPS - https://www.safps.org.za/
SABRIC - https://www.sabric.co.za/
Cifas - https://www.cifas.org.uk/
ACFE - https://www.acfe.com/
Fraud com - https://www.fraud.com/
What is account takeover fraud?
As fraudsters become more sophisticated, there is the growing threat that millions of people will lose access to their online accounts because of impersonation scams. Attackers pose as trusted colleagues, leaders, or partners to trick you into sharing sensitive information to take over bank accounts and transfer funds out of these accounts.
This type of fraud occurs when a fraudster poses as someone you trust, and tricks you into sharing sensitive information, such as login credentials or clicking on malicious links to gain access to your account. All of this is done through using different social engineering techniques to manipulate a person into trusting the information being shared and requested from them.