New research has revealed almost one in five Australians are OK about telling “white lies” in a financial service or loan application.
The latest survey findings from digital identity specialist company GBG highlights how first-party fraud is evolving in Australia and how the financial services industry should respond.
The Evolution of First Party Fraud in Australia report highlights the complexities of first-party fraud amid the rising cost of living, inflation and economic impacts of the pandemic on consumers.
The report analyses responses from 1,008 Australians in July 2022 which highlights first-party fraud is not a new concept or challenge for financial institutions and analyses the way it will manifest in the next 12 months.
Carol Chris (pictured above), regional general manager of GBG for Australia and New Zealand, said despite growing financial pressures, 89% of Australians said they were unchanged or less likely to omit a debt or liability in a financial service or loan application in the next 12 months.
“Meanwhile, 81% of Australians said they would be 100% accurate about how much debt they have,” Chris said.
“Furthermore, 70% said they would never knowingly lie in a financial service or loan application. However, the minority who are likely to commit first-party fraud is not a negligible amount, with 19% believing it’s OK to tell a ‘white lie’ and report having less debt than they actually have in a financial service or loan application.”
GBG’s report revealed 12% of Australians have knowingly omitted a debt or liability from a loan application in the past, with the most common reasons cited for omitting a debt or liability from an application including – the knowledge that they could afford the repayments (40%); needing the money and feeling they had no other choice (34%) and believing the financial institution was unlikely to find out (31%).
“We had 30% of responders tell us it was not a big deal to lie to financial institutions if it meant they got the finances they needed or because they believe nobody gets hurt in these situations,” she said.
“The most common reasons consumers cited for switching banks or financial institutions were pricing (40%), lost trust due to how they handle fraud and scams (27%) and a faster and easier onboarding process (11%).”
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Chris said the reality was most Australians would try to do the right thing when it came to loan applications and managing their finances.
“Even during times of financial instability or stress, most Australians will look for legal, simple and cost-effective ways to address their challenges,” she said.
“Concerningly, only 22% of respondents were very confident in understanding the rules, legislation and consequences of lying in a financial service or loan application.”
Chris said while most Australians seemed to be taking responsible steps to be honest in their financial service and loan applications, there were some clear misconceptions around whether it was acceptable to omit seemingly small details in these applications.
“Not to mention there is a lack of community-wide understanding of how dire the consequences can be when these instances of fraud are uncovered.
“There is an opportunity for financial institutions to make information about the rules and regulations of loan applications more accessible for customers to limit the impact of intentional or unintentional first-party fraud.”
