Data insights company Veda has seen the number ‘red-flagged’ loan applications increase by 52 per cent in the two years to June 30.
In the past financial year almost $2 billion worth of credit applications were flagged as being high risk, with potential links to known fraud events, according to Veda.
To highlight the risk to credit providers, Veda ran an analysis of $1.6 trillion worth of credit applications checked by its credit bureau in the 12 months to June 30.
The analysis found $1.9 billion worth of red-flagged applications.
In a statement released yesterday, Veda expressed its concern that not all lenders assessing the applications were aware of the risks, particularly at a time when red-flagged applications have grown 52 per cent in two years and are rising as a percentage of all credit applications.
Veda’s general manager of fraud and identity solutions Imelda Newton said credit applications are red-flagged, or highlighted for further investigation by credit providers, if there is an association of details such as address or driver's licence with a previous known fraud event.
“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,” Ms Newton 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,” she said.
“Credit providers who are subscribers to our FraudCheck service are alerted to possible fraud, and can then determine the right course of action.”
Veda’s FraudCheck uses elements of information provided in a credit application to check against information associated with confirmed investigated fraud events.
Veda data released in June 2014 showed that identity takeover is the fastest growing form of credit application fraud, increasing 103 per cent 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,” she said.
“The depth of our data and sophistication of FraudCheck helps protect lenders from potential fraud.”