The Australian Institute of Criminology (AIC) Consumer Fraud Taskforce has published results of an online consumer fraud survey conducted in 2010 and 2011. There have been some interesting revelations, particularly the likelihood that dating scam victims can suffer both financial loss and disclosure of their personal details (the building blocks of identity theft). We look at this survey in detail, and what the results could mean for the health of your credit rating.

By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

The AIC’s Online Consumer Fraud Survey was published last week.

This report presents the results of the 2010 and 2011 surveys, which each ran for three months commencing from 1 January and encompassed National Fraud Prevention week that coincides with global awareness-raising activities. The theme of the 2010 campaign was Online Offensive—Fighting Fraud Online, which focused on the increased prevalence of online fraud. In 2011, the campaign Scams—It’s Personal aimed to increase awareness about personalised and targeted frauds and scams.

Both surveys explored scams where respondents had been contacted by phone, SMS, email, letter, via the internet and/or in person by someone that they did not know in relation to:

• having won a lottery or some other prize (lottery scams);
• a request for assistance to transfer money out of another country (such as Nigeria; advance fee frauds);
• a notification of an inheritance (inheritance scams);
• a request from a business to confirm personal details or passwords (phishing scams);
• a request to supply financial advice (financial advice scams);
• an opportunity to work from home (a front for money laundering; work from home scams);
• pursuing a personal relationship that turned out to be false (dating scams); and
• other fraud types.

It was found about 1145 people who responded to the survey lost almost $7 million in 2011 to scams.

Dating scams were the most likely to result in financial loss or the disclosure of personal details, with almost half of victims reporting they had lost money. Dating scams are more complex and can use identity fraud, along with information gathered from social networking sites, to target and groom particular individuals.

In 2010, people aged 45 to 54 reported the highest percentage of victimisation. In 2011 the age group with the highest victimisation rate shifted to those aged 65 years and over.

Assistant Treasurer David Bradbury says it is important that anyone targeted by a criminal scammer report it to the Australian Competition and Consumer Commission on 1300 795 995.

“Even if the amount of money or information involved seems small, the same scammer could be targeting other people and that information can help prevent more fraud,” Mr Bradbury said in a statement to the media last week.

Here is an excerpt from the AIC’s report, on the findings of that survey:

Scams were received by a large proportion of the survey respondents—89 percent in 2010 and 94 percent in 2011. While lottery scams, advance fee frauds, phishing and work from home scams were the most common types of scams received, they were not necessarily the ones that resulted in the highest levels of victimisation. Dating scams, although less prevalent, were the most likely to result in the disclosure of personal details or a financial loss when a respondent was exposed to them. This finding is consistent with scam complaints made to the ACCC (2012a) and indicates that it is not sufficient to just raise awareness about the most commonly received scam invitations, but there must also be a focus on the more obscure scams.

The results of the number of people falling victims to scams, and the types of scams people have fallen for year to year have changed. This sends some messages about scams:

1. Education is working. Once consumers are made aware of a scam in the community – it might be likely that victim numbers fall for that particular scam.

2. Fraudsters are concocting new scams all the time. Because consumers are getting educated – fraudsters are changing scams all the time. Consumers need to be on their guard for new scams.

3. Just because people have not identified a monetary loss, does not mean the personal details that fraudsters have been able to obtain will not be used at some future time for purposes of identity theft.

4. The number of people reporting scams is still fairly low – are we all getting too blasé about scams – and at what cost?

Here is another excerpt from the AIC’s report:

One of the salient findings from the surveys was the low reporting rate to law enforcement and regulatory agencies. The main reasons provided for not reporting were not thinking anything would be done, being unsure of which agency to contact and perceiving that reporting was not worth the effort. A failure to report scams is problematic, in part because it reduces knowledge and understanding of the nature and extent of scams, not only for creating awareness about current threats, but also in coordinating law enforcement investigations and collecting evidence about small-value, high-volume frauds that may affect a large number of victims. A focus on the reasons why scams were reported, namely preventing others from being scammed, knowing it was the right thing to do and to assist in investigating and apprehending offenders, may be useful in the development of future education campaigns that encourage others to report scams.

How scams can affect the victim’s credit rating

For people who have fallen for this type of scam, generally they are robbed of money. But in some cases, the fraudsters can have enough personal information about their victims to be able to get credit cards or loans or even mortgage properties in their name.

The costs can be significant long term for the victim and are magnified by the fact that fraud is not often detected until the victim attempts to take out credit in their own name and is refused due to credit rating defaults they didn’t initiate.

It can be quite a shock for someone to realise their entire financial freedom has been taken away, along with any monies that have been stolen from them. Basically someone with credit file defaults finds it extremely difficult to obtain credit for 5 years while the listing is part of their credit record.

Any kind of credit account (from mortgages and credit cards through to mobile phone accounts) which remains unpaid past 60 days can be listed as a default by creditors on the victim’s credit rating. Credit rating defaults remain on credit files in Australia for 5 years. The consequence of people having a black mark on their credit rating is generally an inability to obtain credit.

By law in Australia, if a credit listing contains inconsistencies or is incorrect, the credit file holder has the right to negotiate their amendment or removal, but the difficulty is, to clear their good name, the identity theft victim needs to prove to creditors they did not initiate the credit. Not only are victims generally required to produce police reports, but large amounts of documentary evidence to substantiate to creditors the case of identity theft – another reason for vigilant reporting of scams when we come across them.

For those respondents of the AIC’s survey that revealed disclosure of personal details, I sincerely hope they were advised to keep an eye on their credit report as well as their bank accounts.

Often going unchecked until the time of credit application, an identity theft victim’s credit report can often be the first sign they have been duped – and by then they can have debts owing and defaults or other listings ruining their financial futures and ability to obtain credit in the future and any signs of the perpetrator of this event can be long gone.

For advice on how to keep an eye on your credit report if you feel you may be vulnerable to identity theft or if you wish to try to recover your credit file following fraud – contact MyCRA Credit Rating Repairs on 1300 667 218 or visit our main website www.mycra.com.au.