Chapter News

Don't fall foul of identity fraud

We’ve all seen the headlines: “Authorities warn that identity fraud is on the rise”; “3 arrested in multi-state identity theft spree”; “Police investigate potential identity theft scam”.

We think “that couldn’t happen to me”, but the reality is that identity fraud is on the rise. In fact, it is one of the fastest growing crimes in Australia and costs our economy in excess of $1 billion every year.

And the property industry isn’t immune. In just the past few years there have been two highly-publicised incidents where properties in Western Australia were sold without the knowledge or consent of the lawful owners.

The sales were undertaken by real estate agents who were contacted by fraudsters masquerading as the true owners. In both cases, the properties were tenanted and being managed by an agent on behalf of the true registered owner. The fraudsters initially contacted the agent by telephone, notifying the agent of new contact details to be used for all future communications, and the sales then proceeded from there.

As recently as February this year, the Western Australian Department of Commerce issued a further alert that fraudsters are still trying to dupe property professionals.

Proof of identity required

The key message is that real estate agents need to be on high alert. To combat the increase in identify fraud and scams, and in response to the Western Australian incidents, NSW Fair Trading released the Real Estate Fraud Prevention Guidelines.

The Guidelines help agents to verify the identification of vendors in order to prevent real estate fraud. They are a set of practices and procedures for agents to confirm the identity of vendors or their representatives. They also include a list of possible warning signs and guidelines, including a proof of identity checklist.

You must verify vendors

In accordance with the Guidelines, agents are required to confirm the identity of the owner. When doing so, the agent must:

  • Verify the vendor’s identity from an original primary photographic identification document (such as a current photo driver’s licence) and an original or certified copy of a secondary non-photographic identification document (such as a current Medicare card, credit card, electricity bill or rates notice).
  • The Proof of Identity Checklist for Vendors lists acceptable proof of identity documents.
  • Verify the legal ownership of the property from an original or certified copy of a primary property ownership document, such as a property certificate, current rate notice or other document conferring the power of sale.
  • Agents must conduct the check face to face, and the original documents must be sighted in order to verify identity.
  • The Checklist should then be retained in the sales file for inspection if required.
Penalties may apply

The Guidelines require all Licensees-in-charge to have adequate procedures in place to ensure that proper protocols are followed and all employees are aware of their responsibility to verify the identity of vendors.

Failure to have these procedures in place means that the Licensee-in-charge and/or agent could be held to be in breach of the requirements of the Property, Stock and Business Agents Act 2002 in relation to agents’ conduct and, in the case of the Licensee-in-charge, in regard to the proper supervision of staff. In such cases, penalties and/or disciplinary action may apply.

REINSW strongly recommends that all members familiarise themselves with the Guidelines and put the necessary procedures in place to ensure compliance.

You can download a copy of the Real Estate Fraud Prevention Guidelines and the Proof of Identity Checklist for Vendors at www.reinsw.com.au/FPGuidelines

For all questions regarding the Guidelines, call the REINSW Helpline on (02) 9264 2343 or email

helpline@reinsw.com.au


 
Warning signs!

It’s important that agents are able to identify the possible warning signs of fraud when they arise. Just some of these warning signs include:

  • A recent change in address or other contact details that have not been provided until instructions to sell a property are received.
  • The transaction involves people located overseas or documents issued overseas.
  • There is a request for funds to be sent to a different bank account from that normally used by the client, including but not limited to offshore accounts.
  • Advice is received that the sale is urgent – for example, because of an overseas investment opportunity.
  • New email addresses are generic such as Hotmail, Yahoo or Gmail.

If you suspect identity fraud in a real estate transaction, contact the NSW Police or NSW Fair Trading and don’t act on the property sale.

Source: Real Estate Fraud Prevention Guidelines.

This article was first published in the April 2013 edition of the REINSW Real Estate Journal.