Chapter News

Identify yourself: Implementing vendor proof-of-identity guidelines

Agents that hesitate to implement vendor proof-of-identity guidelines could be risking more than they know.

Often as agents you will have a connection to new clients – you know them from a local community group or maybe you sold their mother’s house? But does that automatically mean you can trust them?

Fraud is one of the fastest growing crimes in Australia and costs the economy in excess of $1bn every year, yet many agents still have not implemented fraud prevention procedures to protect themselves.

The recent arrest of a man in Nigeria in connection with the attempted fraudulent sale of a property in Western Australia highlights the ever–present threat to agents. In this instance the alarm was raised by staff at a Mandurah agency who had recently attended an anti-fraud education seminar held by WA Police and Consumer Protection.

Prevention in NSW

Earlier in the year NSW Fair Trading published the six-page Real Estate Fraud Prevention Guidelines. The Guidelines outline a clear set of procedures to protect agents from vendor identity fraud and include a Proof of Identity Checklist for Vendors.

While the Guidelines are not obligatory and agents are not legally required to run through the Proof of Identity Checklist with every vendor, they are required to exercise “reasonable skill, care and diligence” under Rule of Conduct 4 of Schedule 1 of the Property, Stock and Business Agents Regulation 2003.

If an agent is discovered to have not taken due care to protect their clients from fraud, then there are a number of penalties that may be imposed by Fair Trading. These include everything from conditions on, to the suspension of, the agent’s licence.

Fair Trading may also choose to impose a fine. Individual agents can be fined a maximum of 100 penalty units, which equates to $11,000, while agencies can be fined a maximum of 200 penalty units ($22,000).

In addition, risk of civil litigation by the vendor or buyer is probably the biggest risk to agents. In this instance the penalties are limitless.

Awkward questions

Agents may find it slightly embarrassing to ask clients who they have a longstanding relationship with to supply the documentation laid out in the Guidelines, but this does not match the embarrassment of being a victim of fraud or receiving a penalty or fine.

“Agents must have external identity fraud prevention procedures in place to prevent a fraudulent real estate transaction from happening without the knowledge and consent of lawful property owners,” NSW Fair Trading Commissioner Rod Stowe said.

“Fair Trading has issued the Real Estate Fraud Prevention Guidelines to protect agents against people claiming to be legitimate vendors. Agents should confirm the identity of vendors (or appointed representatives) in order to prevent real estate fraud.”

Implementing procedures

REINSW Residential Sales Chapter Chair Kathryn Hall has implemented the procedures laid out in the Guidelines into her own business, Kathryn Hall Real Estate in Avalon.

“I now include the NSW Fair Trading forms in all my pre-listing kits, even though I have a lot of repeat customers,” she said.

“It’s a matter of communicating and framing the conversation with the client.”

For Kathryn, the procedures are simply an extra layer of paperwork that can help protect her agency from fraud.

To help prevent fraudulent activity from occurring in your agency, download a copy of the Real Estate Fraud Prevention Guidelines and the Proof of Identity Checklist for Vendors at

Proving identity

NSW Fair Trading’s Real Estate Fraud Prevention Guidelines includes a Proof of Identity Checklist for Vendors, which outlines that agents must follow the procedures laid out below in order to confirm the identity of a vendor:

  • Verify the vendor’s identity – agents must verify the vendor’s identity from an original primary photographic document (such as a current driver’s licence) or an original or certified copy of a secondary non-photographic identification document (such as a current Medicare card, credit card, electricity bill or rate notices). The Proof of Identity Checklist for Vendors sets out the documents that are acceptable as proof of identity documents. 
  • Legal ownership – agents must verify the 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.
  • Face-to-face – agents must conduct checks face-to-face, and the original documents must be sighted in order to verify identity.
  • Checklist – agents must keep the checklist on file for inspection if required.
This article was first published in the October 2013 edition of the REINSW Real Estate Journal.