Lenders stop $1.5bn in fraud as risks rise

The Equifax Fraud Index Report – 2025 Year in Review, published by data and analytics company Equifax, highlighted a shift toward first-party fraud and money muling, supported by the widespread availability of artificial intelligence (AI) tools that make falsifying documents easier than ever.

Credit product fraud outpaces non-credit

The report shows that fraud is now growing faster in credit products than non-credit products for the first time in three years.

Fraud involving credit products, such as mortgages and credit cards, rose by 11.1 per cent, while non-credit fraud – including telco and utilities – fell slightly by 1.1 per cent.

This aligns with rising demand for finance. Equifax Consumer Market Pulse data shows unsecured credit demand increased by 6 per cent, while mortgage inquiries rose by 12.3 per cent – their strongest growth since 2021.

As Equifax general manager of digital identity and fraud services, Tehani Legeay said: “As more Australians seek credit to manage their financial needs, it creates a larger pool of opportunity for fraud.”

$1.5bn in fraud prevented – but risks remain

Despite rising fraud attempts, lenders are improving their ability to detect and stop fraudulent activity.

“While the volume of overall fraudulent attempts and reported instances increased over the past year, it should also be recognised that prevention tactics during this time saved over $1.5 billion worth of fraudulent credit applications,” Legeay said.

The report also highlights that while transaction accounts and credit cards see higher volumes of fraud, mortgages and auto loans account for significantly higher dollar values.

Additionally, the report points to a 25.5 per cent increase in first-party fraud, where individuals manipulate their own loan applications.

According to Equifax, this trend may be linked to cost-of-living pressures, combined with the growing availability of AI tools that make it easier to falsify documents.

“We’ve seen a significant spike in loan manipulations,” Legeay said.

“Easy-to-use and inexpensive AI tools can now produce convincing fake documents, which may increase the temptation to falsify information to secure credit, especially amid heightening economic pressures.”

Broker exposure to fraud increasing

The growing fraud challenge is already being felt across the broking industry.

According to previous Equifax research, nearly three-quarters of Australian mortgage brokers reported being impacted by scams or fraud in the 12 months to September 2025 – up from 26 per cent a year earlier.

At the same time, new data from the Australian Bureau of Statistics shows fraud is widespread among consumers.

An estimated 3.2 million Australians – around one in seven people – experienced personal fraud in 2024–25.

Of these:

• 2.3 million (10 per cent) experienced card fraud.
• Nearly 600,000 (2.7 per cent) experienced a scam.
• Around 220,000 (1 per cent) experienced identity theft.
• About 500,000 (2.3 per cent) experienced online impersonation.

While scam victimisation declined slightly, other forms of fraud have increased over time, including card fraud, which has risen from 5.9 per cent in 2014–15 to 10.4 per cent in 2024–25.

Mortgage fraud under scrutiny

Recent developments also highlight the risks within mortgage lending.

Commonwealth Bank of Australia has recently self-reported potential mortgage fraud estimated at around $1 billion, which is now under investigation by the Australian Securities and Investments Commission (ASIC).

Reports suggest the lender identified issues in home loan applications submitted through both brokers and introducers.

Separately, National Australia Bank uncovered around $150 million in suspected fraud linked to an operation known as the Penthouse Syndicate.

Money muling surges as fraud shifts

The Equifax report also identified a 90.9 per cent increase in money mule activity.

This can involve individuals being lured into scams or participating due to financial hardship to move illicit funds.

However, Equifax noted that improved identification methods are also contributing to the increase, with some cases previously classified as other fraud types now being recognised as money muling.

At the same time, reported identity takeovers fell by 16.6 per cent.

“Many accounts once thought to be subject to identity takeovers, now appear to be instances of money muling – often with the account holder’s involvement, whether they are complicit or coerced,” Legeay said.

AI emerging as both risk and response

AI is playing a growing role in both enabling and detecting fraud.

Reports suggest AI may have been used to forge documents in the Commonwealth Bank case, while lenders and technology providers are also using AI to identify inconsistencies in applications.

Brett Spencer, chair of the Finance Brokers Association of Australia and founder and CEO of AI-driven document and data verification platform DocuScan, told Broker Daily that AI can analyse data points at scale, revealing inconsistencies that may not be immediately obvious to a human reviewer.

“What an AI platform can do is cross-reference the bank account details on a payslip, verify the calculations, and check the dates and data,” Spencer said.

“It can also look beyond the typical 90-day window to determine whether income is short-term or ongoing.”

He also noted that AI can check the metadata of a document – the underlying information describing how a document was created or modified.

Lenders and aggregators are also deploying their own technology. Nick McGrath, CEO at Moneytech, said the SME lender was building and using internally developed AI tools to prevent document fraud. He noted that there was also a variety of other platforms in the space, including DoxAI and Equifax.

DocuScan is also launching two broker-focused platforms that allow brokers to upload client files for automated compliance, fraud, and verification checks.

McGrath added: “As fraud tactics continue to evolve, I believe the role of AI in detection and prevention is likely to expand further. The goal is a safer, more resilient lending environment.

“The most powerful fraud prevention tool will be a combination of AI, common sense and experience.”

[Related: Brokers urged to tighten processes as fraud risks rise]