Fraud Prevention Guidelines

Fraud Prevention Guidelines

Over the last six weeks the trainers at ACOP have been conducting our new CPD content and one thing that has been a topic of conversation has been fraud prevention in your agencies. Unfortunately the property industry is a perfect target for fraud because we hold people’s money and their information. It is never a bad thing to be reminded of the fraud prevention guidelines issued by NSW Fair Trading which are designed to minimise fraudulent activity causing your principals a loss of money or their assets.

The guidelines advise agents that to not have a process in place to minimise fraudulent activity from outsiders would be a breach of the rules of conduct, rules such as:

  • Rule of Conduct Two in the Property, Stock and Business Agents Regulation 2014 requires agents to comply with the fiduciary obligations arising as an agent
  • Rule of Conduct Three requiring agents to be honest, fair and professional
  • Rule of Conduct Four requires that an agent must exercise reasonable skill, care and diligence
  • Rule of Conduct Six that requires agents to act in the client’s best interests

So the question for agents is, how can we ensure that as an agency we are meeting our obligations to our clients and continuing to protect the assets that have been put into our trust?

The Guidelines suggest two main items that should be in place:

  1. a policy and procedure that all staff are aware of and adopt in their day-to-day practices to minimise the potential for fraudulent activity; and
  2. to verify the identity of your landlord or vendor. A simple way of evidencing that the agency has done this is by using the proof of identity checklist that can be found on the NSW Fair Trading website.

There have been many cases in the property industry where a person has attempted to sell property that does not belong to them, as well as thousands of cases relating to an agent receiving instructions to change bank account details for properties under management that came from people that did not own the property. It is your job as the agent to ensure that you verify the identity of the person giving instructions.

Some further tips that are identified within the Fraud Prevention Guidelines are as follows:

  • Agents should be especially vigilant if the client is overseas or remote, or if dealings with that person are not face-to-face and unreasonable excuses are given for their unavailability to meet.

  • Pre-establish security questions with confirmed owners that only the owner will be able to answer and which are asked for whenever contact is made.

  • Write only to addresses (postal or electronic) held on the sales file, which are already known to be genuine.

  • If an owner changes their contact details, confirm new contact details and addresses by corresponding with all of the owner’s original and new contact points.

  • Carefully check signatures of property owners against original signatures held on file.

  • When replying to an email, type the known genuine email address from your agency files rather than simply clicking the ‘reply’ button. An email may have a hidden address in it.

Remember, if an agency does not work in a professional manner and exercise due skill, care and diligence, then that agency may be at fault should fraud occur. The agency should have implemented proper processes to minimise or even eradicate the opportunity for fraud syndicates.

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