Some Filipinos willing to commit fraud for loans, claims

FILIPINOS are willing to provide false information to obtain a loan or when making insurance claims, a survey by global analytics software firm FICO showed.

Around 35% of Filipino respondents in FICO’s survey said there are circumstances when it is appropriate to exaggerate income on a loan or mortgage application, while 15% thought it was normal to do so, FICO said in a statement on Thursday.

The survey conducted in 2022 included 1,000 Filipinos.

“These findings underscore the importance of robust fraud prevention strategies that not only safeguard customers’ interests but also strengthen the bottom line of businesses,” Chee Keong Leo, FICO lead for fraud, security and financial crime in Asia-Pacific, said.

“While many think that people should never take these fraudulent actions, the survey sheds light on the concerning willingness of almost half of Filipinos to commit fraud in pursuit of financial gain,” he added.

FICO said fraud could be costing banks inaccurate risk assessments, which could lead to financial losses from inflated insurance claims.

“In the competitive banking landscape of the region, having the wrong fraud strategy is expensive,” Mr. Leo said.

“Successful fraud teams balance both fraud protection with the legitimate needs of customers. Taking a holistic approach to an applicant’s data will help the fraud team effectively distinguish between fraudulent and legitimate applications. The application of analytics and machine learning models will further bolster a bank’s defenses while generating higher levels of customer satisfaction,” he added.

Banks could also face higher costs due to identity checks that customers are required to comply with, resulting in duplications that frustrate customers, FICO said in a statement.

It added that customers could also be unaware that providing false information for financial or material gain is illegal and is known in banking as first-party fraud.

“The economic situation, compounded by the increasing cost of living, has forced some Filipinos to take desperate measures to obtain credit and other means to make ends meet,” Mr. Leo said.

“However, misrepresenting information constitutes fraud. Financial institutions can improve their ability to detect anomalies that suggest exaggeration or misstatement of information, enabling them to take positive action to safeguard against losses resulting from customers’ inability to repay. By doing so, they can also assist customers in avoiding regrettable paths,” he added.

Fraud departments of financial institutions are unable to use data that distinguishes fraud from legitimate applications because these are isolated, FICO said.

“These inefficiencies result in inadequate fraud protection and compromise the customer experience,” it said. — A.M.C. Sy