Identifying and preventing income fraud
Income fraud is a growing risk for the lending industry, with falsified documents becoming easier to produce and harder to detect. As a broker, you are on the front line of preventing fraudulent applications. This article explains how to recognise the warning signs, verify income information, and protect yourself, your clients and lenders.
Why income fraud matters
Fraud undermines trust in the lending system and exposes everyone involved to significant consequences. Regulators and lenders continue to increase their scrutiny of income verification processes, with ASIC having banned or penalised numerous brokers for failing to identify or escalate suspicious activity. In serious cases, criminal prosecution can occur.
Falsified payslips and bank statements are the most common forms of fraud encountered, often created using modern editing software that can manipulate documents convincingly.
Important: You are responsible for ensuring the income declared on an application accurately reflects the customer’s true position.
Common types of income fraud
Brokers most commonly encounter altered or fabricated:
Payslips
Bank statements
Employment letters
Tax records
These may be used to inflate salary, conceal liabilities, or misrepresent employment status.
How income fraud impacts you
Failing to detect or escalate suspicious income information can lead to:
Loss of lender accreditation
Reputational damage
Regulatory investigation
Civil or criminal penalties
How to identify income fraud
Income verification typically begins with reviewing payslips and bank statements. Look closely for inconsistencies or abnormalities.
What to check on a payslip
A genuine payslip should include:
Employer name
Employee name
Employer Australian Business Number (ABN)
Tip: Verify via ABN Lookup.
Pay period and payment date
Gross and net pay
Hourly rates and hours worked
Allowances or bonuses
Superannuation contributions
Other deductions (child support, HECS, etc.)
Leave balances
Year-to-date totals
Missing or unusual information should be treated as a warning sign.
Verifying document authenticity
If a document raises concerns:
Request permission to verify employment.
Contacting the employer is appropriate when clarification is needed.
A customer refusing permission to verify employment may indicate risk.
Note: Record all verification steps and conversations in Mercury.
Use conversation to confirm information
Clients often reveal inconsistencies when discussing:
Job responsibilities
Pay structure
Regular working hours
Time in the role
Capture detailed notes and compare them with supporting documents.
Tip: If something feels inconsistent, request more information or escalate your enquiries.
Tools to help assess income reasonableness
Use external resources to check whether income is consistent with the role and industry:
Apply professional judgment and document the rationale for any additional checks.
Document everything in Mercury
Evidence is your best protection. Upload:
Notes from conversations
Verification steps
Supporting documents
Any follow-up actions taken
These records may be required by lenders, auditors or regulators.
Further learning
Watch our PAYG income and employment verification webinar to strengthen your verification skills.
Need help?
If you need help assessing potential income fraud or verifying documents, contact your Compliance Support Manager or email [email protected]