Fraudsters line up for iPhone release

20 September 2013

Today's Australian release of Apple's new iPhone models is expected to set off a rush of falsified customer applications, with credit data from the days following last year's iPhone 5 release revealing there was a 131 per cent increase in 'high risk' phone applications.

Telecommunications retailers in Sydney in particular are advised to be vigilant, with the analysis by credit bureau Dun & Bradstreet showing a 320 per cent jump in high risk applications in the city during the 48 hours after last year's iPhone 5 launch. Stores in Sydney's west and south-west experienced significant spikes in high risk applications, with those operating in the regions around Auburn receiving a 279 per cent increase,  Campbelltown 173 per cent, Mount Druitt 100 per cent and Liverpool 93 per cent. 

Although at levels lower than the nation's most populous city, east and south-east coast capitals were also hotspots, with the number iPhone applications considered high risk in Melbourne increasing by 190 per cent, in Brisbane by 150 per cent and in Adelaide by 100 per cent.

Dun & Bradstreet develops risk bands for credit applications (including for phone contracts) which range from low to severe - based on the applicant's likelihood of not paying their bills.

After tracking the outcome of applications following last year's iPhone release, Dun & Bradstreet found that 39 per cent of individuals who had been flagged as a high risk subsequently defaulted.  Those graded as 'severe risk' subsequently defaulted at nearly eight times the rate of the average applicant.

High risk application hotspots: 21-22 September 2012

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According to Gareth Jones, CEO of Dun & Bradstreet, the findings are a clear call for stores selling high-demand products such as the iPhone to assess their contract application and identity checking processes

"Having seen the change in the quality of applications in the days immediately following a national launch, it's unfortunately safe to say that businesses selling the new iPhone this week face a heightened risk of bad debt from potentially fraudulent applications," Mr Jones said.

"Bad debt is a real threat to smaller operations which may not have the capacity to properly screen credit applications. Compounding the problem is the reality that small retailers are also often less equipped to cope with financial losses from debt and are also inexperienced at recovering overdue payments.

"Retailers of any high-demand consumer product need to invest the time to ensure their risk management systems can handle the spike in applications they receive following a product launch," he added.

In comparison to applications after the 2012 Samsung Galaxy release, D&B's analysis found there were four times as many high risk applications following last year's iPhone 5 release. The iPhone's 'popularity' was substantial among younger consumers, with a 168 per cent increase in high risk applications by shoppers aged between 24-27 years, and increases of nearly 140 per cent for those aged between 20-23 years.

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"Consumer fraud, such as identify fraud and the falsification of information on credit applications, is a significant issue for individuals, as well as the business burdened with the debt," said Mr Jones.

"Figures from the ABS tell us that millions of individuals have been victims of fraud, with personal losses for those affected in the range of two thousand of dollars each.

"Beyond the immediate financial loss, if identity fraud was at play then the victim may also find there had been attempts to open and use lines of credit in their name.

"Whether these attempts were successful or not, the victim's credit standing may have been adversely impacted, requiring them to go through the process of correcting and removing black marks from their personal credit file," he added.

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