In January 2023 Lam received a call from a lender saying that she had missed several payments on her loan. The lender said that they were handing the account over to their collection department if Lam did not make payment arrangements. Lam was very surprised by the call because she was not aware of any loans with this lender.
Lam told the lender that she did not apply for a loan with them and asked them when the loan was approved. The lender told Lam that the first loan was approved in 2017, six years ago, and that there were five top-ups on the loan over the years.
Lam asked the lender how it was possible that the loans were approved without her knowledge and at a time she was unemployed.
After some investigation, the lender told Lam that her driver’s licence was used to verify her identity when the loan was approved and that they had copies of her payslips at that time. The lender further said that repayments on the loan were on time every month but stopped four months ago.
Lam immediately puzzled the mystery together.
Lam told the lender that she suspected that her ex-partner fraudulently opened the account in her name without her knowledge. Lam said that:
- because they lived together, he had access to her driver’s licence
- her ex-partner had his own business and must have generated a false payslip in her name
- she and her ex-partner split up five months ago
- she thought that he stopped making payments because of their separation.
Lam asked the lender to send her an updated statement as well as a copy of the driver’s licence and proof of income used when the lender approved the loan.
For privacy reasons, and because Lam suspected the account was fraudulently opened, the lender did not want to share the information. The lender asked Lam to make a complaint of fraud against her ex-partner to the police and send them a copy of the police report.
Lam reported the suspected fraud to the police using her ex-partner’s nickname and not his legal name and sent this to the lender.
The lender said that the report was not sufficient, that they had passed on the loan to their collection department and that Lam was responsible for the debt.
Because Lam did not receive any letters or paperwork from the lender, but wanted to resolve the matter, she consulted a lawyer.
Lam’s lawyer told her about FSCL, and they made a complaint.
Dispute
Lam complained that
- a loan was fraudulently approved using her driver’s licence as verification
- the lender had not given her copies of the identification and proof of income they relied on when approving the loan
- she felt that she should not be held liable for a debt she had no knowledge of.
To resolve the complaint Lam wanted the lender to write off the debt.
The lender said that they often received complaints, after the breakdown of a relationship, where the borrower falsely alleged fraud as a reason for the lender to write off a debt.
The lender said that they were willing to look at writing off the debt if Lam provided them with a police report that said it was a case of fraud and included her ex-partner’s legal name.
Review
We reviewed the complaint and explained to Lam that it was not unreasonable for the lender to request a complete police report to assist them in a fraud investigation against her ex-partner, if she wanted the lender to write off the debt.
Lam understood the reasoning and filed another police report stating her ex-partner’s nickname and legal name and sent a copy of the report to us.
We forwarded the report to the lender and the lender then agreed to write off the debt in Lam’s name.
We further suggested that the lender pay Lam’s legal fees, because they did not tell her that she had the option to contact FSCL, rather than having to obtain legal advice.
Resolution
Under our terms of reference, the lender should have told Lam that she could approach FSCL if she was not happy with the outcome of their internal investigation, which would have saved Lam the cost of legal fees and the lender the cost of reimbursing Lam for her legal fees.
Insights
When a borrower suspects that they have been a victim of identity theft or other fraudulent behaviour, the Privacy Act only provides them with the right to request information about themselves and not about the offender. But, whether information is about you or the offender is not always straightforward.
If you believe you requested information about yourself and you are unhappy with the lender’s response, you can contact the Privacy Commissioner for further assistance.
Although the lender could not give Lam all the information on the file, they should have sent her a letter referring her to FSCL. We are a free independent and impartial dispute resolution service.
