The consequences of insurance fraud are harsh. One example was a car owner, “Mike”, who fraudulently claimed his car was damaged in the Auckland Anniversary weekend floods on January 27, 2023. Mike’s name was flagged on an industry database called the Insurance Claims Register, and as a result his house and contents policies were cancelled by another insurer.
Insurance Ombudsman Karen Stevens said Mike is unlikely to get insurance from any other New Zealand insurer and faces the possibility of the bank withdrawing his mortgage because the house is uninsured.
Car and personal loan applications sometimes involve everyday fraud. Less reputable car dealers school potential borrowers on how to get loans they can’t afford and are therefore not entitled to.
Financial Services Complaints Limited, an Ombudsman service, dealt with such a complaint recently about an unaffordable car loan. The car dealer told the borrower they would not meet the lender’s criteria unless he included his girlfriend as a co-borrower and lied to say he was paying less rent than he was.
Chargebacks are another thing people don’t see as a crime. Someone buys goods or services, and then claims their payment back on the credit card. It’s very tough on small business owners, who may just be making ends meet. Airbnb owners report people staying in their homes, then claiming the cost back through a chargeback.,
The Banking Ombudsman service handed a chargeback case in New Zealand where an online gambler tried to get his money back after losing. The bank refused. The customer then complained to the Ombudsman, who sided with the bank.
One type of banking fraud the New Zealand Banking Association sees are money “mules” who, for a payment, let criminals transfer money overseas via their accounts, says chief executive Roger Beaumont. Some don’t understand it’s a crime.
Accident Compensation Corporation (ACC) fraud sometimes appears in court reports. ACC’s deputy chief executive of service delivery, Amanda Malu, says it is sometimes “waste” because it’s careless, not deliberate. She cites a person who returns to work and does not understand they need to let ACC know.
The Inland Revenue Department (IRD) commits millions of dollars to uncovering fraud. A spokesperson says the department’s primary purpose in the compliance and enforcement work is to try to ensure people get things right from the get-go, and where they appear not to be, then working with them to get them back on track and paying the tax they need to pay. “We can’t speak to the issue of intent or realisation. In any given instance, an intent to defraud may or may not have been there before we intervene.” The behaviour sometimes “rapidly disappears” when the person is contacted by the IRD.
I asked the Ministry for Social Development (MSD) for some examples of benefit fraud where people didn’t think they were doing wrong, but the answer was curious. “MSD doesn’t have any comment to make.” Work and Income NZ does have pages on its website to report suspected fraud, and we’ve all read articles about convicted benefit fraudsters. I can only guess the reason behind this is New Zealand’s hypocrisy regarding how we treat financial crimes. Beneficiaries tend to get far more stiff penalties in the courts than tax fraudsters, for example, even though the latter steal more from the public purse.
