Malaysian Loan Application Fraud: Income Exaggeration Common
A new survey by FICO (Fair Isaac Corporation) reveals concerning attitudes toward loan application fraud in Malaysia. More than half of Malaysians believe it is acceptable or normal to exaggerate income when applying for personal loans, mortgages, or automotive financing. Specifically, 37% of Malaysians think it is acceptable to misrepresent income on applications. Furthermore, another 18% believe it is common behaviour. These statistics highlight the growing issue of “liar loans” in Malaysia, a phenomenon that is less prevalent globally.
The survey included 1,001 Malaysian respondents. It found that Malaysians are significantly more likely to accept financial misrepresentation compared to the global average. 55% of Malaysians think it’s acceptable or normal to exaggerate income on loan applications. In contrast, 56% of global consumers reject income falsification on loan applications outright. Furthermore, only 39% of respondents worldwide share the view that it is normal to exaggerate income in loan applications.
Loan fraud extends beyond mortgage application in Malaysia
The issue extends beyond just mortgages. More than two in five Malaysians (41%) stated that lying on mortgage applications is acceptable in some cases. This poses a significant risk to Malaysia’s mortgage sector, where residential mortgages account for 64% of consumer loans. Banks face potential defaults and fraud risks, especially as applicants manipulate income figures to secure loans they may not qualify for.
Aashish Sharma, APAC segment leader for risk lifecycle and decision management at FICO, emphasized the importance of robust verification measures for financial institutions. “Malaysian banks are under threat from ‘liar loans,’” Sharma warned. “Leveraging cutting-edge data analytics can help detect fraud early and safeguard both banks and consumers.”
Interestingly, falsifying insurance claims is considered the most taboo form of fraud in Malaysia, with 49% of respondents rejecting it. This suggests that while Malaysians are more lenient about loan misrepresentation, they draw a firm line when it comes to insurance fraud.
The survey underscores the need for financial institutions to adopt more effective fraud prevention strategies.
