FICO Survey: Growing Acceptance of ‘Liar Loans’ Among Australians

SYDNEY— 13 MAR 2025 — 2025 (NYSE: FICO) 

Highlights  

• One in three Australians (30%) believe exaggerating income on loan applications is justifiable (17%) or common practice (13%), rising to 53% among Gen Z 
• When it comes to mortgages, nearly a third (29%) of Australians believe inflating income on applications is either acceptable or routine, climbing to 52% among Gen Z 
• Insurance fraud remains the most taboo form of financial misrepresentation, with 73% of Australians rejecting the practice outright 

Global analytics software leader FICO has released new consumer fraud research, revealing a concerning shift in Australians' attitudes toward first-party financial fraud - particularly younger generations. The survey shows a rising acceptance of income exaggeration on mortgage applications and other loans, as well as false claims on insurance—behaviours that carry serious financial and legal risks. 

For more information on the broader research study: https://www.fico.com/en/latest-thinking/ebook/consumer-survey-2024-digital-banking-customer-preferences-and-fraud-controls 

Generational Divide in Financial Ethics 

While most Australians (65%) oppose exaggerating income on financial applications, attitudes vary by age. Over half (53%) of Gen Z (aged 18-24) respondents consider it normal or acceptable in some circumstances, compared to just 12% of those aged 65 and over.  

A similar pattern emerges in mortgage applications, where 52% of Gen Z believe deliberate income misrepresentation is acceptable in some circumstances, compared to just 10% of seniors. 

"The shifting attitudes toward financial misrepresentation may, in part, be driven by the cost-of-living crisis, with younger Australians feeling the greatest financial strain," said Corey Smith, senior consultant for decisioning, risk and analytics in Australia for FICO. "However, it's crucial for consumers to recognise that misrepresenting information when applying for financial products—whether intentional or not—can have serious consequences, including committing fraud."  

Mortgage Market Faces Increased Risks 

Australia's mortgage market, with total housing credit outstanding of approximately AUD $2.3 trillion (Reserve Bank of Australia), faces rising risks as borrower attitudes shift toward greater acceptance of income misrepresentation. 

Even when a mortgage application from an existing customer appears legitimate on paper, borrowers may exploit their established banking relationships to commit fraud. Common tactics include inflating self-employment earnings, overstating bonuses, omitting debts, or misrepresenting personal circumstances—making it harder for lenders to detect discrepancies without thorough verification. 

"Application fraud erodes trust in the financial ecosystem," added Smith. "To combat 'liar loans' banks must improve their ability to detect inaccuracies - protecting themselves from bad debt while also preventing customers from committing fraud.  

"This can be achieved by leveraging access to third-party data, enabling real-time outreach for customer verifications, and implementing sophisticated decisioning structures to strengthen detection and prevention." 

Insurance Fraud: Still Taboo, but Not Immune 

While attitudes toward financial misrepresentation are evolving, insurance fraud remains the least tolerated form of dishonesty. A significant 73% of Australians reject adding false items to insurance claims. However, 23% believe there are circumstances where it is acceptable, a figure that rises to 44% among GenZ.  

"The FICO survey highlights a concerning shift in public perceptions of application and insurance fraud," noted Smith. "While some justify misrepresentation based on circumstances, fraud remains a crime. Financial institutions that proactively detect fraud before granting credit can protect themselves while also preventing consumers from making choices that could have lasting consequences." 

FICO's survey was conducted by an independent research company in accordance with research industry standards. 1,004 Australian adults and 1,000 New Zealand adults were surveyed, concluding in August 2024. This research was part of a broader global study, which surveyed approximately 15,000 consumers across 15 countries: Australia, Brazil, Canada, Colombia, India, Indonesia, Malaysia, Mexico, New Zealand, Philippines, Singapore, Spain, Thailand, UK and the USA. 

- Ends -