Personal loan and credit card frauds – a Dubai Office perspective
Alison Horne, Dubai Office
Personal loan and credit card frauds are continuing to result in substantial losses throughout the Middle East. This article sets out the trends we are seeing here at ASL’s Dubai Office and highlights some relevant policy considerations.
Regardless of where in the Middle East the personal loan or credit card fraud occurs, the modus operandi is often the same. This is because banks’ procedures throughout the region are similar, typically involving the following:
- A loan or credit card application which is completed by the prospective borrower alongside a Sales Agent from the bank.
- In support of their application(s), the applicant is required to provide originals of the following identification documents:
- ID card; and
- Residency visa (if applicable).
- The prospective borrower provides a copy of their employment contract and a salary certificate signed by the authorised signatory of their employer.
- Where the applicant’s salary is not paid into an account held with the bank, a bank statement evidencing three months’ salary payments is required.
- The application and documents are uploaded onto the bank’s system for review by two employees in the bank’s Sales Department. If satisfied with the authenticity of the documentation the loan / credit card will be issued.
The forged documentation can include the applicant’s residency visa, salary certificate, employment contracts and / or bank account statements.
We have seen several frauds where fraudsters have exploited the bank’s procedures by purporting to be employees of “blue chip” companies or government entities. Such employees are considered to be “safe” borrowers, because their employers have good reputations and are financially secure. Often these companies are pre-approved by the bank, enabling their staff to obtain loans and credit cards on the basis of their employment.
For these established companies, banks might not undertake a call back to verify the contents of the salary certificate and employment contract. Instead, they might simply check the letterhead and signature on the salary certificate and contract against the examples held in the bank’s records.
We have also come across banks checking the validity of an applicant’s residency visa number through a government portal. Here in the UAE, that portal can confirm that the visa has not been cancelled and verify the dates of issue and expiry. Importantly however, this does not confirm the identity of the visa holder’s employer.
In the majority of personal loan frauds we see, the passports and ID cards provided are genuine documents. However, they typically belong to workers in low-income jobs, who have agreed to lend fraudsters their ID documents in return for a cash payment.
When considering policy response, it is necessary to consider whether the forged documents are of a type envisaged by the relevant insuring clause contained within the Bankers’ Blanket Bond / Crime policy.
It is also important to consider whether there is any evidence of employee dishonesty, which could also trigger policy response, and whether the employee secured an improper personal financial gain.
Other policy considerations can include aggregation, for example if the matter involves multiple loans, customers and / or employees. The policy may also have a plastic card exclusion which could be relevant in respect of credit card loans.
Finally, when calculating the amount of a loan / credit card loss, the policy usually sets out the method for calculation. This is typically the amount disbursed by the bank, less all payments of capital, interest and fees.
If you would like to talk to us at ASL regarding our claims experience, or learn more about the services we provide, please do contact us.