Verification of Identity Best Practice for Real Estate Agents with Ches Rafferty

Verification of Identity

In This Episode

In this episode of the WA Property Q&A Podcast, Peter is joined by Ches Rafferty, owner of Scantek, an expert in identity verification technology.

Peter and Ches unpack the lessons from a recent near miss where a property scammer almost sold a property without the owner’s knowledge. They take a deep dive into the obligations of real estate agents to help prevent property frauds and they look at the ways the state government and industry stakeholders could do more to prevent future property frauds.

Listen to the full episode to learn more about

  • The full story of the fraud attempt and how it was discovered
  • What role do real estate agents play in preventing fraud
  • Understanding the telltale signs of fraudulent transaction
  • The importance of doing your due diligence
  • Why human led identify verification is vulnerable to “bias”
  • How technology can play a pivotal role in a more effective identity verification
  • And more…


00:01 Introduction and disclaimer

00:48 Special Episode introduction: property fraud

01:36 Narrating a real-life property fraud incident

06:29 Unpacking the incident: The role of conveyancers

06:52 The importance of verification of identity

07:31 The role of real estate agents in preventing fraud

07:57 The concept of ‘reasonable steps’ in verification

14:59 Limitations of current verification methods

21:24 Risks of emailing identity documents

23:50 The importance of online solutions for real estate agents

24:40 Understanding back to source checks

28:35 Biometrics in identity verification

29:02 Human factor in identity recognition

31:45 The role of location in identity verification

43:57 The need for improved protection for property owners

44:47 Conclusion: The value of asking one more question

Additional resources mentioned in this episode:


Peter Fletcher

[00:00:00] Peter Fletcher: Welcome to the WA Property Q& A, the podcast where I explore the ins and outs of buying property in Western Australia. I’m your host Peter Fletcher and each week I interview local property experts to help you to develop a deep understanding of the nuances of buying property in WA. From market trends to legal considerations, no topic is off limits.

But before we dive in, a friendly reminder. While we provide valuable information, it’s important to note that nothing discussed in this podcast should be construed as personal investment advice. Always remember to seek the appropriate professional advice for your specific circumstances. Now, let’s get started and unlock the secrets to successful property buying in WA.

Welcome to a special episode of the WA Property Q& A podcast. And I say special, I mean it is seriously special. With me today is Ches Rafferty. Ches is the owner of Scantech Ches is an expert in verification of identity and verification of identity technology. Have I got that right, Ches? Sure have, Peter.

Now, this is serious stuff today, isn’t it? It is, yeah, really serious. And the reason it’s serious is just last Friday, so three, two, two, two or so working days ago. Yep. A property fraud almost eventuated in WA. It was almost an actual property theft and it was headed off by a really smart conveyancer. Now, I’m going to start out with reading her story.

Now, this is a story that she’s shared with the industry, so it’s not something that is secret. And so here it is straight from the horse’s mouth. Wow. What a Friday. Long post. Get yourself a cuppa. We all have had it, a feeling, a sense, an intuition to seek, to search, to come up with answers. I was feeling my gut instinct yesterday.

Backstory, received the deal in December, vacant land in York, acting for the seller. Seller in South Africa, nothing unusual there. Hefty time difference. So most correspondence was done via email. Emails were well written. Real estate agent had already sent the seller to the consulate to do their verification of identity at the time of their listing.

However, I told the seller he had to go back to have the client authorization witnessed and their ID recertified for us. He was okay with that, of course. The first little thing that he wanted differently was that he wanted the funds to be put into an account in Vietnam. On the outset, it’s not a generic request, but yes, this is something we can do if we have the authority to do it.

Once we got the documents back, we looked at them. The consulate stamps were there, all looked okay. The day prior to settlement, we called the seller, as we like to verify the bank account’s details verbally. This is where it gets really exciting, Jess. My PA Amanda, and Amanda should receive an award here I’d say because you know this is really good work on her behalf, had a really strange call with the seller and afterwards she came to me and said she didn’t have a good feeling and when the call first started with him.

The voice sounded computer generated. Now that’s really odd.

[00:03:20] Ches Rafferty: It is very odd. Very interesting.

[00:03:22] Peter Fletcher: Yes. I was finalizing the file in the morning for an 11am settlement, and it just felt off. So I decided to order a copy of the transfer of land document from when it was bought. In 2015, back when buyers still signed transfers, signatures were vastly different.

It made me feel uncertain. However, I also reasoned with myself. If someone ordered a copy of a transfer from a property I bought 10 years ago, my signature probably would be different too. So I signed off in PEXA, but then I felt. Uneasy, so I unsigned. Now folks, just as a a little aside when a conveyancer signs off in PEXA, that’s the final step.

There’s like, if, and I should say that the conveyancer we’re talking about is Leanne Phoebe from Coburn Conveyancing. And I mentioned her name because I think she’s done an amazing job here. So when she signs off in PEXA. Basically, there is nothing between that point and the seller getting the money and the buyer getting the property.

We go on. But then I felt uneasy, so I unsigned. I then Googled time what is the time in South Africa right now? It was like 2. 15am. And then I Googled what time does the consulate open? It opened at 8am. So then I decided that I would be able to call the consulate at 2 p. m. Our time. So I moved the settlement in Pexa to 3 p. m. So she’s unsigned it. She’s moved the settlement to Pexa to 3 p. m. Just one hour after the opening of the consulate.

[00:04:52] Ches Rafferty: Very smart.

[00:04:53] Peter Fletcher: Oh, incredibly smart. Leanne Phoebe deserves. An award here of some kind. She had a long day waiting and looking at the clock, but I had other stuff to keep doing, so luckily the anxiety of waiting didn’t completely wreck me.

I called at 1. 58pm, not open, took a deep breath, answered another call, and then made the call again at 2. 02. Imagine if she had have forgotten to make the phone call. I did, yeah. But, she got through to a department. who do passports and certifications. I said who I was and why I was calling to verify that Mr.

Philip Smith, we’re calling but that’s not the real name, attended their office and to confirm that the mentioned staff member, John Morris, had witnessed the signature. The lady from the consulate took a breath, had a little chuckle and said, we don’t have a John Morris at this consulate. My heart started pounding, I reckon her heart would have been going a million miles an hour.

I don’t know. A million miles an hour. My God. Mine would have been, I said, are you sure? She said, definitely. She said it is a known scam. Not always the name John Morris, other names, they have a dummy rubber stamp that looks pretty legit, et cetera. That’s the scammers have a dummy rubber stamp. She asked me to send to her the certified documents.

And she would issue us an official statement. She said she would flag it with the government’s fraud team. And the rest of the story is the reply from the consulate just to let them know why it was a fraud and, how lucky they were to have not acted on it. And so that’s where we start Ches Rafferty.

[00:06:27] Ches Rafferty: Yeah. Well, I think, when people ask, what does the conveyancing industry do like that’s in a heartbeat, right? That’s making sure properties are correctly transferred or not transferred if they’re not done correctly. And that’s what people are paying for that expertise that.

Intuition that years of experience to know when to make the right call and when to. Just to go that one step further and find out what’s needed.

[00:06:50] Peter Fletcher: I often say to people who buck about doing their VOI, what do I need to do this for? I sold properties before and I didn’t need to do this.

And I say to them conveyances the like last line of defense or. The titles office out part of our job is to defend the titles office 100 percent so,

[00:07:10] Ches Rafferty: Saying, isn’t it? What’d you charge me X dollars for? It’s, for the, for an hour of work, wherever it’s like you’re not touching the X dollars for our work.

You’re charging me for 30 years of experience, right? Yeah.

[00:07:19] Peter Fletcher: Yeah. Well, Leanne, honestly she’s done an amazing job, but what is overlooked here is. That the real estate agent didn’t let it through. Yes. Now, Clause 29 of the Real Estate Agent’s Code of Conduct says that as soon as practical after receiving instructions and before a contract for that sale is executed, make all reasonable efforts to verify.

The identity of each person who claims to be or act for a person who is to sell all or any of the real estate. So let’s unpack what reasonable steps are.

[00:07:58] Ches Rafferty: Yeah. And you’d get this term reasonable steps through all kinds of different regulations and legislations. And it personally drives me nuts because.

For a start, I think reasonable steps completely depends on the actual event occurring. So let’s take that same scenario. If it was a owner occupied house with a mortgage or, multiple mortgages on it, there’s so many different parties that have to be involved. So there’s a lot more levels to get through to pass that.

But when, which in this case I believe is correct, it was an unencumbered vacant block of land. Well, there’s certainly a lot less steps to prevent it being transferred. So to me, the number of reasonable steps that have to be done should be much higher and much stronger because the risk is much higher.

[00:08:37] Peter Fletcher: Yeah. That’s so true. Yeah, so the reasonable steps for a real estate agent is situational dependent. So if they’re listing their neighbor’s property, they’ve, they’ve lived next door to their neighbor for, 15 or 20 years.

[00:08:53] Ches Rafferty: Had dinner there and their kids have grown up together.

You’re probably fairly safe that person is who they say they are. Yeah. And they own that property.

[00:08:59] Peter Fletcher: Yeah. So, like anything owner occupied from a real, and we’re talking real estate agents perspective and don’t forget I’m, I am a real estate agent. So we’re talking about my profession. So owner occupiers are probably at a lower threshold of that reasonable.

[00:09:17] Ches Rafferty: Definitely. And when banks and stuff have got involved, they’re pretty good at holding onto money. So they’re going to make those people jump through a bunch of hoops to even be able to allow the

mortgage to be discharged. So there’s another set of validity that needs to be approved before you could transfer a property.

In this case, again, we don’t know the other side of the story, of course, from a real estate agent’s perspective. But I think to your point about conveyance is the last line of defense. Well, real estate agents should be the first line of defense, right? A hundred percent. Yeah. They’ve got a real. I’ve got a requirement specifically to do that and in fraud and other things like aircraft safety is another one.

There’s this theory of the Swiss cheese theory of defense, which is any system has holes in it. And if you get enough pieces of Swiss cheese together, you can’t see through it because there’s not enough holes that will line up. You block them out. The risk is when you get to this. Idea of a last line offensive or single piece of Swiss cheese if that comes through at the wrong angle that goes straight through a hole and no one notices it as we mentioned this case lands on a fantastic job of listening to intuition a staff member again obviously highly.

Intelligent and trained as well to go things aren’t feeling right to come straight to explain that’s what’s happening. So I guess they did have two lines of defense there. They’ve got different parts. Yes. A hundred percent. But also if you don’t have those other lines of defense and if you think about that scenario with someone, that’s another line of defense.

The fact that there’s mortgages that have to discharge that it’s another line of defense in this situation. If you’ve, you might only have basically the real estate agent and the the conveyances, that’s a very high risk of something getting through those holes in the cheese, so to speak.

[00:10:48] Peter Fletcher: So. When like in this case the real estate agent had been presented with somebody that made contact with them by the sound of it, it probably would have been via email and they’ve said, we own this block of land. Well, we want to sell it. The real estate agent has sent them off to, apparently, we don’t know for sure.

[00:11:11] Ches Rafferty: But we can assume that the second lot of the consulate was fake that they would have gone sure because and as the consulate themselves mentioned, right, this is regularly happening. So presumably as soon as the person goes, great I’ll get that, you have to go to consulate. They’ll be like, yeah, no problems.

Cause I’ve already done these fake documents. However many times before some of the questions I’d be interested in knowing real estate agent was, for

example, was there any negotiation around the commission? Was the price really good? So if someone calls you up, and that could happen in the real world, I’m in financial distress.

I need to move this block of land on. I’m willing to do a good deal. But if I was a real estate agent and no one’s arguing about my commission, it’s supposed to go for X dollars and they want to sell it for 70 cents on the dollar or 80 cents on the dollar. Cause they know that will sell quickly. And obviously if you’re a fraudster, you don’t want to have for sale signs out the front or you don’t want things online saying for sale in case someone comes across it and says, Oh, Peter, I didn’t realize you’re selling your block up in northern where it’d be like, I’m not selling my block in northern.

The faster it happens. So I would be curious to understand whether or not the reasonable steps from their perspective, if those. Red warning flags came up my gut feel. And again, we don’t know that the story here, my gut feel would be, if you were to look at it, they would have been red flag after red flag that wasn’t identified.

Maybe it was the other way. Maybe it was like, man, I’ll give you double your commission. I’ll I need to sell it for half the price. And so I’m saying, well, this is too good to be true. I get the same commission. I’d get it full price. It’s an easy sale. Cause I know I’m over blocking at half the rate that it normally is worth.

Those things shouldn’t make you straight away that, like Leanne did that intuition should have been like, something is very not right here. And again, off overseas, overseas buyer, et cetera.

[00:12:44] Peter Fletcher: Yeah. And the fact that they tried to put the funds into a. A bank account in Vietnam that’s a bit of a bit of a red flag.

[00:12:53] Ches Rafferty: Yeah, absolutely.

[00:12:54] Peter Fletcher: Yeah. So the real estate agent, like there, there’s some like alarm bells that should have been going off, you would think. And maybe they’ve done the right thing. We don’t want to cast aspersions on one real estate agent because perhaps they did everything that they thought was right.

[00:13:09] Ches Rafferty: Absolutely. And we don’t know, we don’t know what. Did or didn’t occur, but we do know how fraudsters tend to operate and that is moving things quickly. And again, it, to be fair to anyone who’s involved in fraudulent transactions it’s an asymmetric game. It’s an unfair game because they can be trying to defraud 20 pieces of land, right?

They don’t have to get one to succeed and they’ve succeeded, because you happen to be the one person. That perhaps missed it or one person did the right steps and they still got past you it’s not to again so that anyone’s done something wrong but just that constant awareness that you have to keep you know be asking again and again like Leanne did that next step of going looking for what other things you could find like signatures you know that’s that was a brilliant.

Really clever, quick bit of thinking. I think from what you’re saying, that’s not actually available anymore. Is that right? Cause we don’t have physical signatures on.

[00:13:58] Peter Fletcher: Yeah. Well, as of when PECSA came through all that, well, that went away.

[00:14:02] Ches Rafferty: Yeah. I mean, that’s five years or whatever. It’s gone away.

So sometimes the old stuff actually has some level of value, but that also is where I think where technology can come in and potentially look at other ways of doing that as well.

[00:14:14] Peter Fletcher: So, so the real estate agent sends them off to the. The consular, or the embassy or the consulate or something.

I’m really curious about this because I just wonder, like, they, they obviously wanted some sort of verification of identity certificate from the consular official.

[00:14:36] Ches Rafferty: Yeah. I personally have a giant bugbear with this whole concept. Feed it.

[00:14:41] Peter Fletcher: She’s gone. Let it rip. Well. Because so do I.

[00:14:44] Ches Rafferty: It’s this idea, and you see it time and time again, it’s this idea that I get something that makes me feel better rather than I get something that makes this more secure, more legitimate.

So, you see the same thing with the sort of notary publics and stuff like that. Well, you need to get someone in a foreign country to sign to say that they’ve cited an ID. Hey, what do they know about IDs? Consulate a bit different. So they do know about ID documents and that story goes on. For them to articulate some of their experience of why the passport provider couldn’t be correct, and again, only experts would know that.

But the problem is. There’s no sort of actual checks amount, there’s no database of consulate verifications, there’s no source that you can go to say, here it is, this person, here’s a photo of them, did it this time, this is the name provided, it’s all legitimate. So there’s this kind of furphy that, oh I’ve got a piece of paper with a stamp on it, well guess what, as we can see in this story.

The fraudsters have the stamp too, right? They make a fake stamp and away you go.

[00:15:40] Peter Fletcher: Yeah and Leanne, and I know that other settlement agents do it. We have these debates on the Facebook group all the time. Yep. They double check by calling the consulate.

[00:15:49] Ches Rafferty: Yes, and that’s the key part that Leanne did, but in many cases they don’t, right?

In many cases

[00:15:53] Peter Fletcher: oh, a hundred percent. You get a document that comes through the mail and, an official looking letterhead and you think Yep. Okay. Well, that’s it. That’s done. You file it away. And it’s, it’s a done deal. It’s like.

[00:16:04] Ches Rafferty: And to be clear, I’m not criticizing it anyway, going to the consulate and doing it.

The problem is there’s no back to source verification on that. It’s not that it’s not a valid thing to do and it’s not worthwhile to do. It’s just that there’s no truth database of truth that can actually say this occurred in this day, this idea. In, in some ways it’s comical if you actually turn up to Australia from a foreign country with a whole bunch of notary stamped things, that’s just as legitimate to open a bank account as someone actually providing Australian documents that you can verify are actually real Australian documents.

You’re like, well, hang on a sec. So if I want to set up a fake document in Australia, all I have to do is fake some British documents and say I’m from the UK and someone will go, Oh, it’s got a stamp on it. Okay, well, here you go. It’s a very Australian British accent you have there, so you’re like yes, my parents are Australian.

I never lost my Australian accent, even though I was born in the UK. So it’s just more, it feels like it’s an antiquated. Yeah, idea that we have from a hundred years ago and that we haven’t as a society. This is not even about what people

are doing in businesses and we haven’t as a society actually said, surely we have the technology today to be able to make this a global verified system and it.

Wouldn’t actually be too hard to do.

[00:17:15] Peter Fletcher: So I see on some of the groups on the real estate groups real estate agents saying, well, we ask for a an online meeting, a zoom or a teams meeting where they show us their driver’s license passport, your thoughts on that?

[00:17:32] Ches Rafferty: I think it’s better than doing nothing.

I think it’s an extra step, but again, if you have any kind of fake. Or whether that’s a high quality fake or even a manufactured fake with a relatively low resolution zoom call, how are you going to be able to tell that’s a real ID? It’s, it is better than nothing. I think probably the most important thing is actually talking to someone face to face and seeing if that triggers anything from more of an intuition experience.

But it, you’re not really doing much to verify it. If I got your ID or a fake ID and put my face on it and said, Hey, I’m Peter. And you look, I make up some numbers and they go, it looks about the right number of ID numbers. You’d have an Australian driver’s license or a passport. I mean, how would you, how would anyone know without those verification feedback loops?

[00:18:14] Peter Fletcher: So the ARNIC what do you, what do they call them, the ARNIC no, that’s the ARNIC NPR version six guidance notes about verification of identity. And I’ll put this in the show notes to for everyone to read what they talk a lot about reasonable steps and

[00:18:32] Ches Rafferty: Again, these reasonable steps, Tim, yeah.


[00:18:34] Peter Fletcher: Yeah. And what they pretty much specifically say that a zoom slash teams call is not reasonable steps should not be relied upon. Yes. It’s just like you could do it as part of confirming other more robust, reasonable steps, but don’t, do not rely on that alone.

[00:18:55] Ches Rafferty: And that’s a good point. But again, there’s other parts of those model participation rules that I don’t think have come up to really take advantage of some of the technology that is available.

[00:19:04] Peter Fletcher: Yes.

[00:19:04] Ches Rafferty: Now, very clear of what we do. We’re very strong inside Australia. Some of the stuff that I’m talking about being able to do is much harder to do outside of Australia. It may not even be possible, may not, is not possible in many other countries. So, for example, In Australia, we’ve got the right technology providers such as ourselves have access to back to source data to actually say that is legitimate details from say a WA driver’s license or a Queensland birth certificate.

You can imagine in other countries, particularly countries that may not be as economically developed as Australia, they don’t have access to that. But even for example, in the UK, which is obviously very advanced society, you can’t actually do a verification back to source and an ID to buy or sell a property, but weirdly you can to rent a property.

So, you’ve got these bizarre regulations sometimes where you think, There is a risk, obviously, in renting a property of someone. They could trash your place. That’s pretty bad. Not as bad as someone selling your property, right? Like, okay, you come in, hopefully you’ve got landlord insurance or whatever, and there’s your 20, 000 in damage you have to repair.

It’s a pretty annoying, month or two. But it’s a lot less annoying than turning up and finding your house doesn’t belong to you anymore and it’s been scammed. So, even those situations, as I said, somewhat frustrates me, Because we have the answers and the UK ones are perfect. We literally have the technology being used and available, but not applicable to property sales.

What’s the UK government thinking? Why would we not agree, for example, that advanced western economies, so we share lots of other. Things around wouldn’t agree that there’s some kind of international, again, highly legitimized, authorized businesses being able to do these checks.

[00:20:48] Peter Fletcher: So I just want to roll back to this notion of, well, what’s the problem with getting the client to email me their driver’s license and passport or doing a zoom meeting with their, driver’s license and passport.

What’s wrong with that Ches?

[00:21:03] Ches Rafferty: Well, let’s start with legitimate people. Well, the first risk is as soon as you start emailing identity documents over, we’ve seen obviously in recent, years, particularly in Australia, how vulnerable Australian identity information is and how much identity theft we’ve had.

It’s been a, an epidemic really in the last couple of years, particularly you holding that data puts you as a business operator at significant risk if you are breached and that information flows out, particularly in many cases, real estate and conveyances tend to Need to collect a lot of very in depth information about their customers.

So it’s not just a, an ID document, it’s other information around bank accounts, all these different, all this stuff that comes here, all the same sort of stuff that’s used to create or provide information to get loan doc, loans or other access to funds. Through other businesses, right? So you’re a hot target, right?

You’re something with a lot of data. So that’s the first two bits. And then the second bit, of course, is when it comes to, and this is always the problem with fraud. 99. 9 percent of whoever you’re dealing with is going to provide the real, true, correct information to you because they’re, like most people in Australia, hardworking, good, legitimate people.

So they provide you the truthful stuff. The people that are trying to commit the fraud are clearly not going to send real information. They’re going to send you ID documents that have been modified to look like real identity documents that could be anything from tampering with the details to tampering with the photo and real details.

So you’re going to get that information and go, well, I’ve got something emailed. I had a quick zoom chat with him. I look like the ID held up in the zoom chat was pretty fuzzy. Couldn’t really make it out and I’ve got it and it looks legit. So you’re really not proving anything other than that.

A person who’s trying to defraud you can email you and can tamper with a photo of an ID document. That’s why I’m really against it for yet. There’s many reasons why I’m against emailing particularly of identity documents, because I think it puts you at risk and your client’s at risk and bae doesn’t actually.

[00:22:59] Peter Fletcher: So we, I’ve, I know I’ve referred you guys to real estate agents you, I think you’re starting to talk to at least one of them now. And I think that the. Online solutions that yours is, being the gold standard in my view, but you know, the, yep you’re welcome. I think that they are the best option for real estate agents, considering, the small amount of money that, that we pay you to do that, take that risk off our plate kind of, or mitigate that risk.

So one of the things is that when, if a real estate agent use. An online identity provider such as yourself or Checkr is back to source checks of the driver’s

license and passports or the passports. There’s multiple countries that do back to source. Yeah.

[00:23:50] Ches Rafferty: Yes. Yep. Yeah. It’s certainly a case of differing countries do different back to source checks.

We’re also looking at.

[00:23:56] Peter Fletcher: Just to clarify, what is the importance of back to source?

[00:23:59] Ches Rafferty: Right. Okay. So the importance of back to source is it gives you, and what is the source? So the sources depend on different countries. Generally the sources are three types of documents broadly, but sometimes there are more.

So the three types of documents broadly are birth or citizenship certificates, driver’s licenses or national, and or national IDs and then passports. Many western or advanced economies have variations of versions of them. Frustratingly, it can be a bit of a dog’s dinner. As I said, the UK has access to it, but for any limited use cases, the US has them.

But, for example, it’s not every state. It’s about 40 out of 50 states give you access. So, It becomes quite complex to line it up. And then of course the problem in these ones, and I can’t remember off the top of my head, if South Africa does or doesn’t allow back to source checks. I think it’s, they don’t but often obviously more developing economies.

They’ve got a lot of other, priorities and, education and health understandably sits higher and often these nice to have function of government aren’t readily available yet.

[00:25:07] Peter Fletcher: So the thing with back to sources, I understand it is if somebody uploads a fraudulent document, it will, There’ll be something on it that’ll be wrong.

The number on it will be wrong, or the DOB’s will be wrong, or the name on it will be wrong. There’ll be something on it that’ll be wrong, so when you do your back to source check, it’ll throw up an error saying, Sorry, that passport that you want isn’t matched on our system.

[00:25:32] Ches Rafferty: Yeah, so the name matches, the date of birth matches, but the actual passport number doesn’t match.

Yeah. Well, that’s pretty unusual because if, you know It has provided me this passport, it says it’s current, and now it’s saying that it half checks, but this number doesn’t check. Yeah. Why is that?

[00:25:47] Peter Fletcher: Yeah. And at that point you, your office stops and go and you, everyone starts asking questions.

[00:25:54] Ches Rafferty: Yeah.

And look, there can be legitimate reasons. It could be a damaged passport and it got misread. It could be what other reasons can it be? There are some strange reasons now, for example, in WA, if you want, you can block your ID from driver’s license from passing a test that was passing this check.

This was to prevent people misusing it, but I think it backfires because it means that

[00:26:14] Peter Fletcher: Yeah, optus, I think it was caused by Optus, and people jumped on the bandwagon saying we don’t want this, but then suddenly they couldn’t do anything. Absolutely. Their driver’s license was basically useless as a piece of ID.

[00:26:25] Ches Rafferty: And unfortunately

because it’s a Date based systems flowing into a federal based bigger system effectively, if you block yours to say, I don’t want people checking it kind of gives us the same result as a as if it’s a scam or an ID that’s previously been blocked from a scam. Yes.

So, yeah, annoying. We can’t really tell you. And then you have to say, Oh no, I blocked it. I’ll unblock it. Try again. So look, like many things in life there’s obviously complexities on it. And look, there are some stuff that we’re looking at now, for example. Passports with chips in it, there’s some possibility we might be able to help, particularly for foreign passports, get access to those chips to verify that they’re legitimate and their designs effectively a non tamperable design, so if the passport that you show me says says it’s Ches’s passport, and then we go do a check, that will say no, there’s you.

Chess isn’t recorded on this passport. This is a fraudulent attempt to get into this chip. So we know straight away that something untoward is occurring. You’ve stolen my passport and attempt to alter it to make it look like someone else. So that’s some things we’re looking at because we know that the scammers, unfortunately, are generally coming from offshore.

That’s what we’re saying, COVID accelerated a lot of things. And A lot of great things like, digitally the accessibility of digital transactions. But of course, like any new technology that assists, someone’s always going to figure out how to weaponize it for for you. Yeah.

Evil purposes, I guess.

[00:27:42] Peter Fletcher: So I question so, so your system checks the back to source, but it also has facial biometrics. Yes. Now I remember you saying something to me about we as agents are not, we’re not trained in recognizing human beings. Like, we think we know, oh, that person is Ches and this person is somebody else.

Actually we actually don’t know.

[00:28:08] Ches Rafferty: No, and my favourite test that was conducted that really brought this home to me was actually against I don’t think it was the Australian passport office, but it might have been, but an Australian passport office, sorry, a passport office. And they actually tested real passport, like frontline officers and their pass rate was something like 60%.

So, a third of the time they couldn’t tell if a person was legitimate or not. And that’s their day job. Yes. Yes. And that’s because we look different. Right. And the way that humans. Look at people in a way that computers look at people are quite different,

[00:28:39] Peter Fletcher: There must be some sort of cognitive bias there you’re looking at somebody and you sort of want that match to happen because if it doesn’t happen, there’s work for you.

So you’re sort of looking at, yeah, this is a way you go.

[00:28:52] Ches Rafferty: And we are. But issues that’s built on trust, you don’t end up with millions and millions of people living on top of each other. If there’s not a high degree of trust, right, which has amazing advantages, what we’ve done as a species, but also means that you’re right.

We have these biases built in that if someone purports to be that and they appear confident and relaxed about it, our general feeling is, Oh yeah, well. It seems right. And as I said, the way we look at things is quite different. And we’ve all experienced it. Friends cut a hair or, grown a beard.

Grown a beard, dyed their hair, lost a significant amount of weight, put a significant amount of weight on. And we’re almost that double take of like, hang on, who’s this person? And it takes your brain that moment to go, Oh my God, that’s Peter. Look how. He’s looking fabulous at the moment. He’s got a new haircut or whatever it is.

Computers don’t look at faces in the same way. They don’t have that bias, like all technologies. They’re not perfect, but they look at a very narrow party of face that doesn’t change basically whether you lose or gain weight, it’s really around the sort of the eyes and the nose. And it’s very much.

It’s designed about measuring things that don’t really change. So, you’ll face very little changes from, 20 to sort of 80 to a computer. Now to a human, Oh my God, a 20 year old and 80 year old don’t look very similar at all, but to a computer says, well, if I measure between this point of one eye and this point of the other eye, they don’t change much in 60 years.

And that’s some of the other advantages of a biometric quantitative analysis, as opposed to a human qualitative analysis, which is. Hey, this looks like a guy I know called Peter. Yes. And the flip side is, of course, we’ve all done the other one. We’ve walked up to someone at a bar, that’s probably because we had a couple of drinks and going, Hey, Peter, how are you going?

Good to see you. And the person’s looking at you going, sorry, I’m James. Do I know you? And you’re like, Oh my God, sorry. You look just like a mate of mine. My bad. And walk away embarrassed.

[00:30:41] Peter Fletcher: Yeah, I had, I’ve had that. Yeah. We are literally being mistaken for another person. Yeah. The other side of things the house for you guys is location of where the identity happens.

So if you’ve in, as in this case supposedly the person was going to the South African the embassy or the consulate, but their ID was done in like, had they done a Scantech ID, they would have been geographically located probably in Nigeria.

[00:31:10] Ches Rafferty: Yeah, almost certainly. And part of this is. As I’m saying, we’re very focused on Australia now, and we can do it internationally, but for people who have Australian documents, so in this case, we’re working towards having it, being able to read, different document types and to bring up warnings.

We’re going to have to caveat this a lot, as I said, because in many cases, we will not be able to do a back to source check, because of the reasons we explained earlier, but certainly some of those other things, absolutely, like facial biometric, and also combining that with location, just straight away, if someone tells you, I’ve got a South African document, I’m in South Africa, I won’t transfer to Vietnam my money, but I can see that are in Nigeria, you would be straight away saying, no dice.

[00:31:44] Peter Fletcher: Lumbers that have to be going off.

[00:31:46] Ches Rafferty: Yeah, absolutely. Yeah. And that’s something we would like to be able to bring to our clients, because we do think there’s a lot of value, but we’ve been very, taking a very, I don’t want to say cautious, not rude, but a sensible step by step process, because what we certainly don’t want to do is to give our clients false confidence because that would be even worse than the other option, I guess, if someone goes, oh, well, Scantech said this, and that’s what it normally, we have to be very clear, like, we couldn’t do a back to source check on this document, we’re not saying it’s not legitimate.

But what we could potentially say is we noticed other anomalies that would concern us. Yes. So what are those anomalies?

[00:32:20] Peter Fletcher: So at least with this, it’s well, scan text thrown up some error messages. Yep. In the workspace. That’s your cue. To start asking some further questions a hundred percent and it comes back to that notion and you know that’s a government body the notion of reasonable steps and i would suggest that.

That real estate agents, they’re going to have the same set of standards,

[00:32:49] Ches Rafferty: I think they’re supposed to, I’m not sure whether there’s the same, they’re not, well, I don’t know if there’s the same level of information available currently, which I think there should be, right?

[00:32:58] Peter Fletcher: Yeah. So, so in there, the code of conduct that I read at the very start, it says reasonable steps.

Yep. Now I would be very surprised where long, in fact, I’m just going to say it. I think that the reasonable steps for a real estate agent and a reasonable steps for a conveyancer should be the one and the same thing. I agree on that completely. Because this should never have got to the conveyancer.

[00:33:23] Ches Rafferty: Yes.

[00:33:24] Peter Fletcher: If you just rely on one document, one email verification of identity from a supposed consulate, I’m sorry, but I don’t think you’ve done enough.

[00:33:36] Ches Rafferty: Certainly, I mean, as we saw this case, did that first letter consulate documents get called to confirm that they had passed? Clearly not. Clearly not. I think it’s what we can see from the evidence.

Right. So they got something and they said, Oh, it said South African consulate stamp on it. I mean, I don’t know about you, you obviously do this. I don’t, I have no idea what a South, South African consulate stamp looks like. I know Marcus Lyley, he tells a story where he paid somebody, like online, he says, Oh, can you make me up a fake, some consulate stamp and it turned up in the mail, there it is a fake stamp.

No doubt.

[00:34:11] Peter Fletcher: He’s a good guy, but he just wanted to prove a point that, there’s these things going on.

[00:34:17] Ches Rafferty: Oh, absolutely. It’s, I mean, we don’t know what the value of this property was, but this would have been pretty buddy lucrative scam if they got away with it. Right? Like tens and tens of thousands of dollars, if not hundreds of thousands of dollars.

Yeah. For what? Making a few fake letters and a few fake.

[00:34:33] Peter Fletcher: Oh, there’s a payday in it for sure. Yeah.


[00:34:35] Ches Rafferty: And you imagine doing this as I said, doing it 10, times, right? You can succeed pretty poorly and still do really well, right?

[00:34:43] Peter Fletcher: Yeah. Yeah. Oh, well, they work on the numbers. I think we were talking about this off air that they just work on, well, we’re just going to throw as many dots at the wall as we can.

And yeah, one of them will stick. And I would not be at all surprised. I’ve said this in in some of the Facebook groups. That I, I suspect that there is a, one of these successful scams sitting in the system waiting to be found waiting to be revealed. Yes. Somebody. In around about September or October this year there’ll be a, mum and dad sitting around the kitchen table and, Mabel, have you

got the rates bill for that block we’ve got in York, and, no, I thought you had it, and, oh, well, can you give the council a call tomorrow, and.

Yeah, they call the council the next day and they said, sorry, you don’t own a block in, in York. You sold it in February, 2024 and you go, Oh shit. Like I’m just fully expecting that to happen. And I think that whatever conveyancing firm and whatever real estate agent touch wood, it’s not mine.

That happens too. I think that will be, it’ll be the last thing they’ve done in real estate.

[00:35:56] Ches Rafferty: Yeah. And look, we were talking off air about this as well. I mean, we’ve obviously really been focused so far on this conversation about, the real estate and conveyancing aspect of it. The bit that, that we were really curious about is.

As we said, for these deals to work with a lot less friction, it has to be basically a non occupied building, which is not that common, obviously in a pretty good rental market and owner occupied, so really we’re talking mainly about vacant land here, and it has to be unencumbered. So, where do we think the scammers are getting this data from how did they know? How did they know? And obviously you and me have got some theories that we may not go into how we think they got away that we don’t want to give our own ideas, but I think the bit that is A big question mark is what’s the responsibility of the land registry and all of this?

[00:36:45] Peter Fletcher: Yeah, a hundred percent Jez, because, like the land registry that when those first two property frauds came out in, in, yeah, well, it was 10 years ago or thereabouts now. And there was a hell of a lot of, finger wagging and most of the finger wagging was at the real estate, at the conveyances and there was a bit at the real estate agents as well.

But you know, a lot of it was at the conveyances, how did you let this through? And so there was a whole bunch of things put in place, but since then nothing’s changed. And you look at the land gate, like recommendations around verification of overseas, clients and all that. They haven’t changed.

They don’t even recognize the value or proper place of electronic platforms such as yours. It’s like, why?

[00:37:33] Ches Rafferty: Yes. Like, get your shit together, guys.

Yeah, and look, we appreciate that, to a certain extent, governments need to move at a slower pace than technology. But there’s a difference between taking your time.

And having a process to engage it and just this kind of thing. Well, it’s sort of worked for the last a hundred years. Why change it? Well, a lot of other things have changed in a hundred years. That can’t be a mindset because the fraudsters aren’t thinking that either. They’re thinking, well, there’s new technology and new ways we can take advantage of this.

You couldn’t commit this fraud. I’m so you couldn’t. This frauds with attempted fraud. We’re talking about now. It’s very hard to commit 20 years ago, right? You really need to do a lot more paper sign is a lot more physical interactions. So that’s been taken away for good reason. And it’s really advanced.

It’s where there’s no doubt where the industry is heading is where it had to have was inevitably going to end up. But you can’t just bring part of Along for the journey and leave the other bit. Like, well, we’ll still use the old way of verifying, which is, Hey, if someone can turn up in person, they’re good.

And then if they can’t turn in person, well, we don’t, we’re not going to tell you just do reasonable steps. Okay. Do you want to turn out there? No.

Oh, thanks.

[00:38:41] Peter Fletcher: And there’s other things that the government could be doing such as we, and we spoke about this earlier about the office of state revenue have been Collecting the buyer’s date of birth since Pexa was born.

Yep. So they’re holding that. Now we upload the seller’s date of birth into Pexa when we’re doing a transaction, wouldn’t it be good, make sense for OSR and Pexa to talk and just throw off a mismatch if that was not.

[00:39:13] Ches Rafferty: Absolutely. Flag. This seems unusual. You’ve got this date of birth, but now.

Apparently there’s a different date of birth five years later. Yeah. Maybe you want to go check that. The other bit as I’m curious, and there’s still risks in doing this, but again, it’s going back to Swiss cheese analogy. Why can’t I associate key information with my title? So I want my. Yes.

Mobile phone number. Now, again, someone’s going to say, but people change their mobile phone numbers. Sure they do, but not that often. I want to put my

email off. People change their emails. Sure, but not that often. If you were to say, I want associated with my title, my mobile phone number and my my email address, and if there’s more than one person the title they want there’s on there as well to flag anything around that things are still going to get through, but what’s that going to drop the success rate?

90%? 95%?

[00:40:01] Peter Fletcher: Yeah, at least it’s another line of defense.

[00:40:03] Ches Rafferty: It’s another line of defense. It costs virtually zero. So close to zero it’s not funny. Again, there’d probably have to be some way, mechanism if you need to update that. And that would need to be quite rigorous because you couldn’t have a scam where someone just goes and updates the number straight away.

But surely that’s another line of defense that would be very cheap. Very easy to implement.

[00:40:21] Peter Fletcher: Could be done at settlement.

[00:40:22] Ches Rafferty: Could be done at settlement. Yeah.

[00:40:23] Peter Fletcher: Yeah. Cause you, we’ve collected all this information and when we lodged the electronic transfer of land, we also lodged the, well, what is it that you guys, that, that is the buyer want kept against this title?

Yeah. I mean, you literally do. It’s almost like a

pass phrase.

[00:40:40] Ches Rafferty: Yeah. We do with bonds tenancy, right? If you. Give you your, whatever the bond agency I forgot is here. You put it in there and they make you put your email and your phone number down. And then when at the end of a rental, you ask for your bond back, you have to provide a pin to pass it.

So the government’s literally done this for good reason, because no doubt those bonds were getting scammed at one stage. Yet we can’t, the same government can’t do it for titles. I think you would, again, and this is the thing that people forget about fraud. It’s a numbers game. It’s only profitable because it works 10 percent of the time.

If you go block 90 percent of those transactions, then it only works 1 percent of the time. And all of a sudden, guess what? The scam’s not worth committing. They’ll go somewhere else. They’ll go to South Australia, they’ll go to Victoria, they’ll go to Tennessee. I don’t know, they’ll go somewhere else.

Where those levels of integrity aren’t in place, and they’ll find a different place to scan. But, I don’t want to sound too parochial, but who cares? That’s not us then, right? That’s someone else’s problem. And how do they solve that problem? They copy what we’ve done. They put those levels of protection in.

So, it feels like, and it won’t happen because these things never move quickly, but this feels like a solution that could be mandated. And I’m not saying, look, you might say it’s not feasible to back date it, that’s fine, that’s not ideal, because properties only change, what is it, every seven years on average, so it’s going to take a long time for a vast chunk of that to come through, but at least in seven years we’ll say, well, We’ve got a much more secure system, maybe you offer someone maybe the councils can provide the data they have for all the properties that it feels like there’s solutions that would be cheap and pretty quick to do.

[00:42:21] Peter Fletcher: Ches. I’m very mindful that we’re starting to run out of time.

[00:42:25] Ches Rafferty: We always seem to.

[00:42:25] Peter Fletcher: We’re probably going to run out of out of storage space on this machine that’s recording this conversation. I think the message here is that what Leanne and Phoebe stopped could just as easily have been, have gone through that fraud could very easily be a fact of history now.

And we, no one would be any wiser. Our point here is. To, to Landgate, to REWA, to AICWA to OSR, to all the stakeholders in this, it start doing something to improve the protection for property owners.

[00:43:08] Ches Rafferty: Yeah. I think even the fact if they were to say they were doing something that would discourage scammers.

It really is a case, and yeah, and I’m the same with what Leanne did. I think that just shows you as well that. It never hurts just to ask that one more question, right? It could have been so easy for her or her team member. One more question is reasonable steps. Yeah. One more question. Anytime you get an inkling of doubt, I think that’s that good thing about reasonable steps.

Anytime you get that slightest inkling, something doesn’t quite pass the sniff test. Then you need to add another step to that reasonable steps.

[00:43:39] Peter Fletcher: So we’re going to wrap it up there on behalf of the industry, Leanne Phoebe, take a bow. Thank you so much for what you’ve done here and for, I think you’ll become a catalyst for change.

Ches Rafferty thank you so much for coming on again. For those who want to find out more about Scantech, go to scantech. com. au and that’s S C A N T E K That’s great.

[00:44:04] Ches Rafferty: That is. Yes.

[00:44:06] Peter Fletcher: And yeah, look them up. They’re a great service. And I think that if you wanting to tick the box of reasonable steps, start with Scantek and I think you’ve done a lot better than what most people would be doing.

[00:44:19] Ches Rafferty: Thank you.

[00:44:20] Peter Fletcher: Until next week, this has been Peter Fletcher for the WA Property Q& A Podcast. And that wraps up another. Episode of the WA Property Q& A. We hope you found our discussion valuable and gained some valuable insights into the world of property buying in Western Australia. Remember, while we strive to provide useful information, it’s crucial to consult with the appropriate professionals before making any investment decisions. Don’t forget to tune in next week for another exciting episode where we continue to unravel the mysteries of the WA property market. If you have any questions or topic suggestions, feel free to reach out to us. Until then, happy property hunting and remember to seek the right advice for your personal circumstances.

Thank you for listening.