Although 40 per cent of Australian real estate agents are concerned about fraudulent activity, only 2.17 per cent use a verification app to confirm they are dealing with the true owner despite tough Verification of Identity regulations that can lead to heavy fines, licence cancellation and disqualification. That needs to stop according to Lee Baillie.
Kevin: In the past we’ve talked a fair bit about online security as the Internet opens up more and more possibility for us to do just this. I guess, like me, you’re probably a little bit concerned about how much information is going onto the Internet and how secure it really is. In the past, we’ve spoken to PEXA about online transactions and so on, but I’m interested now to talk to my next guest, Lee Bailie. Lee is the General Manager for Product and Innovation at InfoTrack, and they have a product called IDfy.
Is that what it’s called Lee?
Lee: Yes, that’s it, Kevin. IDfy is how we pronounce that.
Kevin: Tell me a little bit about the product, and then I want to ask you more about security. How does IDfy work?
Lee: IDfy is a product we’ve enabled and we’ve built within InfoTrack to perform a verification of identity for any clients who are in the process of buying or selling property. What IDfy essentially enables the person using it – so the agent or the conveyancer or the lawyer involved – is to sit down in front of their clients and using a single app, be able to actually take a picture of that client, take a picture of their documents, verify their documents, and then actually save that in a secure environment where we can actually store that within InfoTrack for up to nine years as part of the cloud service we have, but also receive a summary document that goes to the party involved that says when the verification was completed, the identification that was completed, who was there, the time and date, and where it was actually located.
Kevin: So, where do you see this thing used?
Lee: From our point of view, this should be used when a real estate agent is potentially listing a property. There has been a number of cases – and you may be aware of some – where properties have been sold without actually the owner’s consent, whether that’s a distressed tenant who might be thinking “I’m going to try and get away with this,” or a Nigerian scam whereby they’ve actually tried to sell a property from overseas.
The best course of action an agent can take is to ensure they are speaking with who they think they’re speaking to, and they actually do that by way of verification.
Kevin: Just help me understand a little bit here, Lee, the actual sequence. An agent goes in. I’m an agent, and I go through the process of taking a photograph, uploading all this material. Does that thing cross-check somewhere, or is that the first entry point into being identified?
Lee: No, at the moment, that doesn’t cross-check against something like a DVS system (data verification service), but it is something we are looking into at InfoTrack at the moment. What it essentially requires still is the person present – so, if that was the real estate agent – to ask the vendor or the person about to list the property to show them something such as their driver’s license and their passport.
What the real estate agent would do at that stage would be sat down with Kevin Turner, as an example, and would check the drivers license says Kevin Turner and it has the address marked, take a picture of that, and would then ask for the passport and check that the passport says Kevin Turner as well, take a picture of that, and then they actually move on to sign off so that both parties agree that what they’ve actually been presented and taken pictures of is correct. And then that is the document that is completed and therefore completes the verification of identity.
Kevin: Okay, but it doesn’t necessarily verify that that person actually owns that property does it, Lee?
Lee: No. What we’ve actually built in within the system is a title search ordering functionality. So, in the same platform, you can actually order a title search, and in doing so, you can actually reconcile that against the title that you’re looking at and check that Kevin is actually at the top of that title. So, we tried to enable that.
The take up of that, it’s a little bit slower in people actually ordering the full title because that obviously comes at a cost when actually completing that. But the reality is at some point during the process, the agent and certainly the conveyancer or the lawyer would order a title to that property and check the relevant details against that title.
Kevin: Who do you say as the driving force behind making sure this is all implemented? Is it the real estate agent? Is it the lawyer? And where does the consumer come into this?
Lee: That’s a really good question, Kevin, and probably one of the toughest for us to move forward to at the moment. The Office of Fair Trading has some guidelines around it, but simply put, that’s what they are at the moment. ARNEC – which is the body that works with PEXA and the real estate bodies across the country – has some very clear guidelines if a transaction was to settle on PEXA, but the reality outside of that, it’s going to be self driven.
In some surveys that we’ve recently done earlier this year through InfoTrack, we found out that approximately 48% of real estate agents are concerned about fraudulent activity in the property space but yet less than 2% actually use VOI verification apps and probably approximately 35% to 38% have in-house processes that they actually do themselves, and that could be anything from getting a scanned copy of the drivers license or getting a scanned copy of a recent utility bill, but to that degree, it still doesn’t verify the identity of the person involved.
Kevin: Being in the industry myself, I can tell you that I joined almost 50% of agents who are concerned about security, but probably like them, I’m among the 2%. Well, no, it was only 2% I think who were actually doing something there. But I would guess that the majority of the others don’t know what to do, Lee, because there aren’t too many opportunities or ways that this is being promoted.
Lee: No, absolutely, Kevin. I think that’s the part of the role that we’re trying to play. In Queensland, we’re actually doing some work with REIQ, and we’ve created a subset of IDfy that is called AgentID specifically for that reason, to actually give some guidelines and some clarity to the agents in Queensland about how they can use the app to ensure they’re protecting both themselves and the consumer.
In the UK, they’re concerned that fraudulent activity is growing at 300% per annum, and they starting to see more and more of that. In a recent case here in ACT in Australia, we saw a couple on honeymoon – I think it was – had their property sold by a scam that was being completed outside of the country.
So, I think the guidelines that we need to start to work with, particularly the real estate environment and also a greater aspect to the legal environment, we need to start to educate the consumer of what they should look for when they are choosing a real estate agent or a conveyancer or a lawyer to go through the property transaction process.
Kevin: Okay. So, IDfy is really only operating in Queensland through the REIQ at this point in time. What’s been the uptake like, and what sort of feedback are you getting from agents and consumers?
Lee: Sorry, just to be clear, Kevin, IDfy is across the country. AgentID is the app that we’ve actually built with REIQ.
Kevin: My apologies.
Lee: I’m being very honest. From a real estate agent point of view, it’s still quite slow, but I’m here in Sydney today, and I’ve just walked out of a seminar. That was one of the areas we spoke about, and there was a lot of interest in people understanding it.
To your earlier point, I think people just don’t know what is out there at moment and they’re not sure what their obligations are. So, I think working with some of the professional bodies, such as REI Queensland, REI across the countries, that is going to be the way that we can help educate the real estate agent to actually move towards this.
I think from a national point of view, those conveyancers and lawyers who are operating on the PEXA platform or intend to operate on the PEXA platform probably are quite aware of the ARNEC requirements, and in the ARNEC requirements, it stipulates there must be verification of identity of the clients involved in the transaction. But to that degree, fewer than 20% of transactions are currently occurring on PEXA.
Kevin: It’s fairly obvious to me that there has to be some kind of legislation or driving force behind this, because I think if you just left it up to agents, with respect, it’s probably never going to happen. It almost needs to be “This is a requirement of your listing your property that you become properly identified.” It’s good protection for everyone.
Can I ask you, Lee, just before I let you go, just in terms of security generally, how are we in Australia? How secure is the information we’re putting on the Internet now? Should we be concerned about that?
Lee: I think from a general view, we probably have to be more aware of what we do put on the Internet in a very simplistic term. Someone said to me many, many moons ago, it’s like a postcard. It’s out there, everyone will get to see it, unlike a sealed letter.
I think from our point of view, we’ve taken this very seriously. We’ve worked in the legal space and the corporate space for many years, and so with that in mind, we’ve actually built our cyber security to a level certainly of that of the major banks in the country but also getting very close to that of military-grade security.
We encrypt everything that goes into our cloud-based services, and we ensure throughout that we have very clear audit trials and everything that goes through our platform. We can actually audit by way of date, time, we can see he’s actually logged in and looked at a certain piece of information. We actually hold that information for up to nine years for the clients we are working with, and that certainly is what is intended with the VOI and IDfy.
But I do know that there is a growing concern of “Okay, what is actually happening with that information?” And for that purpose, the clients we’re working with being the real estate agents and the lawyers, we’re not expecting them to have that level of security, and therefore we provide that on their behalf through the platforms and through the products we’re offering.
Kevin: We certainly need to be very concerned about this, and I applaud what you and your company are doing, Lee. Lee Bailie has been my guest. The company is called InfoTrack, InfoTrack.com, where you can get a lot more information.
Lee, thank you so much for your time, and all power to you, mate.
Lee: Thanks, Kevin. Thanks a lot for having me.