The pace of convictions for fraudulent disaster claims from Services Australia is accelerating. Since July 2019, there have been more than 250 disaster payment fraud convictions – of those, 143 or nearly 60 per cent have occurred since May 2022.

The fraudulent claims included people using fake addresses and sending fake images of property damage, and stealing identities to make multiple claims. The exploited events included the 2019-20 bushfires and floods in 2021 and 2022 in NSW, Victoria and Queensland.

A Mount Pritchard man was sentenced in December to 3.5 years imprisonment with a non-parole period of 22 months. He used 26 identities to lodge fraudulent disaster claims, and redirected 168 customer payments, netting $43,800 from disaster fraud in addition to other proceeds of crime.

Many other fraudsters avoided jail terms, receiving community correction orders in NSW and, in Victoria, good behaviour orders.

Shorten warned that such frauds “risked undermining the social licence” for disaster relief, but the government’s commitment to helping disaster-struck communities would not waver.

He said fraudsters ranged from “pretty stupid” to “extremely sophisticated” and some were “clearly organised”. He did not suggest they were linked to known organised crime groups.

Services Australia general manager Hank Jongen said most people submitting claims were honest, but fraud was a growing issue for the agency.

“Previous emergencies like the Black Summer bushfires, and even COVID-19, tested our capabilities and helped us improve our controls to better prevent and detect fraud,” Jongen said.

“We are seeing fraud become increasingly complex, with offenders exploiting technological advances for criminal activity.”

Services Australia estimates its investment in pre-payment fraud checks has prevented more than 33,000 fraudulent claims being paid, saving taxpayers about $33 million.

Ken Gamble, co-founder of Sydney cybercrime investigation unit IFW Global, said insurance companies were also affected as the spike in claims after a disaster made it easier for fraudulent claims to slip through.

NRMA Insurance executive manager for claims, Luke Gallagher, said the company received 19,600 claims for wild weather damage to homes and vehicles in the 2023-24 summer, including cyclones, bushfires, severe storms and damaging hail.

“As an insurer, we see the impacts of the changing climate with each and every severe weather event and natural disaster that impacts our customers and communities,” Gallagher said.

The AON 2024 Climate and Catastrophe Insights Report calculates the economic loss to Australia from record-breaking rain in a two-week period in December was $1.98 billion.

The Insurance Council of Australia says individual companies have means of detecting fraud and there are also industry-wide initiatives. The most common scenario is where opportunistic individuals exaggerate personal claims.

The council also warns of “disaster chasers” who arrive shortly after a disaster touting quick-fix cleanup, repairs and inspections, often demanding upfront cash payments then doing shoddy or incomplete work.

An Australian Competition and Consumer Commission spokesperson said its National Anti-Scam Centre was aware of scammers targeting victims of natural disasters, and also impersonating charities seeking donations to assist those affected.

Gamble, who focuses on investment scams and has also consulted for insurance companies, said there was an “epidemic of scams” and AI would make it harder to stop.

Criminals and law enforcement were locked in a technological arms race, he said. Fraudsters in Australia tended to be individual operators, while organised crime syndicates targeted Australians from overseas.

“Disaster scams will definitely increase because of the awareness – disasters are well publicised in the media, and of course criminals see this and to them, it’s just another opportunity,” he said.

Loading

In the recent Victorian bushfires, Bela Pechnig and Georgia Matthey, co-owners of the Pomonal Cottages near Ararat in the state’s north-west, lost the home they shared with their two young children, as well as most of the holiday cottages that provided their livelihood.

Pechnig said fraud checks delayed his disaster payments because he had not updated the address on his driver licence. It was sorted out promptly after the government sent staff to the town to verify his identity in person.

Pechnig, who is crowdfunding to recover, said fraud was upsetting. “I’m honest, but it makes you realise that there are people around who will use whatever they can to get ahead,” he said. “It doesn’t feel good.“

Forbes Shire Mayor Phyllis Miller, whose town was devastated by floods in 2022, said there “was no room for anyone being fraudulent when there’s been a natural disaster”, adding that the federal government needed to cut red tape and speed up reimbursement to local councils.