A false report or rumour; an absurd story.
1916 Anzac Bk. 56/1 These furphies are the very devil. Ibid., Furphy was the name of the contractor which was written large upon the rubbish carts that he supplied to the Melbourne camps. The name was transferred to a certain class of news item, very common since the war, which flourished greatly upon all the beaches.
Since the word seems to be ANZAC in origin, it makes sense that I found it in a book by an Australian.