The story
From Furphy (a surname), from the firm of J[ohn] Furphy and Sons. An often-repeated etymology is that during World War I (1914–1918), Australian soldiers in Europe and the Middle East often stood around water carts manufactured by the firm and emblazoned with its name to talk and exchange news and rumours. Alternatively, it has been suggested that the word derives from news and rumours spread by soldiers operating Furphy carts collecting garbage and human waste in the Broadmeadows Camp in Melbourne, Victoria, Australia, in 1914, or shared between soldiers visiting latrines where such Furphy carts would often be seen.
Etymology from Wiktionary, CC BY-SA 4.0.