Conveyancing Fraud – Don’t Take Any Chances

HR Blog Conveyancing Computer Fraud

In December 2016, the Solicitor’s Regulation Authority (SRA) reported that conveyancing fraud was the number one cyber-crime in the legal industry.  The reasons for this are easy to understand; to achieve their aim, fraudsters simply highjack existing trusted relationship (usually by email) between a conveyancing solicitor and their client, to obtain very large sums of money, quickly and relatively easily.  By intervening at the right time, fraudsters manage to convince unsuspecting house buyers and vendors to transfer money into fraudulent bank accounts, rather than the intended destination.

It was also reported that at the time, it was thought that fraudsters had targeted one-quarter of all law firms.  Those statistics were a real wake up call, resulting in a great deal of awareness of this easily avoided form of fraud.  Nevertheless, conveyancing fraud, sometimes referred to as “Friday afternoon fraud” due to most transactions settling at the end of the week, does still occur and quality law firms are particularly aware of the dangers and are committed to protecting their clients.

How do the fraudsters intercept a property transaction?

Typically, a fraudster will scout for potential victims by gaining access to their email, before selecting people that can be defrauded.  Once they have found a possible victim, they will keep a close watch on the email activity until its almost time for completion of a property transaction.  When the deposit or final balance is due to be transferred, cyber-criminals will intervene in the email communication chain, with the aim of ensuring that money from a sale or purchase is placed into their bank account rather than the intended recipients.

Examples of conveyancing fraud

In January 2017, charity worker, Howard Mollett, had £67,000 stolen when purchasing his first house.  Fraudsters contacted Mr Mollett after he had sent an email to his solicitors requesting information on how to transfer over £74,000.  The email sent by the criminals comprised of an identical email address used by a member of staff at the solicitors to which Mr Mollett had been conversing.  The email requested the money should be paid into a Yorkshire Bank account, which Mr Mollett duly did.  It is understood that the fraudsters most likely gained access to the law firm’s webmail service.

In another example, Andrew Doyle and his partner, Susan Paul lost over £200,000 when a fraudster posed as their conveyancing solicitor. It is believed that fraudsters hacked Mr Doye’s account, deleting a genuine email from his conveyancer and then replicated it with different bank details and re-sent it from a “spoof” address, which mimicked the real address of the conveyancing solicitor.  All this happened in the space of a few minutes.

How can you protect yourself from conveyancing fraud?

When it comes to transferring money (e.g. a deposit), take no chances. NEVER send money to an account where you have received details of by email. We will ONLY send out bank details by hard copy letter and NEVER change our bank details during the course of the transaction. Consider going into the office of the intended recipient ie your solicitor, and/or making a small payment first, verify that it has been received, and only then send the balance.

It is important that the relationship between you and your conveyancing solicitor is a trusted one.  They should know you well enough that any erroneous behaviour is detected immediately.  Where possible, you should work with a conveyancing lawyer who you have met in person, thereby establishing a trusted relationship from the outset.

Lexcel accreditation

When seeking a conveyancing solicitor to undertake your property transaction, don’t make the mistake of thinking that low-cost is best.  While most transactions go smoothly, experienced conveyancers can be worth their weight in gold.  Not only will they complete the necessary steps in the process diligently and in close communication with you, they will also follow very strict processes to make sure the whole transaction goes smoothly, including any transfer of money.  Law firms with a Lexcel accreditation must demonstrate they have undertaken IT risk-management assessments and have policies and procedures in place to prevent cyber-criminals targeting their clients.

Lexcel is an accreditation awarded by the Law Society of England and Wales.  It is difficult to achieve and demonstrates the law firm is committed to following best practices in its day to day operations.  Ultimately it is a mark of quality and shows the company is working to a very high standard.  By engaging a solicitor with Lexcel accreditation, you can be confident they have strict policies and procedures which protect clients and themselves from the possibility of conveyancing fraud.

Hart Reade Solicitors is a full-service law firm with offices in Eastbourne, Hailsham, Polegate and Meads.  We hold a Lexcel accreditation and a Conveyancing Quality accreditation from the Law Society of England and Wales.  To make an appointment with one of our property solicitors, please phone our office on 01323 727 321.

Please note, this article does not constitute legal advice.