In recent years homebuyers and conveyancers have increasingly been targeted by criminals with scams which have left homebuyers at risk and out of pocket.
Given the sums involved in conveyancing transactions, consumers can be hit particularly hard by this type of activity. Transfer scams are where the borrower transfers the deposit of the house they are buying to their solicitor or conveyancer – but the money is intercepted and stolen by a fraudster.
The number of authorised transfer scams targeting the home buying process in March 2016 was more than triple those in March 2015, according to statistics from the National Fraud Intelligence Bureau, and this number is continuing to rise.
According to Land Registry figures, £25 million was lost through property hijack in the year to April 2017. Despite increased awareness of fraud within the conveyancing industry, these figures are still increasing each year.
Because the victim has been tricked into authorising a payment to a fraudster the customer’s bank has to act on the instruction and so the victim is ultimately liable. This differs from when a payment is made without the authority of the customer and the bank is liable for the cost of the fraud.
“Friday afternoon fraud”
Cyber criminals have become increasingly sophisticated, and the conveyancing process is particularly vulnerable due to the nature of the transactions, namely one-off and sizeable. Conveyancing fraud has become known as ‘Friday afternoon fraud’ as most completions take place on a Friday.
Scammers hack into emails between conveyancers and homebuyers and effectively hijack the process. Once they have a suitable victim, they will remain dormant until just before completion, when a large sum of money is due. At this point they will send a fake, but genuine looking, email to the homebuyer with revised bank account details.
Once the unsuspecting homebuyer transfers funds into this fraudulent account, they then empty it and close it down. By the time the buyer realises that something is amiss, the criminal will have already quickly transferred the money to numerous other accounts, often abroad, where it is then cashed out.
For regular home buyers, the damage is huge. According to the Solicitors Regulatory Authority, on average, victims of conveyancing fraud lose £101,000.
Who’s being targeted?
There were a number of cases in 2017, where on completion day homebuyers were tricked out of large sums of money. First-time buyer Howard Mollett, lost £67,000 to scammers who hacked his conveyancer’s emails, and so there was nothing to alert him to the fact that the communication wasn’t genuine. Mr Mollett is still trying to retrieve his money.
Just before Christmas a young family in London were subject to similar scam, losing £137,500 to a bank account operated by a fraudster. They have since managed to recover a significant chunk, but are still down £57,388.
But transfer scams are not the only risk to watch out for. In August last year, the CLC was alerted to a scam email purporting to be from the Halifax, that contained links to suspected malware. The email header appeared as follows (note the real email address of the scamming sender under the apparently correct alias).
We don’t know how many people may have fallen victim to the malware contained within this email, but it’s a good example of needing to be extremely vigilant with online communications, as at first glance it appears authentic.
What steps can consumers take to protect themselves?
Most conveyancing firms are actively engaging with clients to ensure that their data and monies are well protected. They may insist that bank details are only sent by post and will advise clients to ignore emails or phone calls that claim last minute changes of bank account details.
There are also important steps homebuyers should take to protect themselves and their funds.
7 ways to spot if an email you’ve been sent is a scam:
- The sender’s address doesn’t match the website address of the organisation it says it’s from. Roll your mouse pointer over the sender’s name to reveal its true address.
- The email doesn’t use your proper name – using something like “Dear customer” instead.
- There’s a sense of urgency, asking you to act immediately.
- There’s a prominent website link which may seem like the proper address, but with one character different.
- There’s a request for personal information.
- There are spelling and grammatical errors.
- The entire text of the email is within an image rather than the usual text format and the image contains an embedded hyperlink to a bogus site. Again roll your mouse pointer over the link to reveal its true destination.
If you have any concerns you should contact your conveyancer directly by phone on a number you know to be genuine, or, if local, you may wish to visit the office in person.
Consumers can also check the validity of websites through secure schemes such as the CLC’s secure badge scheme. These types of safety measures significantly reduce the risk of impersonation online through cloned or copied websites. It also helps to identify fraudsters setting up fake firms. These types of safety measures work by installing a unique piece of code on the website which makes it impossible for fraudsters to copy.
While the fraudsters become increasingly sophisticated, and the sums involved in this type of fraud are daunting for consumers, by being aware of the issue and knowing how to spot the scammers, homebuyers can take practical steps to ensure that their funds remain safe and their transaction progresses smoothly.
The CLC is the regulator of specialist property lawyers. For more information visit www.conveyancer.org.uk