Every day, conveyancing firms transfer millions of pounds to clients and lawyers… And crooks. Being an ideal target for fraudsters, most law firms are struggling to understand how to deal with this problem.
A dose of reality
In 2018, clients in the property sector lost over £216m due to fraud. Law firms rely on email to communicate with their clients, despite email scams being a common fraud. For instance, fraudsters will use a similar email address to a law firm. They then email the client advising them that bank details have changed and to send their deposit to the new account.
We saw this first hand several years ago when we used to use email. A client sent £600,000 to a fraudster. She admitted that “I read your big red email warnings about bank details not changing, but was flustered”. Our client was in her early thirties and worked for a major London bank. Not one of the “old and vulnerable” that the press like to paint as typical victims.
Silver bullet solutions
Unfortunately, snake oil salesmen are pushing technology such as the ludicrously cynical idea of “secure email” or it’s equally useless stablemate, “encrypted email”. Neither of these solve the problem of fraudsters using fake email addresses. If a client expects to receive an email from a lawyer then they are vulnerable to fraud. If owners of law firms want to protect their clients, they must stop using email and switch to secure messaging portals.
Identity theft
Most people struggle to know whether identification documents are genuine. Anyone who thinks that lawyers have special powers in this area are very much mistaken. It is not uncommon for us to get to the end of a transactions to find the other lawyers have not formally identified their clients. With everyone pushing for exchange, expert detailed scrutiny of such documents is probably not high on their agenda. The good news is that proven smartphone technology that banks use for identity checking is now being made available to property lawyers. Unfortunately, the average law firm owner still thinks case management systems are overrated and paperless operation is just a pipe dream. We don’t see them adopting such technology any time soon.
Conclusion
Law firms really need to take a long hard look at how they protect their clients from fraudsters. Unfortunately until most wake up and realise they need to invest in training and technology they are continuing to put their clients hopes and dreams at risk.