Scammers are constantly devising new strategies to trick individuals into giving away their money, and certain forms of fraud, such as identity theft, have recently reached record highs. At Guardian Money, we regularly receive pleas for help from victims who have been defrauded. The amounts lost can range from less than £100 to six-figure sums, with some unfortunate individuals even losing their life savings.
In 2022, fraudsters managed to steal over £1.2bn from UK consumers, a shocking figure calculated to be more than £2,300 every minute. The banking trade body UK Finance describes this amount as staggering. The ongoing cost of living crisis has made financially vulnerable individuals particularly susceptible to scams. Scammers often entice victims with fake deals and discounts in order to obtain personal and financial information.
We have recently been contacted by several people seeking assistance. In this article, we will discuss some of the scams currently circulating and offer advice on how to avoid falling prey to them. We will also provide guidance on what steps to take if you suspect you have been a victim.
One individual who fell victim to a scam is Andrew White. As the completion date for his house purchase approached, he received an email from his conveyancing firm instructing him on when and where to make the deposit payment. Andrew dutifully transferred the funds to the provided bank account. However, when he followed up with the company to confirm receipt, he discovered that the money had not arrived.
It turned out that a scammer had hacked into Andrew’s email exchanges with his solicitor and, posing as the same email address, had redirected him to send the funds to a fake account. Andrew lost £240,000. Unfortunately, this type of conveyancing fraud, also known as “Friday afternoon fraud,” has become more prevalent during the Covid pandemic as solicitors and clients increasingly communicate remotely.
Hackers often strike on a Friday afternoon because it allows them to go undetected until the following Monday, when the law firm reopens. They breach the email account of either the conveyancing company or the client and intercept correspondence related to a property purchase. If the firm’s account has been compromised, the fraudulent messages are typically sent from the solicitor’s genuine email address. If the client’s account is targeted, the scammer creates an email address that closely resembles the solicitor’s and replicates the formatting used in genuine correspondence. Posing as the solicitor, they then direct victims to deposit their money into an account controlled by the scammer. By the time the fraud is discovered, the money is long gone.
Law firms often include warnings to clients that bank account details will never be provided via email. However, these notices are usually buried in introductory materials received weeks before the completion date or in the footnotes of emails, making them easy to overlook. Andrew had been using the same solicitors’ firm for family business for many years and had no reason to suspect anything was amiss, even though the account name differed from the law firm’s. The emailed instructions bore the name and authentic email address of the solicitor handling his purchase. Over a ten-day period, Andrew made nine payments totaling the full amount, as his bank, HSBC, only allowed transfers up to £25,000 per day. He claims that the bank did not question these unusual transactions.
“I lost my entire retirement money through buying a house to be closer to my family,” says Andrew, an RAF veteran. “The solicitors have refused to accept that their email systems have been compromised and insist that a short sentence at the bottom of their emails alluding to fraud is sufficient to absolve them of any responsibility.”
Andrew received a full refund after the Financial Ombudsman Service (FOS) determined that HSBC had not adequately scrutinized the multiple payments. Under the industry’s contingent reimbursement model (CRM) code, banks have committed to reimbursing scam victims who haven’t been grossly negligent. An HSBC spokesperson stated, “Protecting customers from unscrupulous fraudsters is a priority for us. The customer has been reimbursed in full.”
Law firms are appealing targets for cyber-attacks, accounting for 75% of reported crimes in the UK. They handle large payments and store sensitive client information, making them prime targets. In a 2020 survey, the Solicitors Regulation Authority (SRA) reported that 30 out of 40 firms surveyed had experienced at least one cyber-attack, resulting in a total loss of £4 million in client funds. The remaining firms were aware of clients who had been targeted.
Another couple, George and Lisa Frost, lost £308,000 after a fraudster posing as their solicitor instructed them to transfer their house deposit to a compromised account. The scammer used an email address similar to the genuine law firm’s but with one letter changed. The fraudster intercepted email threads from two weeks earlier, sending the couple fake updates about the purchase while intercepting authentic emails from the law firm. The funds were transferred via a cashier at Clydesdale Bank just before the law firm closed for the Christmas holidays. By the time the scam was discovered, the money had vanished. Both the bank and the law firm declined liability. Clydesdale, part of Virgin Money, stated, “The transaction was handled by an experienced bank teller, and we are satisfied that the bank fulfilled all its obligations to our customer. Mr. Frost signed the Chaps form confirming the payee details were correct, as well as signing the fraud prevention warning to confirm he was happy to proceed with the transaction based on the supplied details.” The couple eventually received reimbursement from their bank after the FOS ruled that it had not taken sufficient measures to protect them.
According to Arun Chauhan, a fraud and financial compliance solicitor at the law firm Tenet, companies are not adequately warning clients of the risks of scams. However, this does not mean that law firms will accept liability and compensate victims. If the bank has adopted the CRM code, they are the first point of contact for reimbursement. If the bank hasn’t adopted the code, the only option is to pursue a professional negligence claim against the conveyancing firm, which can be costly in terms of fees and expenses.
To avoid falling victim to conveyancing fraud, follow these top tips:
1. Be cautious of grammatical errors or unusual phrasing in emails.
2. Beware of messages from a conveyancing firm claiming unexpected changes to payment dates or details or from someone allegedly new to the firm.
3. Only use bank details provided by your conveyancing firm on paper and in person.
4. If you receive an email stating that the account details have changed, contact the firm using the phone number listed on their official website or visit in person to confirm the email’s authenticity.
5. Pay attention to ungrammatical English or awkward phrasing in emails, as these could be signs of a fraudulent message.
6. Whenever possible, make large transactions at a bank branch and ensure the account name matches the law firm’s name and that associated with the account number.
7. Use secure and unique passwords for your email accounts, and check if your email has been exposed in a data breach on the website haveibeenpwned.com.
Another individual who fell victim to scammers is Julie Hall, a businesswoman who lost £4,900 after being tricked by fraudsters posing as Halifax bank representatives. She claims they even played the exact same hold music that Halifax uses during phone calls.
In July, Julie received a text message that appeared to be from Halifax, mixed in with a thread of genuine messages. The text stated that her card should be replaced with a new one due to suspicious activity. Julie followed the instructions provided and ended up disclosing her card details to the scammers.
These examples demonstrate the importance of staying vigilant and taking precautions to protect yourself from scams.
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