Fraudsters are impersonating solicitors and stealing house deposits just before completion dates. This type of scam, known as conveyancing fraud, typically involves a fraudster hacking into a solicitor’s or buyer’s email account and providing alternative bank details for deposits. Once the buyer transfers the money, it ends up in the fraudster’s account instead of the solicitor’s.
Lloyds Bank reported a 29% increase in conveyancing fraud cases in the second half of last year compared to the first half. Victims lost an average of £47,000, with around 45% of victims aged 39 or under. This indicates that first-time buyers may be particularly at risk.
How Conveyancing Fraud Happens
Fraudsters can hack either the solicitor’s or the buyer’s email account, but it’s usually the buyer’s email that gets compromised. The Solicitors Regulation Authority explains that buyers’ emails often lack the robust firewalls businesses have. Once the fraudster gains access, they monitor email discussions about the property purchase.
When it’s time to transfer the deposit, the fraudster provides fake bank details from the solicitor’s email address or poses as the solicitor from a lookalike email address. The fake email might differ by just one character from the genuine address and will mimic the tone, signature, and logos used in previous messages. Sometimes, the fraudster calls the buyer, impersonating a solicitor’s employee, and provides bank details over the phone.
The Impact of APP Scams
Victims of conveyancing fraud are often tricked into transferring money directly to the fraudster’s account. This type of scam is known as an authorised push payment (APP) scam. Campaign efforts by Which? and others have led to a voluntary reimbursement scheme for faultless victims of APP scams, which most major banks support. Starting in October, a new mandatory reimbursement scheme will come into force, covering over 1,500 firms offering faster payments.
The Payment Systems Regulator (PSR) has set the reimbursement limit at £415,000 for APP scam victims. However, banks and other financial entities are lobbying to reduce this limit to £85,000. Which? argues that policymakers must resist such calls to ensure that faultless victims receive fair reimbursement.
Avoiding Conveyancing Scams
Buying a new home is stressful, and fraudsters exploit this urgency. Here are essential tips to avoid becoming a victim of conveyancing fraud:
- Transfer a Small Amount First: Before sending your house deposit, transfer a nominal amount like £1. Call your solicitor using their registered branch phone number to confirm receipt.
- Double-Check Contact Details: Be cautious of unexpected emails or phone calls. Verify email addresses for any new or missing characters and be wary if contacted by a ‘new’ staff member.
- Avoid Posting Details Online: Fraudsters can use social media to identify potential victims ready to make large purchases. Avoid posting about your new home until the transaction is secure.
- Verify Payment Instructions: At the start of the process, confirm payment instructions with your solicitor in person or via a trusted phone number.
- Pay Attention to Bank Warnings: If you’re about to make a payment and see a mismatch in account details, double-check with your solicitor by calling them at a verified phone number.
What to Do if You Fall Victim
Fraud prevention and fraud awareness are crucial in today’s digital age. Conveyancing fraud, a severe threat to homebuyers, can be avoided with vigilance and precautionary measures. By following the tips provided, you can protect your hard-earned money and ensure a secure property purchase.
Remember, always verify payment details, stay sceptical of unexpected communications, and act swiftly if you suspect fraud. Stay informed, stay safe, and protect your financial future. If you do become a victim of a conveyancing scam, act immediately: Call your bank using the number on the back of your bank card. Report the fraud to Action Fraud or call the police on 101 if you are in Scotland.
