Vendor fraud has become one of the most disruptive and costly threats in the conveyancing sector. The SRA highlighted it as an emerging risk in its 2024 AML Sectoral Risk Assessment, noting a sharp rise in cases where law firms had unknowingly facilitated fraudulent sales. Much of this increase is linked to the wider availability of artificial intelligence tools, deepfake technology and high quality forged documents that make fraudulent vendors harder to spot.
Fraudsters are quick to adapt. Some are embracing new technologies, while others continue to use traditional methods that have worked for years. This blend of old and new tactics means criminals can stay ahead of legislation, regulation and law enforcement, and makes the role of the conveyancer more challenging than ever.
Why vendor fraud matters
When vendor fraud occurs, the consequences can be substantial. Firms can face regulatory action, fee write offs, insurance complications and reputational damage. Clients, whether genuine buyers or property owners whose identities have been stolen, often face significant legal and emotional fallout.
One recent example was a law firm fined just shy of £20,000 for failing to verify a client’s identification and overlooking a ‘Refer’ decision in an AML report. The firm transferred £110,910 to an unrelated third party in what turned out to be a vendor fraud scheme.
HM Land Registry has the power to recover indemnity payments from conveyancers or pursue claims arising from fraudulent transactions. However, HMLR’s practice guide 39 confirms that these powers will not be used where the firm has properly complied with the digital identity standard.
How vendor fraud happens
Vendor fraud typically involves a criminal impersonating the legitimate property owner and attempting to sell the property without their knowledge. Sometimes they target a genuine buyer, and sometimes they work with a complicit buyer who supports the fraud.
Common scenarios include:
Tenanted properties
A fraudulent tenant can assume the identity of the landlord and provide detailed, convincing responses to enquiries, since they are in occupation.
Empty properties
Fraudsters often mine the publicly available Land Register to identify owners of vacant homes. Although they may have less knowledge about the property, many can still provide forged or manipulated documentation.
Other common methods:
- Impersonation using stolen or forged ID
- Fake or altered title documents
- Buyer collusion
- Attempted infiltration of law firms through temporary roles or staff connections
Who is most at risk?
Vendor fraud can be carried out by organised criminals, opportunists or people known to the property owner. Some clients are more vulnerable, including those who are elderly, abroad for long periods, have reduced mental capacity or have previously been victims of identity theft. Properties where the owner has died or where tenants reside can also be attractive targets.
Red flags conveyancers should pay attention to:
- ID that looks inconsistent or poor quality
- Clients reluctant to provide documents or information
- Seller not living at the property
- Complex or unusual corporate structures
- Funds routed through unrelated third parties
- Pressure for a quick sale or to bypass normal processes
- Property priced significantly above or below market value
- Lack of direct contact with one of the parties
- Sudden changes to banking details or client identity
One red flag alone may not indicate criminality. Multiple indicators together should prompt deeper scrutiny.
Practical steps to reduce risk
Assess the risk
Firm wide and matter level risk assessments remain central to preventing fraud. Conveyancers should document the rationale behind risk decisions and revisit them throughout the transaction.
Verify ID properly
With deepfakes becoming more sophisticated, firms should review whether their electronic due diligence tools are resilient enough. Digital identity verification that uses biometric and cryptographic checks is increasingly recommended by both regulators and HMLR practice guide 81.
Where relying on certified ID, ensure the certifier is appropriate and reachable through a trusted source such as the Law Society’s Find a Solicitor.
Link the client to the property
When acting for a seller, ensure you can evidence their connection to the property. Electoral roll entries, utility bills, insurance documents or historic deeds can all help.
Be alert when the seller is not in occupation
A seller who does not live at the address increases the risk. Additional documentation should be requested to confirm their entitlement to sell.
Sense check dates and details
Compare your client’s age and background with the Land Registry registration date. Large discrepancies can be a warning sign.
Monitor the transaction throughout
Fraud risk can change. Look out for unusual buyer behaviour, changes to banking instructions or new parties entering the process. One known scam involves a criminal posing as a buyer, withdrawing after receiving the report and then using that information to pose as the seller with another firm.
Keep thorough records
Document all due diligence steps, decisions and changes. Good record keeping is vital for demonstrating compliance if challenged later.
Inform clients about Property Alert
Encourage clients to sign up for HM Land Registry’s Property Alert service. Updating service addresses, especially where owners live abroad or properties stand empty, is also important.
Staying ahead of the threat
Vendor fraud is evolving quickly, and conveyancers are on the front line. A combination of strong due diligence, sensible scepticism, digital identity tools and continuous monitoring can significantly reduce the risk. Having the right controls in place protects firms, clients and the integrity of the property market.
Eilish Cullen, head of partnerships and data protection subject matter expert at Teal Compliance
