Action Fraud’s latest fraud reports show that there were £2.35bn of reported losses in the last 12 months (to March 2021), with 80% of all reported fraud being cyber enabled.
The pandemic has exacerbated levels of fraud as the volume of digital transactions across all sectors has increased by an estimated 40%, leaving consumers more vulnerable than ever to cyber-crime. So why is conveyancing particularly vulnerable to cyber-crime and what can be done to help prevent the risks?
Conveyancing transactions have always been a target for financial crime – there’s so much to think about when buying and selling a house – it’s often fast moving and pressurised and large sums of money are involved. The victim may be the buyer, seller, borrower, lender or even conveyancer and this can occur in any number of ways, with increasing levels of sophistication from fraudsters. Examples of fraud within property transactions include:
This occurs when the fraudster appears to be the owner of a property and markets the property through an estate agent, at auction or online. An innocent buyer will view the property and sometimes even meet the “owner” . A price is then agreed and the buyer will instruct a conveyancer. It is then not until after completion when the monies are sent to the fraudster when the buyer is then unable to register the title, only to discover that the property they bought either does not belong to the seller or does not exist.
Criminals may use a false ID and pretend to be a buyer making an offer and then withdraw before the exchange. They may then use the seller’s information to commit title fraud, or continue with the transaction to steal money raised from the lender.
This type of fraud more often than not targets owners considered more vulnerable, including:
- Elderly owners including those in care
- Absent owners such as landlords or those overseas
- Sole owners
- Owners who have passed away
- Owners who have built up equity
The fraudster will hack into email exchanges between a client and their conveyancing solicitor and pose as the solicitor. When the time comes to transfer funds to the solicitor – either for a deposit or the purchase balance – the fraudster sends the victim an email that looks like it’s an authentic communication from their solicitor but is in fact a scam email linking to the criminal’s own bank details.
Lenders or borrowers
Fraudsters may also attempt to impersonate those lending or borrowing money, often via false contact information.
Michael Connelly from Legal Bricks knows only too well the prevalence of fraud in property transactions – “
because of the number of parties involved and the complexity of transactions, the opportunities for fraudsters to infiltrate the process is sadly, on the rise. The diverting of funds is one of the most common fraudulent activities committed over the past few years and it is done with worrying levels of sophistication.
We have also seen a massive impact on property transactions being able to progress due to security breaches – a recent example being Hackney council, who were hacked at the end of last year, leading to a 6 month backlog and catastrophe for many home buyers and sellers whose transactions subsequently fell through”.
So what can be done to prevent fraud in property transactions?
“The first and most obvious way to help reduce fraudulent activity is to educate all parties involved in the transaction on what information they will be required to submit, when they need to do it, and how they will be required to do it. We often hear from our clients that there still remains a lack of clear understanding of the process.
Secondly, we recommend that conveyancing firms use a secure online portal such as the one provided by Legal Bricks – LB-Connect. By using a secure portal, firms remove the need for easily compromised email communications throughout the entire conveyancing process and deny fraudsters access to sensitive information. Alongside email removal, LB-Connect also uses Multi Factor Authentication or MFA, where users are required to add a mobile number to gain access to their account, alongside their email address. The use of MFA itself can help block up to 96% of bulk phishing attacks*
In addition to the vastly improved security elements provided through systems such as LB-Connect, consumers can also access details about their sale or purchase, upload or complete required forms, and message their solicitor through a secure environment. These systems also speed up and streamline the conveyancing process.”
*source: Google online security 2019
This article was submitted to be published by Legal Bricks as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.