5 April, 2019
There has been a worrying rise in authorised push payments fraud, especially when transferring money to buy a home. Stephen Ward, director of strategy at Council for Licensed Conveyancers (CLC), explains what to look out for to avoid being scammed
Figures produced by the finance industry group, UK Finance, reported that in 2018, consumers lost £123.7 million due to being scammed into making a payment that turned out to be criminal after a malicious redirection of where the money was going.
The conveyancing process is particularly vulnerable due to the nature of the transactions, namely one-off and sizeable. Conveyancing fraud is often referred to as ‘Friday afternoon fraud’ as most completions take place on a Friday.
How does conveyancing fraud work?
Typically, scammers hack into emails between conveyancers and homebuyers and effectively hijack the process.
Once they have a suitable victim, they will remain dormant until just before completion, when a large sum of money is due. At this point they will send a fake, but genuine looking, email to the homebuyer appearing to come from their conveyancer with revised bank account details for where to send the deposit.
Once the unsuspecting homebuyer transfers funds into this fraudulent account, they then empty it and close it down. By the time the buyer realises that something is amiss, the criminal will have already quickly transferred the money to numerous other accounts, often abroad, where it is then cashed out.
Authorised push payments fraud
Because the victim has been tricked into authorising a payment to a fraudster the customer’s bank has to act on the instruction and so the victim is ultimately liable. This differs from when a payment is made without the authority of the customer and the bank is liable for the cost of the fraud.
These are referred to as authorised push payments (APPs) and are not just limited to email, payments can be made over the phone or in person, and most are completed instantly.
APP scams can have a devastating impact on victims. According to UK Finance, there were 43,875 victims of APP scams in 2017, involving £236 million.
For home buyers, the damage is huge. According to the Solicitors Regulation Authority, on average, victims of conveyancing fraud lose £101,000.
In 2017, the banking industry introduced new standards to ensure those who have fallen victim to fraud or scams get the help they need and according to UK Finance, all banks are working towards the introduction of suitably trained staff available 24-hours, 7-days-a-week to deal with and process APP scam complaints. But ultimately it is for each of us to make sure we are doing all we can to protect ourselves.
What steps can we take to protect ourselves?
Prospective home buyers are understandably nervous about their funds, but there are steps they can take to safeguard their money.
Most conveyancing firms are actively engaging with clients to ensure that their data and monies are well protected. They may insist that bank details are only sent by post and will advise clients to ignore emails or phone calls that claim last minute changes of bank account details. And many lawyers put on all their emails a reminder that they will not change bank account details through an email.
Remember, a genuine bank or organisation will never contact you out of the blue to ask for your PIN, full password or to move money to another account.
7 ways to spot an email you’ve been sent is a scam
If you have any concerns you should contact your conveyancer directly by phone on a number you know to be genuine, or, if local, you may wish to visit the office in person.
Consumers can also check the validity of websites through secure schemes such as the CLC’s secure badge scheme. These types of safety measures significantly reduce the risk of impersonation online through cloned or copied websites. It also helps to identify fraudsters setting up fake firms.
These types of safety measures work by installing a unique piece of code on the website which make it impossible for fraudsters to copy. The CLC has also published a guide to help consumers avoid being scammed when buying a home.
While the fraudsters become increasingly sophisticated, and the sums involved in this type of fraud are daunting for consumers, by being aware of the issue and knowing how to spot the scammers, homebuyers can take practical steps to ensure that their funds remain safe and their transaction progresses smoothly.
What to do if you are victim to APP scam
If you believe you have been the victim of an APP scam you should get in contact with your bank as soon as you can. The criminal will be seeking to move your money on swiftly, so the quicker you get in contact the better.
You should also report it to Action Fraud https://www.actionfraud.police.uk/.
Additionally, if you believe your bank has been negligent or is at fault and you’re unhappy with their response, you can complain to the Financial Ombudsman https://www.financial-ombudsman.org.uk/default.htm
The CLC is the regulator of specialist property lawyers. For more information visit www.conveyancer.org.uk
This article was first published in What Mortgage
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