Analysis by Lloyds Bank of conveyancing scam reports, made by its own customers, found that homebuyers are being targeted by criminals hacking emails to exploit the conveyancing process.
Increasing numbers of homebuyers have been tricked into sending their property deposit to fraudsters, said the report. In the second half of last year, the figure rose by more than a quarter (29%).
While the overall number of cases is much lower than for other types of fraud, the average amount stolen was the highest, at around £47k ($59k) per victim. The bank has also seen several cases where victims have lost more than £250k ($316k).
What the scams are
| Example scam types | Average loss |
|---|---|
| Purchase | £498 ($629) |
| Romance | £6,340 ($8,002) |
| Investment | £9,037 ($11,406) |
| Conveyancing | £47,527 ($59,986) |
With around 45% of victims being aged 39 or under, first-time buyers may be at particular risk from this type of scam said the report, noting a lack of previous experience of the homebuying process.
We discussed this disturbing phenomenon with Emma Parry, an independent C-Suite & Board Adviser: “Buying a home is a stressful process for anyone, but especially so for first-time buyers. To add to the stress, we are now witnessing an increase in conveyancing fraud,” she said.
“Conveyancing fraud uses similar methodology to other fraud schemes, often involving a combination of emails and telephone calls, with criminals also pressuring victims to make the payment. In this case, as in other schemes, the bank account is operated by the criminal.”
How a conveyancing scam happens
The report found:
- Conveyancing scams typically start when either the solicitor or homebuyer has their email account hacked.
- Fraudsters will monitor email exchanges related to the property purchase, waiting for the opportune moment to strike and send false payment details.
- Sometimes the fraudster can send emails directly from the solicitor’s email account, but usually they will create a spoof email address which looks very similar.
- Because they have seen the genuine chain, the emails fraudsters send will look extremely convincing, using the same names, logos and signatures.
- In some cases, the fraudsters may call the victim and impersonate someone working at the solicitors, to reinforce the urgency of making the payment.
- The homebuyer is then tricked into sending their money to a bank account controlled by the criminals.
Liz Ziegler, Fraud Prevention Director at Lloyds Bank, said: “Fraudsters prey on weaknesses in email security and exploit a conveyancing process that most people may only experience a handful of times in their lives. It’s vital that solicitors also grasp the importance of educating their clients on the risk of this type of scam and make a point of sharing payment details in person at the start of the homebuying process.”
Parry agreed that people need to be aware of these types of risks. She said: “Disturbingly, fraud – in all its many guises – continues to grow. Suddenly, wherever we turn, we are surrounded by criminal activity, be it online, on email, or on a phone call.”
How to protect customers
The bank suggests the following advice should be offered to clients:
- Verify payment instructions – confirm payment instructions with your solicitor in person, or over the phone using a phone number you trust, not from an email or invoice. You should do this at the start of the homebuying process.
- Be wary of changes – solicitors very rarely change their bank account details. Be extremely wary of any sudden changes and remember that email is not a secure communication channel for receiving payment instructions.
- Secure your email – use strong, unique passwords and enable two-factor authentication on all your email accounts. Always sign out of accounts if using shared devices and avoid using public or unprotected Wi-Fi connections.
- Avoid posting online – don’t shout about your property purchase on social media, at least until you’ve got the keys in your hand. Criminals monitor posts and will target the email accounts of those who look to be in the process of buying a new home.
- Don’t be pressurised – fraudsters will try to put pressure on you to make a payment at short notice or risk the deal falling through. Never send money until you have picked up the phone and spoken to your solicitor on a trusted number.
- Pay attention to warnings – your bank might provide a warning about the payment, especially if the name of the account you’ve entered doesn’t exactly match the details of the receiving account. Always follow the advice provided as part of any warning.
ScamSmart
The FCA has a dedicated section on its website called ScamSmart which provides resources and information to help consumers avoid scams. This includes information on how to spot fake communications, recognising investment and trading scams, the tactics scammers use and methods of contact. The regulator also urges people to report any suspected scams to them.