Conveyancing completions historically have taken place on a Friday, generally to allow for a weekend of unpacking boxes. However, this is a prime time for fraud to take place as solicitors are often under pressure from multiple completion deadlines and client accounts are likely to contain large amounts of money. This has led the Solicitors Regulatory Authority (SRA) to coin the term ‘Friday Afternoon Fraud’.
In December 2016, the SRA published figures showing that reported cases of conveyancing fraud from email hacking reached £7million in the previous 12 month and receive an average of four reports a month of law firms being tricked into handing over client account details.
Fraudsters manage to gain access to firm’s online systems where malicious software has been downloaded by solicitors accidentally from unsolicited emails. The fraudsters then intercept emails between the solicitors and client and replace them with their own in an attempt to hijack money from client accounts. On other occasions the scammers have called pretending to be from the banks counter-fraud team and tricked firms into giving over account details.
How can you avoid online fraud when working with Solicitors?
Below are my tips on how clients and firms can better protect themselves:
1. Wherever possible it is a good idea for clients and solicitors to meet in person at the start of the transaction. During this initial meeting, details of the firm’s client account can be given in writing along with confirmation that it will not change during the transaction.
2. The client should provide a bank account statement to verify their account details and this should be kept on file and used where monies need to be returned to the client during the transaction.
3. Neither the client nor the solicitor should access emails when travelling or anywhere where the connection is not likely to be secure.
4. When making a large transaction, transfer a small amount first to make sure the bank account is legitimate.
5. If in doubt get in touch! If either solicitors or clients are concerned about the content of an email they should contact the other party directly via a reliable means to check the authenticity.
Recent case law
There are a plethora of recent case law dealing with situations of such Friday Frauds, a couple are listed below:
Dreamvar v Mischon de Reya (2016) the solicitors were found in breach of trust and denied relief under s.61 of the Trustees Act. A tenant posing as a landlord successfully sold a property to Mischon’s client. The claim was based on an alleged failure by the firm to seek an undertaking from the seller’s solicitors that it had taken reasonable steps to establish its client’s identity.
Most recently, in Patel v Freddy’s Ltd and others (2017) the High Court considered whether the buyer’s solicitor had a duty to check the identity of the seller. They held that the duty lay with the seller’s solicitor to check their client’s identity.
If you would like further information or advise on this topic, please contact Milly Webb, a Solicitor in our Residential Property team in our Sevenoaks office on 01732 448163 or email [email protected]