Fraudsters attacking the conveyancing sector, successfully stealing large sums of money from homebuyers, are making national headlines at a depressing rate.
As criminals deploy ever more sophisticated methods to intercept the money, Greg Bryce, managing director of SearchFlow, property intelligence specialists, takes a look at how the conveyancing sector can best protect themselves.
Recently, the Law Society’s annual professional indemnity insurance survey which looked at insurance claims among law firms of up to 25 partners, reveals that almost a quarter of law firms have reported being targeted by scammers in the last year.
The risk of cybercrime is on the increase across all industries, but the legal sector, and in particular the conveyancing sector, where large sums of money are transacted, remains a primary target for criminals.
Being a victim of a scam can have a devastating impact which could lead to bankruptcy of partners or a closure of a firm, loss of clients and income, irreparable damage to your reputation and increased professional indemnity insurance premiums.
Concern is mounting that conveyancers, despite the professional risks to themselves, are not doing everything they can to ensure they are best protected and there is increasing pressure for the industry to address this.
Last month, Insurer QBE said indemnity insurers will want to see firms’ plans for stopping cybercrime when they come to set premiums this year.
Cyber criminals are using the most insidious techniques to infiltrate systems; by hacking into email chains to divert the money to their account, creating a fake seller identity altogether or stealing the seller’s identity, setting up a bogus law firm, email spoofing which is the creation of email messages with a forged sender address, and phishing or vishing whereby attempts to acquire sensitive information such as usernames, passwords, and credit card details by fraudsters masquerading as a trustworthy entity are made by emails or telephone respectively.
But the legal sector is fighting back. The cybersecurity industry is the one of the fastest growing industries in the world. Electronic solutions, checks and systems are readily available to ensure the profession is best protected but unfortunately they are still not universally adopted.
With regards to checking the identity of a seller, the most effective and safest way to ensure all the checks are carried out is by carrying out electronic AML checks.
We have partnered with GB Group, the global leaders in identity data intelligence solutions, to offer a fully integrated and detailed AML report which gives extensive and instant results.
GB Group utilises the most comprehensive suite of data sets that are updated daily and sourced from over 240 countries. Electronic AML checks can be purchased as a low cost report and offer vital protection, reassurance and time savings.
However, many conveyancers are still merely asking to see their clients with their documentation and do not make the necessary electronic checks to verify the identity of their client.
Our recent conveyancing sentiment survey reveals that only a third of conveyancers are carrying out electronic AML checks on all transactions.
The survey also revealed a stark difference with identity check practices by company size. Sole practitioners are leaving themselves more exposed to the risk of identity theft as only 5% carry out electronic checks on all transactions. In contrast, half of larger firms, of 15+ partners, carry out electronic checks on all transactions.
In addition to stealing the identity of a seller, the theft of a law firm’s identity is a big area of risk. The Law Society’s Conveyancing Quality Scheme (CQS) and Find a Solicitor service and SRA’s Law Firm Search have all been promoted as means to help identify if a company is legitimate and regulated.
However, whilst the intentions have been well meaning, information is either not comprehensive enough or up to date.
One initiative that has been driven by lenders’ desire to reduce risk and verify the law firms on their panels has made great progress.
Working with both lenders and law firms to provide the most effective solution to help reduce the risk, Lender Exchange, a unique secure web portal which is owned by Decision First recently launched its Law Firm Search service to enable users to check the validity of not only a law firm but the account details of the law firm acting on the other side of the transaction.
Lender Exchange offers access to the largest set of verified conveyancing firms in England and Wales, equating to over 95% of the active conveyancing market and therefore offering the most comprehensive check on solicitor’s details in the market.
As part of our commitment to offering value added service, we have recently partnered with Decision First to offer our clients the service at no additional cost.
Our clients can now check and confirm the client account of the vendor’s solicitor on every single transaction by simply searching using the name, sort code, and client account number of the firm that they need to check.
However, working in conjunction with cyber security technology and services, law firms of all sizes, from large conveyancing firms to one-man bands, need to ensure best online practices and procedures are enforced throughout
Often the weakest link in cybersecurity is the person using the PC, laptop, tablet or smartphone and there is a growing need for the industry to work together to educate not only professionals but homebuyers on best practices to stay safe online.
And there have been many initiatives to help inform the sector, with sound advice, scam alerts and the Law Society’s updated Practice Note on fraud, along with the Conveyancing Association’s recently launched Cyberfraud and Fraud Protocol; all going some way to help best protect homebuyers and law firms.
Working alongside these initiatives to educate about safe practice online , SearchFlow is committed to offering world class solutions to protect against the threat of fraud.
With the provision of electronic AML checks at a minimal cost and the Lender Exchange’s portal to verify the account details of law firms available at no extra cost, we believe the industry is now making great strides in helping combat fraud within the conveyancing sector.
