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Conveyancing scammers are turning buying your dream home into a nightmare

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Conveyancing fraud occurs when scammers intercept the communications between buyers and solicitors. Worryingly, TLW is seeing a rise in cases.

You’ve spent months, even years, saving to buy the property you’ve always wanted, and just as you get ready to pay the deposit to your conveyancing solicitor, you get an email advising that they have updated their bank details and to send the payment to the new details – no red flags yet, right?

It’s not until you speak to your solicitor on the phone again that you realise the email was not from them but from a scammer intercepting your communications to divert the payment, and now your hard-earned money is lost, and your property transaction is in danger.

While this may sound like a horror scenario, it is the unfortunate reality for an increasing number of conveyancing fraud victims in the UK. However, UK banks have a duty of care to prevent, spot, and stop scams like this as they happen. The Government backed Financial Ombudsman Service (FOS), which investigates complaints between financial institutions and their customers, is increasingly finding that banks have failed in these responsibilities, resulting in significant compensation for victims.

Conveyancing scams are property fraud in which criminals intercept communications between house buyers and their conveyancing solicitors to get access to the tens and sometimes hundreds of thousands of pounds involved in property transactions.

Conveyancing scammers rely on the high-pressure, time-sensitive nature of conveyancing matters to catch victims when they are less likely to spot red flags or spend extra time reviewing more minor details. Victims are also vulnerable as moving house is a rare lifetime experience, so they are unsure of the process or what to look out for. Often, the scammer will impersonate the buyers’ conveyancing solicitor by setting up fake email addresses that are almost identical (save for one letter) and emailing the victim, advising of a ‘change of bank details’. This is sometimes referred to as an ’extra s’ scam, as it relies on most individuals being unlikely to spot an extra ‘s’ in the email address of someone they have been communicating with previously.

Once the fake details have been planted, the idea is that the victim will transfer some (if not all) of the deposit or final balance of the conveyancing transaction to the scammer via bank transfer. By the time the scam is uncovered, usually, when the victim speaks to their genuine conveyancer again, the money has already been moved on, often overseas, by the fraudsters and is as good as lost.

To maintain a sense of urgency and pressure, these scams often happen on a Friday afternoon, under the ruse that everything has to be rushed through ahead of the weekend. This has led to the term, ‘Friday afternoon fraud.’

The Financial Ombudsman Service publishes notable decisions it has made on such investigations, and it seems that conveyancing scams are on the rise. Two such cases are those of Miss Z and Mr and Mrs B, who were targeted by conveyancing fraudsters for significant amounts of money.

Miss Z, who was purchasing an investment property, was in near-constant contact with her conveyancing solicitor who was regularly emailing for updates as they had passed the initial deposit deadline. Within the chain of emails, Miss Z asked for the solicitors’ bank details to pay the deposit but was unaware that the communication had been intercepted by a scammer posing as her solicitor, using an amended but almost identical email address.

When she received the expected response with bank details attached, Miss Z noticed nothing out of the ordinary and transferred the deposit amount of £53,500 in a series of incremental payments. The scam was only uncovered 6 days later when Miss Z spoke to her real solicitor again. Nationwide, Miss Z’s bank, refused to reimburse her for the loss, stating that it had provided sufficient ‘effective warnings’ to her during the process.

Mr and Mrs B suffered a very similar experience when, shortly after transferring the sum of their deposit to their solicitor’s firm, a scammer posing as the conveyancer emailed Mr B and advised him that the remaining balance of almost £530,000 could be paid, including new, false, bank details. The payment was then made to the scammers.

Like Miss Z, the scam was not uncovered until 5 days later when Mr and Mrs B were next in touch with their actual solicitor. After discovering the fraud, their bank, HSBC refunded two-thirds of their loss but refused to reimburse the remainder as it felt the couple had not done enough to check the legitimacy of their payee.

Both cases were referred to the Financial Ombudsman Service for an independent investigation.

In both Miss Z’s and Mr and Mrs B’s stories, the scammers used Authorised Push Payment (APP) fraud to get their hands on the victims’ funds. APP fraud is a type of fraud in which victims are tricked into instantaneously sending money to scammers, sometimes using social engineering schemes incorporating impersonation and pretending they are someone they are not, such as their trusted solicitor.

As the transactions are being made for a reason, service, or product that the victim believes to be legitimate, such as paying their conveyancing solicitor, the money is often moved on before the scam has been uncovered, making it difficult or even impossible to recover.

In the UK, banks have a responsibility to safeguard consumers from the risk of money laundering and scams, such as conveyancing fraud, by having in place procedures and systems that detect, stop, and warn consumers if they are at risk.

In the cases of Miss Z and Mr and Mrs B, their banks were signed up to the Contingent Reimbursement Model (CRM) code launched in 2019, which gives customers of banks who’ve signed up to the code even further protections and guaranteed reimbursement where their transactions are covered by the conditions in the code. However, in both scenarios, the banks involved did not believe that the transactions were covered by the CRM code, and so did not refund their customers.

Whilst Miss Z’s bank, Nationwide, claimed that it had provided sufficient ‘effective warnings’ during the transactions and that she bore some responsibility for the fraud by not spotting the typo in the scam email address, the FOS investigator disagreed. She came to the conclusion that Miss Z had fulfilled her ‘requisite level of care’ and that Nationwide did not provide sufficient warnings to halt the scam.

Miss Z was awarded compensation totalling the £53,500 lost to the scam, plus 8% interest from the date of the scam, as well as £400 for distress and inconvenience.

In the case of Mr and Mrs B, whilst HSBC had refunded two-thirds of their lost funds, it refused to refund the remainder as, again, it felt that the couple should bear some responsibility. The FOS investigation found that HSBC should have asked more probing questions and delved further into the reasons for the transaction, had they done so, this in turn would have uncovered the scam.

Mr and Mrs B were awarded compensation for the full remainder of their loss (the remaining one-third), plus 8% interest, together with £500 compensation for distress and inconvenience. HSBC was also directed to cover the costs incurred by Mr and Mrs B for a subsequent mortgage they had to take out to ensure the property transaction did not fall through.

Sarah Spruce, Head of the APP fraud team at TLW Solicitors commented:

“Property transactions are stressful enough at the best of times, and when an email comes through from your solicitor requesting money, it is not surprising that people act quickly, without thinking through everything clearly and rationally – which is exactly what these fraudsters rely on, and we have seen first hand the rise in cases such as these.

We would always recommend that customers call their solicitors directly to confirm bank details before transferring any money, and remain vigilant that emails can be intercepted. However, if you are victim of a conveyancing scam, all is not lost – get in touch – we have a wealth of experience in taking complaints to the FOS, with positive results.”

Our dedicated Conveyancing Scam team has many years of experience in claiming compensation for our clients with the Financial Ombudsman Service (FOS).

We understand the time limits to be followed, the information needed and the claims and appeals processes. The team will also deal with any complex legal arguments and defences that the bank may raise.

If you, a friend or a loved one lost money to a conveyancing scam, then please get in touch with our specialist team for a confidential, no-obligation discussion. We work on a no win no fee basis, so you pay us nothing if your fraud refund claim is unsuccessful.

Call us on 0800 169 5925 or complete the Online Claim or call-back forms below.

Time limits can apply and so anyone wishing to bring a claim should do so without delay.

Meet Our Team

Meet Sarah, who heads up our experienced Authorised Push Payment Fraud Claims team.

Sarah and her colleagues are on hand to help with your claim.

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