A record number of cyber thefts from law firms – including over half relating to moving home – have been reported from January to March 2017, according to the Solicitors Regulation Authority (SRA).
The regulator of law firms in England and Wales has found that the number of reports of cyber theft has tripled in the first quarter of this year compared to the same period last year, with £3.2 million stolen.
Between April 2016 and March 2017, the SRA dealt with cases where a total of £11 million had been taken. It reports that around three-quarters involved email hacking, where criminals make changes to email addresses and bank details so that funds are transferred to them rather than going into the solicitor’s account.
Around 50% of cases involved money being used for house moves. In a separate report, the National Fraud Intelligence Bureau also reports an increase in cyber crime during house moves, with an 85% increase in property deposits being stolen in 2016.
Tricks fraudsters use include changing the email address of the solicitor slightly or emailing the home buyer to say that the solicitor has new bank account details where they need to transfer their deposit money.
Paul Philip, SRA chief executive, says: “House sales are an attractive and increasing target for cyber criminals. They can try to trick either the solicitor or the buyer into transferring large amounts of money into their hands.
“We all need to stay vigilant and take sensible steps to protect ourselves. For instance, we would recommend that people avoid sharing bank details over email, or transferring money to a solicitor before confirming the source of any request. You may also want to send over a token amount first, to check it is going to the right place, before transferring over a large amount.”
Dubious property schemes
The SRA is also warning consumers about “too good to be true” property schemes that criminals set up, sometimes using real law firms to give them credibility.
It says that while most solicitors act with honesty and integrity, a small number get involved in investment schemes they don’t understand, or occasionally knowingly handle dubious schemes.
The SRA reports that in the past nine months it has taken action against eight law firms in cases where investors – who are often retired and using their life savings – have lost around £50 million in total. Although these cases don’t always involve fraud, the SRA suggests that law firms don’t always look after their clients’ best interests.
The SRA warns consumers to think twice about investing in unusual developments, such as buying individual hotel rooms or self-storage units; landbanking, where investors buy small plots of land at inflated prices in the hope that planning permission will eventually be granted; and buying new-build properties abroad off-plan, paying huge deposits upfront.
The SRA offers these tips to investors:
- Don’t invest in schemes that seem “too good to be true”.
- Always get your own independent advice from a law firm or other trusted professional.
- Make sure your own adviser reads the small print for schemes that promise a lot and seem as though they could work in theory.
- Research the scheme and look at official sources. Look for warnings or decisions from financial regulators. You can usually find details on their websites.
- Do not be pushed to get involved quickly – if fraudsters say you must act fast, you should be suspicious.
- If the proposed investment is in something unusual, ask yourself why. Remember, the suggested asset will be worthless if it is a scam.
- Complain if something goes wrong – report your concerns to the SRA.
Mr Philip adds: “The vast majority of solicitors act with honesty and integrity. Only a tiny number of solicitors are involved in these schemes, but the damage can be huge, with people losing their life savings.
“We will continue to protect the public by taking action against solicitors who fall short of the high standards we all expect. Yet the best way for people to stay safe is to make sure they are aware of the risks. If something looks ‘too good to be true’, it probably is.”