FRAUDULENT TRANSACTIONS
By Christie-lee Britz
Recently there has been an increase in attorneys falling prey to fraudulent claims on trust accounts. Attorneys need to pay special attention to these scams as the courts are particularly unsympathetic towards them if they are not vigilant when dealing with claims in respect of trust fund money.
These scams can occur in a variety of ways. The first and most popular being the so-called “Attorneys Fidelity Fund” scam. This normally begins with the unscrupulous person depositing a stolen cheque into the legal practitioner’s trust account. The fraudster then contacts the legal practitioner’s office and claims to represent the Attorneys Fidelity Fund. The fraudster then informs the legal practitioner’s office that a payment had been made in error into the attorney’s trust account. The fraudster then demands an urgent refund of the so-called payment made by error, by way of EFT, into a bank account which is allegedly the Attorneys Fidelity Fund account but is actually one opened using a stolen identity document. The initial payment made by the fraudster is then reversed during the following few days, leaving the legal practitioner who had refunded the “payment error” at a loss.
There are red flags to look out for when dealing with a situation such as the one described above. Always identify the person who is calling you and always confirm with the Attorneys Fidelity Fund that this person is in fact an employee. Insist on proof of payment and bank details stamped by the bank before paying a “refund”. Always ensure that your FICA policy is followed without exception. If you receive an email requesting a refund always pay special attention to the font and font size usage. The writing will usually have two or three different fonts and sizes and may contain spelling errors. The email address from which the email was sent will not be registered to the Attorneys Fidelity Fund. The fraudster will attempt to make the email look legitimate by incorporating the Attorneys Fidelity Fund logo which is in all likelihood copied from their website.
The second scam applies specifically to conveyancers. Before registration of transfer of the property, the seller signs the transfer documents. This will include a document with the seller’s banking details into which the proceeds from the transfer are to be paid. Throughout the process of registration, the fraudster will call the conveyancing secretary and present himself/herself as the seller. The fraudster will generally advise that his/her banking details have changed and will instruct the conveyancing secretary to deposit the proceeds into a bank account other than the one that had been provided initially. This call is confirmed with an email that provides the new banking details. Upon payment into the new bank account, the funds are immediately withdrawn thereby ensuring that the payment cannot be reversed. More often than not the account is opened by way of a stolen identity document or by someone on behalf of the fraudster.
Caution can be exercised by asking the fraudster to confirm their personal details. Always call and email the seller to ensure that it was in fact him/her that requested a change in their banking details. Alternatively, the conveyancer could insist that the client come into his/her office to sign written confirmation of the change in payment instruction.
Not obtaining documentary proof of the new bank account, verified by a telephone call to the bank, is problematic. This is due to the fact that in the event of an internet transfer, the bank does not compare the account number with the name of the account holder. Therefore, if the account details are incorrect the error will most likely not be noticed.
Lastly, a more complex conveyancing scam occurs when there has been a cancellation of a property sale. The conveyancer following due process, informs the purchaser by way of email that he/she will receive a refund of the deposit and that it will be paid in the purchaser’s bank account. The conveyancer then receives an email, purporting to be from the purchaser, once again claiming that their banking details have changed or their previous bank account has been discontinued and providing new banking details. Simultaneously, the fraudster purporting to be the conveyancer, informs the purchaser that there has been a delay in the refund but that all is in order. The fraudster once again withdraws the money upon payment by the conveyancer.
To avoid falling victim to these types of scams ensure that you are vigilant. Particularly when you receive instructions to make payments whether it be by a phone call or email. Pay special attention to slight discrepancies in the email address, different font sizes, spelling errors, wrong references, and blurry logos. Always call the client on their number as shown on your system and not the email to confirm that the payment request was valid.
With this we urge all legal practitioners and staff to be extra vigilant in making payments from a trust account.
Should you require any legal assistance regarding the above, please contact Marie-Lou Gillespie at mlgillespie@dacct.co.za.