A solicitor’s client account has long been a target for fraudsters. With the universal use of online banking by solicitors, concern over computer hacking, and the monitoring of potential fraudulent activity by banks, there are many opportunities for the sophisticated fraudster to exploit.
Solicitors and their PI insurers should be on their guard about a clever fraud that is targeting solicitors nationwide as you might be next. The fraud works like this:
- You, the solicitor, receive a telephone call (typically on a Friday) purportedly from your bank’s Fraud Unit asking for the Head of Finance/Head Cashier by name
- This person says that they are concerned about possible suspicious activity and provides information about genuine transactions from your client account which you confirm. This gains your trust
- Then they refer to the suspect transactions. You agree that they are nothing to do with your firm and the person says they will not be processed. These are fictitious
- You are told the account has been frozen whilst an investigation is undertaken. However, you are asked if any payments need to be made that day and if so, that person will help you make them
- If urgent payments are to be made, you are “conned” into disclosing the online security access pin/security number which gives access to the client account. Client money is then stolen from the account
Any unauthorised payments from a solicitor’s client account are a breach of the Solicitors Accounts Rules with potentially dire consequences from a regulatory, insurance and personal viewpoint.
What can you do to avoid being a victim of this fraud:
- Never give any access or security information to anyone over the telephone or in an email no matter how genuine they sound. Banks will have all the information they need and will not ask you for it
- If you receive such a call, ask for a name, contact number and email address and say that you will call that person back. Then contact your bank’s relationship manager and seek to verify the details you have been given. Only proceed when you are totally satisfied
If you are a victim of any fraud immediately contact:
- Your bank
- The Police
- Your brokers/insurers
Immediate action can help to reduce the scale of the fraud. Banks will co-operate in blocking accounts where fraud activity is suspected and some recovery may be possible, especially if the funds are still in the UK.
We are aware of a number of solicitors’ firms targeted in this fraud and we suspect that there are more out there. Firms and their accounts departments need to be aware of this scam. If it is as widespread as we fear it may be, insurers might want to consider a co-ordinated approach to further investigation and possible recovery action.