Mortgage deposit fraud is on the rise, but what can law firms do to stop it?
Mortgage deposit fraud is a serious and growing problem in the conveyancing industry, and is part of the wider rise of ‘push payment’ frauds which saw over £350m stolen in 2018 alone.
Fraudsters frequently target both borrowers and banks, intercepting correspondence and impersonating the law firm involved in the conveyancing process. Scammers then email the target (the client) with a phishing email, providing ‘new’ bank details and encouraging them to send their deposit funds to the criminals account.
Unfortunately, many mortgage applicants fall victim to this type of scheme, and the majority of cybercrime reports to the SRA (75%) concern ‘Friday afternoon fraud’. Fraudsters are developing ever more convincing and sophisticated ways to steal people’s hard-earned money and endanger their journey to homeownership in the process.
Stakeholders across the entire mortgage process can be impacted by mortgage deposit fraud and understanding the risks is essential if the threat is to be mitigated. Conveyancing firms should proactively communicate with the the most vulnerable link in the conveyancing chain, the client, to help reduce the threats they face.
Following these five steps can help firms to reduce the risk of mortgage deposit fraud:
Raising awareness of potential threats is the most important step firms can take to help their clients. Clients are usually the key target due to the volume of information they receive from their lender, estate agent, mortgage broker and conveyancer. Fraudsters hope that at some point, with all this information, clients will drop their guard.
Law Firms should therefore communicate and outline the risk around how clients might be targeted. Knowing in advance about these potential dangers may reduce the chances of borrowers falling victim to fraud.
Make the most of technology
Using the latest technology is an excellent way to reduce risk. Using secure messaging services, for example, ensures that all communications between firms and clients remain closed off to unauthorised access – and therefore fraudsters. Dual-factor login processes and encryption make it difficult to intercept messages, meaning borrowers and their conveyancers can both be confident that messages and information are genuine.
Use online resources
There are resources available to help mitigate this and protect customers against phishing attacks and fraudsters. In practice, the most efficient and cost-effective way for borrowers to ensure they have the right bank account details for their law firm is to check them on a bank account checker. LMS is the first conveyancing solutions provider to have launched a free account check service for customers of lenders who use LMS’ Panel Link Service. Law firms should encourage their clients to use such services to help reduce the chance that funds are mistakenly sent to the wrong account.
Bolster your cyber defences
The majority of hacks come from unsecured consumer email systems, such as Gmail or Hotmail, leaving even the most vigilant conveyancing firms susceptible to cyber threats. Firms should ensure their IT infrastructure is secure so that, in the event a borrower’s account is compromised and guidance has fallen on deaf ears, the firm won’t be affected.
For real progress to be made in the fight against deposit fraud, cross-industry collaboration and information sharing is essential. Fraud is an industry-wide threat which requires an industry-wide solution. Firms, and indeed the whole mortgage sector, must work together to make sure borrowers are aware of the threats they face, and take advantage of any technological developments which can mitigate the risk of deposit fraud. Knowledge is key, and everyone involved in the mortgage process, from one-man-band brokers to international law firms, needs to be aware of the threats and what can be done to protect against them.