Mortgage deposit fraud is on the rise, but what can consumers do to protect themselves against it? Nick Chadbourne, CEO at LMS, offers some advice
The most financially ruinous fraud that consumers could encounter in their lifetime is likely to be mortgage deposit fraud. With some people losing tens of thousands and on occasion even hundreds of thousands, of pounds. It is a scam that can have a disastrous impact on ordinary people.
Mortgage deposit fraud involves scammers intercepting correspondence between solicitors and borrowers. The scammers impersonate the solicitor and send an email to the client providing ‘new’ bank details, encouraging the borrower to transfer funds as soon as possible.
It’s simple, but frightfully effective as those subjected to the crime are simply not expecting to be targeted in an already unfamiliar process.
Unfortunately too many mortgage applicants fall victim to this type of scheme. 75% of cybercrime reports to the SRA concern ‘Friday afternoon fraud’, and fraudsters are developing ever more convincing and sophisticated ways to steal people’s hard-earned deposit money.
Being aware of the risks and understanding ways to protect yourself is essential. Following these five steps can help reduce the risk of falling victim to mortgage deposit fraud.
Be aware
Being aware of potential threats is one of the most important steps a borrower can take in protecting themselves against mortgage deposit fraud.
Borrowers are the most vulnerable party in the mortgage process, and are usually the key target due to the volume of information they receive from their lender, estate agent, mortgage broker and solicitor. Fraudsters hope that at some point, with all this information, they will drop their guard.
Knowing in advance about potential dangers can reduce the chances of borrowers falling victim to fraud.
Understand the process
Solicitors will inform clients about communication methods, especially in relation to transferring funds.
Law firms will never share bank details over email, so borrowers should keep a hard copy of the firm’s bank details safe, and ignore any details which are shared via email. It is important that borrowers keep these details safe for easy reference when the time comes to transfer.
Strict processes for how a law firm will contact the client will be in place in the event there is a change in bank account details.
If a borrower is ever in doubt, they should contact the solicitor directly via the phone or go into the offices to confirm.
Borrowers can also test any details they receive by sending an initial transfer of £1 and checking that the law firm has received it – this is a low risk way to make sure funds are going to the right place.
Make the most of technology
The majority of solicitors will use technology to help reduce the risk to their clients. Secure messaging, dual-factor login processes and encryption all make it more difficult for third parties to intercept messages, ensuring both the customer and their solicitor are confident that the message and the information contained is genuine.
Use online resources and educate yourself
There are resources available to help mitigate the risk and protect borrowers against phishing attacks and fraudsters.
In practice, the best way for customers to ensure they have the right bank account details for their law firm is to verify 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.
By using such services, customers can protect themselves against phishing emails and help reduce the chance that their savings are mistakenly sent to the wrong account.
Bolster your cyber defences
The majority of hacks come from unsecured consumer email systems. Customers should be aware of the additional servers available, which may protect against hacks better than others more popular services.
Researching what security features are available, and making a choice over email provider based on that, can reduce the chances communications will be intercepted.
