Fraud Alert: December 15, 2017

Happy holidays? Not for one BC law firm reeling from a six-figure theft.

December 15, 2017

A BC law firm has fallen victim to the sophisticated "phony direction to pay" social engineering fraud (see the July 6, 2017 Fraud alert). Here's what happened. The perpetrators hacked the firm's computer, and then monitored the firm's email traffic for some time before making their move. As soon as the lawyer was on holiday, the fraudsters appear to have sent an email – directly from the lawyer's own email account – urgently requesting that the lawyer's assistant immediately transfer funds to a client's bank account (in reality, the fraudsters' account). Although the assistant diligently attempted to reach the lawyer to confirm the instructions, the hackers intercepted and blocked her telephone calls. In addition, they responded to her email request to the lawyer to please telephone her by sending an email, again from the lawyer's account, advising that he was tied up and unable to speak. The funds were transferred, leaving the firm with a significant trust shortage.

Protect yourself. If there is any request to transfer funds or any change in payment instructions, consider the possibility that a fraudster is at work. Ensure every request is verified through direct, in-person contact with the author. Establish protocols for transferring funds and adhere to them. Find more detailed information about the social engineering scams that trick lawyers into willingly paying funds out of trust, as well as all of our tips to keep you safe, here. And be sure to share this information, as well as our resources, with your key non-lawyer staff.

HOLIDAY ALERT: Be on high alert for scams during the holidays. Arrange for a competent lawyer to supervise your practice and provide your contact information to the lawyer and your staff. Your non-lawyer staff are not in a position to deal with trust funds, except in accordance with the BC Code and Law Society Rules, and should not be left without your proper supervision (see BC Code, Chapter 6 and Law Society Rules 3-64 to 3-66).

If you suspect that you have encountered a fraud in BC, contact Barbara Buchanan, QC, Practice Advisor, Conduct & Ethics, at 604.697.5816 or