Fraud Alert: May 7, 2015

May 7, 2015

If you are about to pay out trust funds and your client’s payment instructions change, stop and check thoroughly to ensure the new instructions are legitimate. The Law Society has just learned that a BC law firm re-directed sales proceeds that it was holding in trust for a real estate client on revised instructions from someone that the firm believed was the client. Before the firm wired the funds to the client, it received an email, purportedly from the client, directing the funds to be wired to a different account. The funds were sent, but apparently never received. In this case, the email address used by the fraudster was identical to that used by the client, except for one letter.

Although we do not yet know how the fraudster knew the details of the transaction, we have just learned of frauds in the US involving email instructions. For more information, read the following alert from the North Carolina State Bar. In other situations in the US, the email accounts of realtors have been infiltrated to send altered wiring instructions.

If you receive any change in payment instructions, consider the possibility that the new instructions may be fraudulent. Take whatever steps are necessary to satisfy yourself that any change in instructions is legitimate, including checking the email address and initiating direct, in-person contact with your client. As insurance is available on the commercial market that responds to these kind of risks, talk to your broker. If you suspect you have encountered a fraud, contact Barbara Buchanan, Practice Advisor, Conduct and Ethics, at 604.697.5816 or bbuchanan@lsbc.org.