Cyber crime a big threat, say conveyancers (but they haven’t done much about it)

Almost six in ten property law firms say that cyber crime poses a big threat when handling property transactions – but only a minority have done much about it.

A total of 58% ‘strongly agree’ that cyber security is a concern at their own organisation, but just 13% have spent much time and money making their communications safer.

The ‘Friday afternoon’ fraud in which people moving house are tricked into transferring their deposit to the bank accounts of fraudsters, has become one of the most significant of all cyber crimes.

One buyer, Howard Mollett, had £67,000 stolen after cyber criminals intercepted emails between him and his conveyancing solicitor.

Mollett claims that his solicitor had not warned him about the risk.

In January, the High Court ruled that law firm Mishcon de Reya should hand over more than £1m after a client was conned into ‘buying’ a property from a tenant pretending to be the owner.

Mishcon de Reya, which was not found to have been negligent or irresponsible, has been granted leave to appeal.

Key findings in a new report based on research by TM Group, calls for law firms to do more to educate their clients on the possibility of cyber crime – for example, by providing free literature on how to spot genuine communications.

Next May, new EU General Data Protection Rules will considerably increase law firms’ obligations to maintain the cyber security of client data.

However, judging by remarks this week made by RBS chief executive Ross McEwan, victims of fraud should shoulder some of the blame. He labelled them “careless” and warned that they should not expect compensation from banks.

According to research for software firm Aspect, only 44% of all cyber crime cases where monies were lost fraudulently were refunded by banks, taking on average 3.7 days to reach their accounts.

EYE would be very interested to know if agents specifically warn buyers and also sellers who are moving of the possibility of cyber crime, particularly the Friday afternoon scam, and if you do, what advice you give.

The report, ‘Protect and Survive: Risk and Cyber Security in the Property Sector’, can be found at http://web.tmgroup.co.uk/cn/an9um/survive

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4 Comments

  1. Oliver Wharmby

    Nobody is immune to the threat of being hacked or cyber crime. The General Data Protection Regulations (GDPA) come in to effect in May next year which shall result in heavy fines for those that are non-compliant. We have been marketing cyber liability for the last 12 months to thousands of existing and prospective agents and the take up has been less than 0.5%. It’s a classic example of agents putting their heads in the sand. We have had countless occassions where agents IT systems have suffered cyber breaches and yet they still don’t take out a cyber insurance  policy which would cover the instant response and pay any fines or ransoms. The challenge is to make sure you buy a policy that is fit for purpose. Unfortunately the market is full of cheap and not very useful policies that do not provide the comprehensive cover that should be in place.

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  2. Peter Ambrose (The Partnership)

    When I read this report the other day I was not surprised.

    When 58% of law firms “do not feel that threatened” about fraud, it takes their usual complacency to a whole new level – such a cavalier attitude towards their client safety suggests that maybe people should start voting with their feet.

    We see lawyers on a daily basis playing fast and loose with bank account details seemingly unaware of the risks.

    Indeed – we go so far as to say that lawyers that are still using email with their clients are assisting criminals.

    https://thepartnershiplimited.com/lawyers-using-email-clients-assisting-criminals/

    I know that the conveyancing sector is currently beset by horrendous quality problems that need sorting out but when are people going to wake up and stop exposing their clients to fraudsters through the misguided belief that email (rather than secure portals) is a safe way to conduct business.

    Peter

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  3. Rob Hailstone

     
    I haven’t yet read the report, ‘Protect and Survive: Risk and Cyber Security in the Property Sector’, but that only six in ten firms believe cyber crime is a big threat is worrying, let alone just over 10% making their communications safer. Cyber crime is a big threat to all firms, not just law firms. Every week I report to the BLG member firms on some new fraud and scam, and the majority take the issue very seriously.
     
    Client warnings are now included on emails, websites and letterheads and some firms employ businesses to send in fake emails to test and monitor the awareness of their staff. A few use encrypted emails, but these can prove to be cumbersome.
     
    There are two main issues here: The first issue is email interception/hacking. If a seller or buyer, during the course of a transaction, receives an email purporting to be from their lawyer, with new bank account details, question it and check it. It is very unlikely to be from their lawyers and more likely to be from fraudsters. The second issue is seller fraud/impersonation (as in the Mischon de Reya case). Often very difficult to spot, if good forged or fraudulent documents have been used.
     
    We recently put together a list of 21 warning signs for our member firms to watch out for. If anyone would like a copy, please email me: rh@boldgroup.co.uk

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  4. Emmersons46

    Presumably the cyber criminals are not sophisticated enough to hack into a “secure” portal?

    The issue isnt about whether one uses email, letters, faxes or pigeon post. Scammers have utilised all methods of communication in the past-it didnt start with email-to confuse people into confidently handed over assets to someone who is purporting to be someone else.

    The issue is that everyone in the process has to take care-think twice-educate themselves and their friends and family to be alert to the danger signs. Durham Constabulary run a very effective warning campaign as do a variety of organisations.

    Anyone who suggests that there is a secure method of communication is taunting the scammers to prove otherwise.

    Everyone should be taking a role in educating others in an effort to reduce this criminal activity. If you are in the North East of England then I would suggest that you connect with the North East Fraud Forum. You should check the advice of your local police, Action Fraud and the City of London Police.

    The real defence to scammers isn’t in changing the method of communication but in changing attitudes towards communication methodology so that everyone Thinks Twice!

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