Payday lender Wonga has recently been in the news after customers were sent letters apparently coming from a law firm, but one which did not actually exist.
At least they weren't trying to trap people into paying them money which they didn't owe.
Looking for a conveyancing solicitor in London?
But fraudsters are now finding a profitable source of income by impersonating law firms. These criminals often choose the name of a genuine firm of solicitors which has ceased trading or a name which is almost but not quite identical to that of real solicitors.
One way in which the fraudsters work is to set up a sale by pretending to be the seller of a property. The buyer is given the name of the bogus 'solicitors' who will be representing the seller. The buyer's solicitor deals with them thinking them to be a genuine firm and sends the purchase money to their bank account on completion.
Of course the money is promptly withdrawn from the bank account by the fraudsters who then vanish into thin air. The buyer finds that the real owner of the property knows nothing about the supposed sale so he does not own the property and has also lost his purchase money.
If the buyer has taken out a mortgage the lender will find their money has also disappeared and they have no security for the loan.
Concern at rising numbers of bogus law firms reported to SRA
The Solicitors Regulation Authority (SRA) which regulates the solicitor's profession, has just reported that they are seeing an increasing number of such cases. In 2013 they received 548 reports about bogus firms, a 57 percent increase on 2012, and have already received 235 similar reports in the first four months of this year.
False conveyancing transactions are becoming more common because of the large sums of money involved. The SRA has therefore warned all conveyancing solicitors to be careful both to check the identity of firms they are dealing with and to check whether their own identity has been stolen.
With much conveyancing now being carried out online solicitors often find themselves dealing with law firms who they do not know and have not previously dealt with. It is easy enough to check in the register of solicitors maintained by the SRA to see if a firm is genuine, but sometimes fraudsters will use the name of a real firm but with a different address.
Increased security checks necessary to protect clients
Many solicitors are now resorting to various security checks carried out by outside companies to check whether the lawyers acting for the other party are genuine. Such checks will include checking whether the bank account details to which the purchase money is to be sent match up with those of the real solicitors.
Property owners and buyers should also be on the alert for property fraud. The Land Registry has set up a fraud hotline and has also introduced a number of services which can help property owners to protect themselves against fraud.
Properties particularly at risk from fraud are:
- when the property is being left unoccupied for some time, such as when the owner is on extended foreign travel
- when the owner has had to go into a nursing home or has died
- properties which are let to tenant
- if there is no mortgage on the property
- when joint owners have split up and one or both no longer live at the property
How to protect yourself against property fraud
Following an increase in the number of fraudulent property sales the Registry introduced Property Alert. This is a free service which is available to all registered property owners.
It is also available to anyone else who might want to know if someone is trying to sell a home without authorisation such as a relative of a deceased owner or a wife who has left a jointly-owned matrimonial home and wants to know if her ex-husband is trying to sell the property without her knowledge.
If the Registry receives a request for an official search of the register, which is usually made immediately before a sale is completed, or an application to transfer the property into someone else's name, the Property Alert service will send out an email.
A person receiving an email warning of an unexpected transaction will have to respond rapidly to ensure that the Registry is informed of any suspected fraud. It is therefore essential that the Registry has their correct email address and that this is updated if necessary.
Another way in which property owners who are not living at their property can protect themselves is to register what is known as a 'Restriction' against the property title.
Such as restriction means the Registry will not register a dealing with your property, for example a transfer or a mortgage, unless a solicitor or other professional conveyancer certifies that they have checked the identity of the person who has signed the deed. This could help to prevent a fraudster forging a signature.
Your solicitor can apply for a restriction to be registered or you can do this yourself using Form RQ - See more at: http://www.landregistry.gov.uk/public/property-fraud#restriction
Buyers can also help to protect themselves against fraudulent sales. Be wary of private sales where no agents are acting for the seller.
Always inspect a property (and preferably have an independent survey carried out) – it seems that some buyers who have been victims of fraud have bought off the internet without ever seeing the property.
Let your solicitor know if you are suspicious about anything, such as the seller being evasive about giving information.