Susceptible to scams?

December 1st, 2016
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By the Risk Management Unit of the Attorneys Fidelity Fund

Running a business opens one to susceptibility to fraudsters who are continuously looking for new ways to make money. Scams against legal firms have been, and continue to be, on the rise. No firm is immune and should be on the lookout for potential scams attempted against them.

In order to position yourself and limit the probability of being scammed and – ultimately losing money to fraudsters – it is important that you have a good understanding of how your stakeholders operate, what their service offering is and how they would interact with you. Some of the attempts made by the fraudsters may appear to be obvious, but these may not be so obvious to everyone, and continue to be experienced by some legal firms. In this article, the Attorneys Fidelity Fund (AFF) will, in an attempt to raise awareness, share some of the scams perpetrated against attorneys.

It is recommended that this article is read together with the following articles –

  • ‘Are you losing money through EFTs?’ (2014 (June) DR 18); and
  • ‘Scam fraudsters: Beware’ (2014 (Nov) DR 14).

Fraudsters often purport to be a stakeholder, for example, the AFF. It, therefore, becomes very important for the legal firm to take note of the following:

Forms of scams Considerations to be made by the legal firm
The perpetrator will call the firm and advise that they mistakenly deposited an amount into the firm’s trust or business account when it was meant for another firm and would like a refund.

Depending on the form of the attempted scam, a legal firm should consider the following:

• Know your clients and check any and all provided details against the details that you already have in your records.

• Ascertain if your firm is expecting any refunds, whether for audit fees or bank charges and what the amounts applied for are.

• Check if the letterhead used is that of the purported stakeholder. This necessitates knowledge of the correct name of the stakeholder, the current logo of the stakeholder and the directors or senior personnel of the stakeholder, which would be reflected on the letterhead.

• Check if the e-mail address used is that of the purported stakeholder. It is important to know the extension of the e-mail addresses of the purported stakeholder. For instance, the e-mail addresses of the AFF have the extension fidfund.co.za after the @ sign, fraudsters would perhaps use an e-mail address with an extension fidelityfund.co.za after the @ sign.

• Check if the quoted amount was received in your trust or business account as claimed.

• Check on the bank statement if the amount was paid in cash or cheque.

• If the amount was received as a cheque deposit, do not be pressured to make a refund until the cheque has been cleared and confirmed as such with the bank. The perpetrator will apply pressure on you to refund them, do not succumb to the pressure.

• Inform the person requesting a refund that you will process a refund of the money as soon as it is cleared on your account and ask for proof of the deposit.

• Ask the person requiring a refund to provide you with their banking details. It is important to know your stakeholders’ bankers and perhaps their bank details. Remember, the banking system recognises an account number and not an account name. The perpetrator can, therefore, give you an account name of your stakeholder that they are purportedly representing, but the account number will not be that of the stakeholder.

• Inform the stakeholder affected before you even consider a refund.

• When informing the purported stakeholder, do not use any of the contact details provided by the purported stakeholder representative, check the legitimate contact details on the stakeholder’s website or inquire with your provincial law society.

The perpetrator will advise the firm that an incorrect amount was refunded in respect of a refund application for audit fees and/or bank charges. They will then ask for a refund of a portion of the amount.

The perpetrator will call the firm purporting to be a client of the firm and ask for banking details of the firm in order to make a deposit. A few days later, the perpetrator will make another call suggesting that they incorrectly paid money into the account.

 

 

 

 

 

 

 

The perpetrator will send an e-mail to the firm advising that an amount was incorrectly paid into the firm’s trust or business account when it was meant for another firm.
The perpetrator will send post mail to the firm advising that an amount was incorrectly paid into the firm’s trust or business account when it was meant for another firm.
Fraudsters may purport to be an existing client and provide a different account number into which money due to them should be paid. Whenever a client that you are providing legal services to provides or changes an account number to pay into, insist on a bank stamped proof of that account.
A fraudster may hijack the identity of a senior partner in the practice, and send an e-mail to the bookkeeper containing a payment instruction. Carefully check the sender’s e-mail address to establish its veracity, and if there is any doubt, obtain confirmation that the e-mail is genuine.

 

As a general rule, the AFF would never advise attorneys to retain a portion of an amount that was erroneously paid into your account. If this should happen, it is guaranteed to be attempted fraud. Be on the lookout.

It is important to realise that should you fall victim of a fraudulent scam, specifically on your trust account, you will end up with a trust deficit position, and that has a number of negative implications for you as a practitioner and for your firm. Stay alert and do not fall victim.

The Risk Management Unit of the Attorneys Fidelity Fund in Centurion.

This article was first published in De Rebus in 2016 (Dec) DR 22.

 

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