More and more, scammers are targeting lawyers by sending forged emails to law firms, clients and financial institutions. These wire fraud scams typically involves a compromised email account, which can be the lawyer’s, the client’s or even the bank’s. Scammers monitor the account to uncover pending transactions, such as a real estate purchase, a loan or the settlement of a lawsuit.
At the appropriate time when the parties are expecting a request for funds, the hackers (who often know exactly how much money is being transferred) will send wire instructions.
The funds are immediately swept from the account, and the hackers disappear. The emails usually originate from an address that appears to be from a legitimate sender but uses a slightly altered domain name.
Sometimes the scammer will request a change to previous wire transfer instructions after a request has already been made or suddenly require funds be transferred by wire when the original agreement was to pay by check.
Recent Attorney Protective Wire Fraud Scams
In a recent scam, hackers penetrated a firm’s email accounts and monitored a lawyer’s account who was involved in settlement negotiations of a large commercial case.
The lawyer had accepted a settlement on behalf of the client, but the settlement agreement had yet to be signed. Hackers, using an altered email account, sent an email to the lawyer’s client requesting they send the settlement funds by wire transfer. The client followed the instructions and the money disappeared.
In another case, a lawyer received wire transfer instructions on a settlement for an amount lower than had been previously discussed, with a deadline by end of day. The lawyer was surprised at the lower demand and called the opposing counsel to determine if the transfer of funds could wait until the following day.
She discovered no lower demand had been made, and opposing counsel had not sent the email at all.
In another situation, on the day before a real estate closing transaction was scheduled, a client was sent a forged email. It appeared to be from his lawyer instructing him to wire the funds needed for closing to the lawyer’s account. At closing, the parties discovered the funds were missing, and no one involved in the closing had sent the email.
Prevent Wire Fraud Scams at Your Firm
To prevent becoming a victim to one of these scams, exercise a healthy dose of skepticism before any money is wired for a transaction.
- Look for inconsistencies with email, such as various email addresses in use and different spellings of a name.
- Be wary when a party suddenly changes their normal procedures, including instructions to wire money to a different account, using a personal email address as opposed to their usual work email or contacting a different person at the company.
- To confirm a proposed change, first call the intended recipient to verify the information is accurate and legitimate before transferring any funds.
- Instruct your clients and others that email instructions regarding wire transfers should always be viewed skeptically, and confirmation by phone is an absolute must.
- Consider avoiding wire transfers, if possible.
While the UCC protects the sender of a stolen check with a forged endorsement, no such protection is afforded to funds wired to the wrong account. Sending money through snail mail or by hand may be slower and more cumbersome, but in today’s present climate, it’s far less likely to result in stolen funds.
Information provided by Attorney Protective is not intended as legal advice. This publication provides best practices for use in connection with general circumstances, and ordinarily does not address specific situations. These best practices are not intended to meet or establish the standard of care, and sometimes recommend practices that exceed the standard of care. Specific situations should be discussed with legal counsel licensed in the appropriate jurisdiction. By publishing practice and risk prevention tips, Attorney Protective neither implies nor provides any guarantee that claims can be prevented by use of the suggested practices. Though the contents of Attorney Protective’s Best Practice Database have been carefully researched, Attorney Protective makes no warranty as to the accuracy, applicability or timeliness of the content. Anyone wishing to reproduce any part of the Attorney Protective Best Practices Database content must request permission from Attorney Protective by calling 877-728-8776 or sending an email to firstname.lastname@example.org. Additionally the rules cited in the contents of this article may have since changed. You should check the laws and model rules in your state for specific information on the topics addressed here.