Conveyancing scams on the rise as APP fraud regulations strengthened.

As the Mandatory Reimbursement regulations for the victims of APP fraud focus even greater the attention on the response from banks to fraud, conveyancing scams continue to emerge as a particularly costly threat to home buyers and banks. In 2024, Authorised Push Payment (APP) scams accounted for more than half of the 8,700+ consumer complaints received by the Financial Ombudsman Service (FOS) in just a three month period (April - June), with conveyancing fraud standing out as one of the most damaging types. 

In a typical conveyancing scam, criminals pose as solicitors and trick unsuspecting homebuyers into transferring life-changing sums of money into fraudulent accounts. This high-stakes fraud has devastating consequences for both victims and banks, with the pressure on banks increasing thanks to recent changes in reimbursement regulations for the victims of APP fraud.

So, how exactly do conveyancing scams work, and what can banks do to protect their customers - and themselves - from this growing threat? In this post, we’re exploring the tactics criminals use and how banks can take a proactive stand against conveyancing fraud.

What are conveyancing scams, and how do they work? 

• Perpetrators often find victims on social media and focus on accessing their (or their solicitor’s) email account through phishing scams where they can gain intel on where their victim is in the buying process.
• From here the criminals impersonate the solicitor by setting a fake email address that closely resembles the real solicitor’s email address.
• Contacting the victim with the fake email address, the fraudster tells the victim they need to urgently transfer funds to secure their property purchase to ensure they don’t lose it, with the email containing fraudulent account details set up by the criminals. Well practised scammers will back this kind of email correspondence up with a telephone call. Here they impersonate staff from the solicitors office in order to instil trust in their victim and coerce them through making the payment while on the phone.
• After the victim transfers the money, which is usually a sizable deposit, or even the full cash value of the property, the criminals set about to swiftly launder the money and delete any trace of the fake email address, and themselves.
• Unfortunately, victims often only realise that fraud has taken place after their genuine solicitor alerts them that their payment never arrived.

Conveyancing scams by the numbers

This kind of elaborate fraud is becoming increasingly common due to its high returns and low risk for criminals, and most often leaves victims financially and psychologically devastated. Here are some key figures about conveyancing scams and their impacts:

• In 2023, the number of conveyancing scams increased by 29% in the second half of the year over the first half.
• This form of APP fraud is particularly costly for victims. While the average loss is around £47,000, some victims have lost more than £250,000. 
• Recent regulations introduced by the Payment Systems Regulator (PSR) require banks to reimburse victims of APP fraud (such as conveyancing scams) up to £85,000 per claim. 
• Approximately 45% of victims were 39 or younger, meaning that first time buyers are likely to be more at risk of falling victim to conveyancing scams.

How conveyancing scams impact banks (and how they can help to prevent them) 

Banks end up paying a high price when their customers fall victim to conveyancing scams. With the new mandatory reimbursement regulations there is less room for avoiding rapid reimbursement for scam claims. Furthermore banks can face reputational damage following high value cases of fraud and lost customers.

Consumers must trust banks and feel secure leaving their money in their hands. In most cases, UK account holders do have high levels of trust in their banks, however that trust can be quickly eroded when a bank fails to prevent fraud.

Banks must take action to help protect customers from conveyancing fraud. Not only to prevent potential victims from losing money but to safeguard their own reputations and reduce reimbursement claims.

While these kinds of elaborate APP frauds are complex for banks to address, they can make a difference by taking the following steps:

• Monitoring activity closely in real-time to intercept suspicious transactions. 
• Studying user behaviour analytics, transaction history, and other data to spot suspicious transactions. 
• Working with telecom operators, banks can integrate real-time call intelligence data into their existing fraud systems that can help them detect if account holders are on a live call during a high-value transaction, a red flag to an individual potentially becoming the victim of a coercive impersonation scam.
• Improve customer verification processes to confirm that people are who they claim to be. Common processes include biometric verification (e.g., fingerprints, voice) and multi-factor authentication involving multiple identity confirmation methods.
• Improve Know Your Customer (KYC) checks on new bank accounts to reduce the risk of mule accounts being set up and used for the purposes of laundering the proceeds of APP fraud.
• Educate customers about the risks and signs of conveyancing scams. Empowering people who may be targeted by criminals with valuable knowledge can help them remain vigilant and recognise the signs of suspicious communications. Banks should issue regular updates on the latest scam techniques, FAQs, and other educational materials.

Proactively prevent APP fraud with JT Scam Signal 

Conveyancing fraud puts banks and their account holders at risk for significant financial loss. However, technology can make fraudulent activity easier to identify and prevent.

Scam Signal, part of JT’s Mobile Intelligence Solutions, is a game changer for banks in terms of the fight against APP fraud. Enabling them to integrate real-time calling data into their existing work flows provides insight into whether an account holder is vulnerable to coercive impersonation fraud during a high-value transaction. From here a bank's risk engine can better decide whether or not to take proactive measures to reduce the risk of financial loss.

Traditionally this type of coercive fraud has been very difficult to spot due, but now for the first time banks can be one-step ahead of the scammers.

For a deeper dive into the landscape of APP fraud and how the award winning Scam Signal solution is helping to turn the tide on the scammers, download our latest whitepaper, Scam Signal: Proactive fraud protection turning the tide on APP fraud.

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