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Loss Prevention Tip #6

Loss Prevention Tip
Identifying Fraudulent Scams

Lawyers in all areas of practice continue to be the targets of bad cheque scams. Fraudsters retain the firm on a contrived legal matter so that they can run a counterfeit cheque or bank draft through the firm’s trust account and walk away with real money. Don’t be complacent and think you will never be fooled. These frauds are getting more sophisticated. The matters will look legitimate, the fraudsters will be very convincing and the client ID and other documents you receive will look real. The fake cheques will be printed on real cheque stock and in the past have fooled bank tellers and branch managers. There are often two or more people collaborating to make the scenario even more convincing (e.g., the lender and the debtor, the lender and the borrower, both ex-spouses, etc.). When the bad cheque or draft bounces, there will be a shortfall in the trust account. These scams may involve real estate transactions, debt collections, business loans, IP licensing disputes or spousal support payments.

Here are some Red Flags that may indicate a matter is a fraud:

-The name and/or email address is different than sender’s signature
-Client uses one or more email addresses from a free email service even when the matter is on behalf of a business entity
-Initial contact email is generically addressed, ex. “Dear Attorney”
-Email header indicates sender is not where he/she claims to be
-Client prefers email communication due to time zone differences
-Client is in a rush to have the deal done quickly
-Client is willing to pay higher than usual fees on a contingency basis
-Client instructs you to quickly wire funds to an offshore bank account based on changed or urgent circumstances
-Client is in a distant jurisdiction
-Client shows up and wants the matter completed around banking holidays.
-Cheque is drawn from the account of an entity that appears to be unrelated.

Proceed with caution if you are suspicious that a matter may not be legitimate. Make sure you understand and are comfortable with all aspects of the transaction. Dig deeper and ask questions about anything you don’t understand. Review the steps in identifying and protecting yourself against fraud found under the Insurance and Risk Management Section on the Law Society’s website

Attached you will also find an updated list of names associated to the various types of email scams which continue to be circulated to our members.