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Con artists phishing property transactions

Confidential email communication between conveyancing attorneys and property buyers is increasingly being intercepted ...

by "sophisticated" fraudsters who monitor purchasing transactions, and then divert money paid for homes into their own bank accounts.

The rate at which this criminal activity is occurring is so high that the Attorneys Indemnity Insurance Fund (AIIF) no longer covers attorneys who fall victim.

Lara Colananni, a conveyancing attorney from Guthrie Colananni Attorneys, says scam artists send phishing-type emails to the buyers or attorneys to intercept their correspondence, and sometimes even phone the conveyancers for updates.

"Shortly before payment is due, they send a mail from a similar email address notifying the purchaser or conveyancer of a change in bank details. The email addresses are sometimes so similar that it's easy to miss the small discrepancy."

If a purchaser is deceived into paying this money to the fraudulent account, and does not have more funds to pay into the correct account, they will not only lose this money, they will also find themselves in breach of contract and be liable for damages to the seller.

"Unfortunately, fraud is not a viable excuse (to not pay the conveyancer again) as neither seller nor conveyancer were at fault. Similarly, if conveyancers are duped into paying the fraudster, they are also liable."

Colannani says her office was targeted by fraudsters who tried to intercept funds after another party in the transaction had their email account compromised. Fortunately, it was flagged by their system.

Con artists are not new to the industry, but Lew Geffen, chairman of Lew Geffen Sotheby's International Realty, says they are now far more prevalent. In addition to electronic interception, syndicates pose as estate agents, sellers and registered attorneys in attempts to steal money meant for property purchasers. Some even sell homes that are not for sale.

In 2012, conveyancers alerted the AIIF to a scam whereby the fraudster waits for the day the property is transferred or about to be transferred, and then phones the person dealing with the transfer at the conveyancer's office, and pretends to be the seller. AIIF risk manager Ann Bertelsmann says he instructs the conveyancer to change the bank details of the account into which the sales proceeds must be paid. When the money is transferred, it is immediately withdrawn.

In these cases, the guilty party passing on confidential information that allowed fraudsters to intercept communication was believed to be linked to the bank involved in the transaction.

Dawn Bloch, area specialist in Lakeside, Zwaanswyk and Kirstenhof for Lew Geffen Sotheby's International Realty, says buyers should ask for verification of conveyancers and agents.

Lanice Steward, national president of the Institute of Estate Agents of South Africa, says there are agents operating without licences issued by the Estate Agency Affairs Board, and warns that if an agent is unlicensed, losses will not be covered by the Fidelity Fund.

How to protect yourself against property scams

To avoid being scammed, Lara Colananni, of Guthrie Colananni Attorneys, advises:

 

  • Know your clients and always personally verify any change in payment instruction.

     

     

  • Be especially careful if bank details are changed. Independently verify bank account details directly with the bank.

     

     

  • Do not pay into an account that does not belong to a party to the transaction.

     

     

  • Confirm your agent is legitimate. You can verify an agent on the Estate Agency Affairs Board website, where all agents marketing properties must be registered.

     

     

  • Do not ever click "reply" to an email when you are sending important information. Instead create a new email and find the person you want to send an email to in your address book. That way you avoid replying to a fake email address.

     

     

  • Buyers and sellers must ask for verification of the bank account into which funds are being paid.

     

     

  • Any emails requesting a change of banking details should be viewed with suspicion. Never use banking details provided in an email, unless you have confirmed authenticity.

     

     

  • Face-to-face meetings are not always practical but important documents should only be signed in person and verification of bank details must always be completed.

     

     

  • Have adequate insurance.

     

    Bonny Fourie
    Property
    Weekend Argus (Saturday Edition)

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