The following article appeared in the new Fall 2011 issue of LAWPRO Magazine.
Don’t be a dupe: That’s the advice from those who were fooled.
In the months of July and August alone, hundreds of lawyers (from across Canada, the U.S., and even elsewhere in the world) have provided LAWPRO with emails seeking to retain them on bad cheque frauds. The most common scenarios are loan or debt collections and spousal support payments. (If you get obviously fraudulent emails, please forward them to email@example.com) Dozens of Ontario lawyers have called looking for help in determining whether a matter they were handling was a legitimate one. In many cases we have recognized the name of the fraudster, the scenario and/or the text of the email. And where we don’t recognize the fraud, the members of the LAWPRO fraud team can use the collective experience of having seen many frauds to determine if a matter may be fraudulent. On a few occasions, we have seen matters that were highly suspicious, but still may have been legitimate retainers.
Clearly Ontario lawyers are more aware that they are the targets of fraud, and they are becoming more adept at recognizing frauds. That is good. But we see some complacency, too. We frequently hear comments such as“l would never be fooled,” or “How would anyone fall for one of these frauds?”
But some are falling for these frauds, acting through at least the initial stages of collecting information, sending a demand letter and communicating with the debtor – who just happens to call up wanting to pay immediately after getting the demand letter. And there are some lawyers who go all the way and are successfully duped into disbursing funds from their trust accounts. This happens more often at solo and small firms, but the biggest firms are not immune either.
One lawyer said to us: “I was suspicious at the start, but the client called several times, provided me with an Ontario driver’s license as ID and a bunch of documentation. He led me along and I got fooled. I feel stupid that I fell for it.”
Some of those who were duped were saved when the teller or the bank detected that the cheque was counterfeit. But don’t rely exclusively on the banks to protect you: They get fooled too. These counterfeits are really good. They will be in colour, on decent paper, and have holographs and watermarks.
In one recent case, a lawyer faxed to the bank a copy of a cheque drawn on the account of a major Canadian retailer. The bank replied that the signatures on the cheque matched what was on file and that the cheque looked good. The lawyer was told “out of an over abundance of caution you may want to contact the company to verify that the cheque is good.” The lawyer did so and it was confirmed that the cheque was bad. The fraud was one we had reported on the AvoidAClaim blog (avoidaclaim.com).
Frauds getting ever better
The fraudsters are changing it up to make fraudulent matters appear more legitimate.
We are seeing more phone calls or personalized emails as the initial contact (not generic BCC blasts to many people). We are also seeing new fake client names more frequently. In the sidebar to the right we list the new and most common names we’ve seen at LAWPRO in the last two months. But just because a name does not appear on this list does not mean you can stop worrying. New names are being used by fraudsters daily.
While in the past the fraudsters would sign retainer agreements and promise retainer cheques, they are now providing actual retainer cheques (which are fake of course),typically on a U.S. account. Banks will accept these for deposit, but will put a hold on them. Of course, a payment on the debt collection matter magically shows up from the debtor a day or two later, before the bogus retainer cheque bounces.
What to do if you are suspicious
If you have even the slightest suspicion that the matter you are handling isn’t legitimate, ask questions and dig deeper, especially if the facts don’t add up or are inconsistent. Click on the confirmed frauds button at the AvoidAClaim.com blog to see a full listing of confirmed frauds. (avoidaclaim.com/?pageid=1479). Search the client’s name on Google. Cross-check names, addresses and phone numbers.
If you still aren’t sure, Ontario lawyers should call LAWPRO for some direction. We will walk you through the common fraud scenarios we are seeing and help you spot red flags that may indicate you are being duped. This will help you ask appropriate questions of your client to determine if the matter is legitimate or not. If the matter you are acting on turns out to be a fraud and there is a potential fraud if possible, and minimize potential claims costs. If you have been successfully duped, please immediately notify LAWPRO as there maybe a claim against you.
For more immediate updates on fraud and claims prevention, subscribe to the email or RSS feed updates from LAWPRO’s AvoidAClaim blog.
Fraud Fact Sheet
More fraud prevention information and resources are available on the practicePRO Fraud page (www.practicepro.ca/fraud),including the Fraud Fact Sheet, a handy reference for lawyers and law firm staff that describes the common frauds and the red flags that can help identify them.
Ultimately, if you are not completely sure a matter is legitimate, terminate the retainer. Don’t be sucked in by your emotions or a strong desire to help. Don’t let the lure of a generous fee cause you to ignore your concerns as to the legitimacy of a matter. If t looks too easy or sounds too good to be true, it probably is.