The recent Equifax data breach compromised the personal financial data of millions of Americans. As scammers seize the opportunity to reach out to consumers, posing as Equifax or its agents, we are reminded to be cautious, both with our own data, as well as with information relating to our clients.
Fraudsters continue to target lawyers, seeking access to client funds and personal information. Lawyers must be vigilant to protect clients against unauthorized access to funds and sensitive information held by the firm on behalf of the client.
The ScamWhile there are new scams every day, we often hear variations on the same scenario. A potential client calls and asks for a small service, offering a generous amount of money. The client sends payment immediately, sometimes before formal engagement. Just as quickly, the client then advises the lawyer that the matter is settled and asks for a refund, less the attorney’s fees. The unsuspecting lawyer issues a prompt refund, without realizing the initial deposit never cleared the bank.
In a variation on this scheme, fraudsters ask the lawyer to hold funds in escrow in the trust account for a generous fee. Similarly, the client requests almost immediate disbursement of the escrow funds before the lawyer realizes the initial funds never cleared.
All versions of this scam take advantage of a lawyer’s desire to engage new clients and quickly complete services or disburse funds. Without any safeguards, however, the lawyer may fall victim to fraud.
Use CautionWhile client relations and new business are important to any practice, accepting funds or matters without sufficient inquiry can backfire. Consider the following as you screen potential new clients and matters:
- How did the client find you? Was it a referral from an existing client, or from a person you do not know? How did this new client find you? If the client claims to have found you via a specific ad location, like the phonebook, do you actually advertise there? If the potential client cannot explain how they found you, tread carefully.
- Consider the nature of your interactions. Does the client use your name? Does the message or email sound like a script? Poor grammar and odd salutations may also suggest a scam.
- If it’s too good to be true, it probably is. If the client offers to pay a fee out of proportion to the service sought, be skeptical.
- Explain expectations and observe the client’s reaction. Advising the client when to expect disbursement of funds and your policy regarding waiting for funds to clear should improve client relations. If the client insists on moving faster and spending money before you can confirm the funds have cleared, beware.
- Finally, is there anything else about the facts of the case or your dealings with the client that gives you pause as to whether the case is legitimate? Trust your instincts.
Resources & ReportingScams are always changing, but lawyers can protect themselves and their clients by remaining vigilant. For more information, including additional tips for fraud protection, see Sophisticated Scams in the June 2015 issue of the Oregon State Bar Bulletin. See also USA.gov for information on popular scams.
To report local fraud, contact your local police department. Consider alerting the Department of Justice, too. The Oregon Department of Justice website offers several resources to protect consumers, including scam alerts and information on how to file a complaint. See also the Financial Fraud Enforcement Task Force website, www.stopfraud.gov, for information on where to report various types of financial fraud.
Fraud may also be reported to the following agencies: