Lloyds Bank issues warning to first-time buyers over scam that could cost you your house deposit

Lloyds Bank has issued a warning to homeowners over a house deposit scam, with first-time buyers likely to be the main victims. The bank says that it has witnessed a 29 percent rise in conveyancing fraud, which sees scammers impersonate solicitors and steal buyers' house deposits just before their completion dates.

The callous scam is typically carried out by a fraudster hacking into a solicitors or buyer's email account and providing alternative bank details for deposits to be paid into.

The bank found that victims are losing an average of £47,000 and around 45 percent were aged 39 or under, signalling that first-time buyers may be most at risk, reports Which?.

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According to Which?, the Solicitors Regulation Authority says it’s nearly always the buyer's email that gets hacked due to the lack of firewalls that businesses have.

After hacking either email account, a fraudster will monitor email discussions about the property purchase. When the time comes to transfer the deposit, the fraudster will either provide fake bank details from the property solicitor’s email address or pose as the solicitor from an email address that looks very similar.

If they create a fake email address impersonating the solicitor, it may only have one character that’s different from the genuine address and the email will copy the tone, email signature and even logos used in previous messages.

Sometimes the fraudster will call the buyer, impersonating an employee at the solicitor’s office and provide bank details this way. Either way, victims of conveyancing scams are convinced to transfer money from their bank accounts to that of the scammer. This is known as an authorised push payment (APP) scam.

After campaign efforts by Which? and others, faultless victims of APP scams are protected by a voluntary reimbursement scheme that most major banks are signed up to. From October, a new mandatory reimbursement scheme will come into force and apply to more than 1,500 firms offering Faster Payments.

The reimbursement limit for victims of APP scams has been set to £415,000 by the Payment Systems Regulator (PSR). However, banks and others are lobbying to reduce this limit. UK Finance states that it would like to see this cap lowered to £85,000.

Which? believes that policymakers must resist calls from finance firms to slash the scam reimbursement limit as many faultless victims would miss out on being reimbursed.

Follow these tips to help avoid a conveyancing scam:

Transfer a small amount first

Before transferring your house deposit to your solicitor, send a nominal amount such as £1. Then, call your solicitor on its registered branch phone number to ensure it’s received the money.

Double-check contact details Be aware of any unexpected emails or phone calls, double-check email addresses for any new or missing characters and be wary if you’re contacted by a ‘new’ member of staff.

Set secure passwords

Read Which?'s guide on how to create strong passwords to protect your accounts.

Avoid posting details online

Fraudsters can also look to social media to discover potential victims ready to make big purchases. So avoid shouting about your new home until it’s secured.

Verify payment instructions

At the start of the process, confirm payment instructions with your solicitor in person or via a trusted phone number.

Pay attention to any bank warnings

If you’re about to make a payment and you see that the account doesn’t match the details of the receiving account, double-check this with your solicitor by calling them on a verified phone number.

If you become the victim of a scam, you should call your bank immediately using the number on the back of your bank card and report it to Action Fraud, or call the police on 101 if you’re in Scotland.