House Buyers lose average of £47,000 to fraud

Lloyds bank has issued a warning to home buyers following a surge in conveyancing scams that cost victims up to £250,000 each, last year.

According to the lender, victims suffered an average loss of £47,000 due to conveyancing scams, where fraudsters gain access to corporate accounts. The incidents rose by 29% in the six months leading to December, with nearly half of those affected under the age of 39, highlighting heightened risks among first-time buyers.

The average loss of £47,000 was significantly higher compared to other types of fraud, such as the £498 lost in purchase frauds like fake ticket sales, and almost five times greater than the £9,037 lost to investment scams on average, Lloyds bank reported. Conveyancing scams typically occur when scammers infiltrate the email accounts of conveyancers and manipulate payment details. Consequently, buyers unknowingly send their deposits directly to fraudsters instead of their conveyancers.

Fraudsters employ tactics such as altering email addresses by substituting characters like replacing a lower-case word with an uppercase word and using fonts identical to those used by solicitors. One first-time buyer, Clare, intended to send her £5,000 deposit on a two-bedroom flat in Birmingham to her solicitor. She initially sent a £10 test payment as instructed, received confirmation of receipt, and subsequently transferred the £5,000 through her mobile banking app, believing it was going to her solicitor.

Only after her bank blocked a second payment and she contacted her lawyers did she realize the funds were gone. Most conveyancing frauds involve authorised push payments. Starting in October, new rules will mandate providers to reimburse up to £415,000. Liz Ziegler, fraud prevention director at Lloyds Bank, emphasised the severe financial and emotional impact of such scams, often leading to collapsed property transactions and long-term devastation for those involved.

According to industry body UK Finance, more than £50 million annually is lost to invoice and mandate scams, including conveyancing fraud, with four out of five originating from emails. Ziegler stressed the importance of solicitors educating their clients on these risks and personally sharing payment details at the outset of home-buying processes.

UK Finance advised vigilance against rushed requests to send money to new bank accounts, a common tactic of fraudsters. The Conveyancing Association echoed concerns, noting the astonishing volume of scam attempts and advising buyers to refrain from discussing their home purchases online to avoid attracting fraudsters.