Fraud response initiative helps secure recovery of almost £4 million of cybercrime losses
Published On : 08 Jul 2019
A fraud response initiative set up by specialist insurance business Pen Underwriting, in conjunction with UK law firm Mills & Reeve, has helped recover £3.7 million of £6.7 million lost to cyber conveyancing fraud since 2017.
Email modification fraud accounted for 80% of cybercrime incidents reported to the Solicitors Regulation Authority (SRA) in the second quarter of 2018 . When used to steal conveyancing money it is also known as 'Friday afternoon fraud', whereby large sums of money— typically hundreds of thousands of pounds — handled electronically by law firms at the completion of residential and commercial conveyancing transactions are targeted by cyber-attacks. The fraud results in the redirection of completion monies to the fraudsters, instead of the seller client.
As a solicitors’ professional indemnity insurance specialist, Pen Underwriting created the initiative to combat and help protect the growing risk posed by cyber security fraud to law firms and their clients. Of the 14 cases reported to Pen Underwriting to date, 55% of the lost money has been recovered. In three of the 14 cases the full amount was contained and recovered. In one instance reported, £1.13 million was stolen in a cyber-attack, of which £1.10 million was recovered (98%) through the fraud response initiative.
The initiative’s effectiveness comes from cutting out chains of communication and administrative delay by (i) allowing affected customers to contact a specialist fraud response team at Mills & Reeve directly via a hotline, and (ii) a clearly defined delegated authority from Pen Underwriting that allows Mills & Reeve to take the immediate action required to preserve, trace and recover the funds.
Billy Hinken, Head of Claims — Financial Lines & Specialty, Pen Underwriting, said: "House purchases are often the most expensive payment that people will make in a lifetime, so it is no surprise that fraudsters line up this veritable treasure trove as a prime target. The swiftness of the Fraud Helpline and Response initiative and its clear set of protocols enable immediate and effective reaction, maximising the chances of blocking, preserving and recovering stolen funds for insurers.
“In many cases, by the time a notification hits the inbox of a client’s broker we and the specialist team of lawyers at Mills & Reeve are already progressing matters with banks, the police, overseas lawyers, IT and data specialists and other experts, giving us the best possible chance of recovering part or all of the stolen monies.”
Tom Filby, Principal Associate at Mills & Reeve, said: “The reaction to fraud is often time-critical and the scheme we have developed with Pen provides us with the tools to take all necessary and immediate steps to preserve and recover stolen funds before it is too late.
“Through its proactive and attacking approach, the scheme has delivered impressively effective results. There is also a strong public service perspective — we have already helped the Police and CPS secure a criminal conviction in a £1 million fraud with further criminal cases in the pipeline, running alongside the civil actions and recoveries that we are bringing against the fraudsters.”