Red Flags & Tips
NOTE: If you wish to report a fraud, please use our Reporting Fraud service.
Real Estate and Bad Cheque Scams
LawPro’s Fraud Fact Sheet at www.practicepro.ca/practice/pdf/FraudInfoSheet.pdf
PracticePro fraud page at www.practicepro.ca/fraud
Is the Fraudster in Your Office?
Not all fraudsters are strangers. Even partners, associates, law clerks or other employees may turn to fraud because of financial pressures from a divorce, failed business venture or other personal crisis.
Red flags to look out for include:
- Someone who never takes vacation or sick leave, works overly long hours or refuses to delegate work
- A firm member who undergoes a sudden change in lifestyle or change in temperament
- Inability to get through staff to reach another lawyer
- Unusual patterns, such as a sudden increase in payments to a person or credit card company or government, or complaints about slow payment from suppliers or clients, or an increase in written-off work in progress
Red Flags Which May Indicate Fraud
Red flags to watch out for include:
- Generically addressed emails (e.g., “Dear attorney” or “Attention counsel) or which are BCC’d to you and sent to undisclosed recipients;
- Emails where the sender’s email address and the displayed name for that address are different;
- Emails that request a reply be sent to a person or email address that is different from the sender’s name or email address;
- Use of the word “attorney” in the subject line or body of the message;
- Emails that give a referral source which wouldn’t have your name (e.g., a website that does not list you or a bar association that you are not a member of);
- Individuals using a personal email account from AOL, MSN, Gmail or similar free email service who contact you to do work on behalf of a major corporation or business (they may use the name of a real person that does actually work for that corporation – crosscheck name and contact info on websites or by phone);
- Clients who insist that email is the only way to communicate due to time zone differences;
- Clients who renege or delay on promised payment of a retainer (when the bad cheque payment from the ex-spouse or loan advance arrives they will ask you to take payment from it);
- Clients who without question or hesitation are willing to pay hourly rates, flat fees or contingency fees that are far higher than normal;
- Clients who insist on or who are not worried about shortcuts being taken;
- One or more delays in the promised payment or advance of funds (this is usually an attempt to create a sense of urgency to quickly disburse the funds when they finally do arrive);
- Debtors who seem over-anxious or who unexpectedly pay outstanding debts;
- The cheque or bank draft arrives from an address that doesn’t make sense, is in an envelope with a handwritten address and/or is without a covering letter;
- The payment or loan advance is not in the form you expected or requested (i.e. it is not a bank draft or it is not certified) and/or it is for an amount that is different than expected;
- The payor on the cheque or bank draft you receive doesn’t make sense given the type of payment (e.g., a payment of spousal support arrears by a cheque from corporation, charity or travel agency);
- Unexpected changed circumstances that give rise to reasons the client wants to wire funds off-shore to third party on urgent basis for reason not related to the legal matter you are handling (e.g., to pay medical expenses or buy furniture);
Check for the red flags listed above if you have any suspicions that the matter you are handling is a fraud.
While there can be good explanations for some matters to have one or two of the above red flags, you should be extra cautious and careful on any matter that has any of the above red flags.
Question your client if things don’t add up or don’t make sense – even the smallest things. Make sure the answers to any questions you ask satisfactorily address any concerns that you have. Lastly, if you aren’t 100 per cent comfortable that a transaction or matter you are handling is legitimate, terminate the retainer.
Don’t let the demands of an insistent client push you into something you are uncomfortable doing.