Unmasking Property Fraud, Mortgage Fraud and Payment Diversion Fraud.
Why are these types of fraud on the rise?
Inside today’s interconnected world, fraudsters are always devising new ways to exploit vulnerabilities in our systems for their own personal gain. Financial transactions and property dealings have become increasingly more digital over the years, leading to the risk of fraud being amplified.
Three common types of fraud that have increased are:
- Property fraud
- Mortgage fraud
- Payment diversion fraud
Understanding these fraudulent activities is crucial for individuals and organisations; to protect themselves, and to ensure the integrity of their financial affairs.
What is property fraud?
The term property fraud is in reference to any type of fraudulent activity that involves the action of unlawfully gaining control over someone’s property. It involves various deceptive methods, such as the following:
All of which aim at unlawfully transferring the ownership or control of a property to the fraudster in charge. This type of fraud can often be seen to target properties that are vacant, have absentee owners, or are possibly involved in complex legal proceedings.
Property fraud by pretending to be buyers or owners
Buyers
Fraudsters may use a false ID to pretend to be a buyer, and place an offer on the property which they will withdraw before the actual exchange.
The criminals involved can then use the information they have learned during the buying process against the owner of the property for their own gain, such as in cases of title fraud. There is also a risk of them continuing with the transaction to steal any money raised from the lender.
Owners
There is also a possibility that criminals may attempt to sell or mortgage a property by impersonating an owner using false or stolen ID.
Who Are The Main Targets of Property Fraud?
Property Fraud Against Sole Owners With No Mortgage
Criminals engaging in property fraud often target specific individuals who are much more vulnerable and susceptible to their deceptive schemes. These fraudsters focus on sole owners, particularly those who own unmortgaged properties. The absence of a mortgage reduces the overall complexity of the attempted transaction and makes it a lot easier for the fraudster to manipulate property ownership records, making this group of owners an appealing target for property fraud.
Property Fraud Against Absent Owners
Criminals can exploit absent owners, such as landlords, who may have multiple properties or live far away from their properties, making them an easier target and allowing for them to go unnoticed during fraudulent transactions.
Similarly, owners who are in a hospital or care home are also prime targets as their limited capacity to manage their affairs can make it easier for fraudsters to exploit highly important property documents.
Property Fraud – Types of Properties
Criminals may target vulnerable properties such as:
- Rental properties
- Unoccupied properties
- High value properties without a legal charge
- Properties undergoing redevelopment
- Properties not available on the market
What to do if you’ve been the victim of property fraud
If you think you’ve fallen victim to this type of fraud, you can visit the Action Fraud website or call 0300 123 2040. In Scotland you can call 101 to report.
What is mortgage fraud?
Mortgage fraud involves the manipulation of information during the mortgage application process to secure a loan under false pretences. Additionally, fraudsters may also falsify their financial information, employment history, or property value to try and obtain larger loans or better terms. Organised criminal property fraudsters might collaborate with appraisers, real estate agents, or loan officers to inflate a property’s value, conceal debts, or falsify documents. Mortgage fraud not only endangers lenders but also puts innocent homeowners at risk of foreclosure if they are unknowingly involved in fraudulent activities.
On an individual scale, lying or omitting financial information when applying for a mortgage is mortgage fraud, and will likely be found out. It is important to be truthful when applying for a mortgage.
Warning signs of mortgage fraud for solicitors
Solicitors should be on the lookout for signs of potential mortgage fraud when dealing with clients during the conveyancing process. Warning signs of mortgage fraud include the following:
- The client or property is located a long distance from your firm.
- The client seems unusually uninterested in their purchase.
- The seller is a private company, or they have recently purchased the property from a private company.
- The mortgage is for the full property value.
What is payment diversion fraud?
Payment diversion fraud, also known as invoice fraud or business email compromise, targets businesses and individuals who are actively engaged in financial transactions. In this type of fraud, cybercriminals intercept legitimate payment requests or invoices and alter the account details, redirecting the funds into their own accounts. They often use techniques such as phishing emails, social engineering, or malware to gain unauthorised access to a company’s systems or email accounts. Payment diversion fraud can result in significant financial losses for businesses which can damage their reputations, and strain relationships with suppliers and clients.
Payment diversion fraud – what to look out for
To protect yourself and your company against payment diversion fraud, you can look out for any changes to payment details or emails, some common warning signs of attempted fraud are:
- Being notified that a client has changed their email or banking details, or clients receiving an email advising them that you have changed your contact or bank details.
- Being asked to urgently process a payment request
- Being asked to process a payment that is large or unusual
- Email requests containing errors such as spelling mistakes
- An unusual tone or change in language compared to a clients usual emails
- Anything else that appears odd or out of the ordinary
What to do if you’ve been the victim of payment diversion fraud
If you think you’ve fallen victim to this type of fraud, you can visit the Action Fraud website or call 0300 123 2040. In Scotland you can call 101 to report.
Property fraud, mortgage fraud, and payment diversion fraud represent three prevalent types of fraudulent activities that individuals and businesses must remain careful and cautious against. By familiarising yourselves with the tactics employed by fraudsters and adopting preventive measures, individuals can protect their assets, and organisations can safeguard their financial interests. Collaboration between stakeholders, industry regulators, and law enforcement agencies is vital to staying one step ahead of fraudsters and maintaining trust within the financial and property sectors.
More resources on fraud:
Citizens Advice Guide to Property Fraud
Safeguarding for Vulnerable Adults
Serious Fraud & Business crime
If you need the support of a criminal solicitor for a fraud case, you can contact our criminal solicitors team or visit our criminal solicitors page for more information.
