Lawyers take cheques often because we’re not allowed to accept cash in large amounts. Therefore, lawyers are a logical target of bad cheque scams.
But take note: the “bad cheque scams” here are not your ordinary garden-variety bounced cheques. The fraudsters don’t just skip their bill; they walk away with real money. The type of scam involves running a counterfiet cheque or bank draft through a lawyer’s trust account before it’s cleared by the bank. When the bad cheque bounces, the victim lawyer is left with a significantly shortfall in the trust account.
One might ask, why would anyone pay out real money before the cheques are cleared?
According to LawPro, the Lawyer’s Professional Indemnity Company, the fraudsters are sophisticated. They generally come with proper documentation (invoices, letters), and corporate background checks often look normal. The certified cheque or bank draft invariably appears authentic with all securities features present. The scammers are often very charismatic and can pressure the lawyer into disbursing funds earlier than normal for a variety of reasons.
Adding pressure to the lawyer, the “client” often arranges that the closing date is generally around a bank holiday and appears distressed about the troubled cash flow.
Remember, it takes only one seemingly legitimate reason for the victim lawyer to cave in and pay out the funds.
What can be done to avoid bad cheque scams?
LawPro offers the following tips:
- Do a reverse phone number search on the company and verify the company’s phone numbers, addresses and email contacts with an independent third-party, such as the telephone company.
- Go to the bank website to verify the branch transit number, address and phone number as they appear on the cheque.
- Hold the funds until your bank confirms that the cheque has cleared, and it’s safe to withdraw the money from deposit.
- Exercise caution when clients are previously unknown to the firm and are “in a rush.”
- Be suspecious of higher-than-usual fees promised by the client for the quick turnaround.
For more information, please visit LawPro at www.lawpro.ca.
