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$558,000 says we will NEVER provide Bank BSB & Account numbers in an email
The vulnerabilities of our modern electronic communication and commerce practices were recently thrown into very clear view with the emergence of something called the “man in the middle” scam.
Using very common modern business practice, a Perth settlement agent sent an email to their buyer client requesting transfer of the balance of the purchase funds for a new house. The email contained the amount to be paid ($558,000) as well as the banking BSB and account numbers for the settlement agent’s trust account.
The email was intercepted by a “man in the middle” scammer and replaced by an otherwise identical email except that the banking details had been changed such that the buyer transferred his $558,000 to someone else who promptly transferred it overseas.
Investigations are proceeding but at this stage it looks like the buyer has lost his $558,000 and the settlement agent probably wasn’t professionally negligent and therefore has no claim against his professional indemnity insurance. It is also likely that the money wasn’t lost as a result of defalcation by the settlement agent and therefore any claim would be unsuccessful to the Fidelity Guarantee Account established under the Settlement Agents Act.
This devastating nightmare scenario opens a whole pandora’s box as to the way modern business is conducted, especially between individuals and business. We can no longer ignore the risks of sending sensitive information by email. In this case, the settlement agent and their client have simply operated on the basis that emails are safe. Clearly they are not, as the buyer has found to his immense, $558,000 cost.
So how do we at Goldfields Settlements deal with this? As a licensed professional, I’m still grappling with the full ramifications, but as start, we will now never send our banking details via email. We are also in the process of establishing a BPay facility to reduce the risk somewhat. But in the end, there is no substitute for eternal vigilance and checking the recipient’s banking details before you transfer funds, EVERY TIME.
The above is general information only and should not be relied on as legal advice.
This article first appeared in The Kalgoorlie Miner Real Estate section on SAturday 30 September 2017