Bad cheque scam
In the "bad cheque" scam, fraudsters want to steal funds out of a lawyer’s trust account. Instead of robbing a bank, they try to trick lawyers into voluntarily paying out funds.
By posing as real clients, with real legal matters, they dupe a lawyer into depositing what appears to be a genuine certified cheque, bank draft or money order, or even a regular cheque, into trust. On the strength of that deposit, the lawyer then pays good funds out of trust. After the funds are gone, the lawyer discovers that the apparently good instrument is a well-made fake, leaving the lawyer’s trust account short, overdrawn or both. The details of the scam, including the method of payment, may change as scamsters work to create a story that seems entirely plausible.
- Learn to identify the scam. Become familiar with the common characteristics and red flags and the ruses (listed right), as well as the ongoing twists and developments.
- Keep on top of new variations that the Law Society notifies the profession about. Make it a priority to read the email notices the Law Society sends. And for your non-lawyer staff who may also need to “keep on top,” sign them up for the Law Society’s RSS feeds so that they receive the same email fraud alerts that you do.
- Review names and documents for some of the different names and documents fraudsters have used in BC.
- Take steps to manage the risk.
- As insurance is available on the commercial market that responds to this risk, talk to your broker (some protection is also provided to you through Part C of the compulsory policy).
In June 2012, the Lawyers Insurance Fund, Law Society and Continuing Legal Education Society presented a free webinar for lawyers: “The bad cheque scam – don’t get caught.” Video clips from the webinar are available on CLE’s website. View the video.
Law Society publications
The Law Society has published extensively about the bad cheque scam. For convenience, those materials are repeated or summarized on this page and the related hyperlinks. For a complete list of publications relating to the scam and the different ruses, see Bad cheque scam publications.
The fraudsters generally use a particular ruse to trick lawyers. Here are the details of the different ruses reported by the Law Society:
Phony debt collection ruse (includes collecting on outstanding loans, commercial debts and settlement agreements)
Phony business loan ruse (includes other phony commercial transactions)