January 12, 2021
Social Engineering Scam Dupes Lawyer
Alberta Lawyers Indemnity Association (ALIA) is warning Alberta lawyers to guard against emailed instructions from clients to transfer trust monies, after an Alberta firm attempted to transfer more than US$500,000 in two payments in response to phony client emails.

One of the attempted transfers was recovered, but another transfer of US$130,000 was lost. A fraudster posing as the client had requested the transfer of funds.

The firm had been receiving substantial amounts of funds in trust further to settlement of a civil action and was releasing trust funds in multiple payments based on the client’s emailed instructions as trust conditions were removed. The emails in question were discovered to be fraudulent in a telephone call between the lawyer and a senior officer of the client. The client’s email system had been hacked and the fraudster had intercepted emails that were being exchanged between the client and the firm.

Reports of attempted social engineering scams (as well as cybercrimes) against Alberta lawyers are common. Fraudulent email communications can be sophisticated and coincide with the planned transfer of client funds.

In another case, an Alberta lawyer reported that they had received a call from the RCMP requesting personal information about them. Although the call appeared to have come from an RCMP detachment, it was subsequently discovered that the call had come from a fraudster. It appears the fraudster had wanted to impersonate the lawyer in a fraud, and no loss is known to have occurred.

ALIA continues to recommend that Subscribers to the indemnity program discourage or eliminate accepting banking details or wire transfer instructions via email and ensure their clients understand that email will not be used to communicate changes in banking instructions unless they are confirmed by telephone.

ALIA also continues to recommend that Alberta lawyers purchase cybercrime coverage to protect themselves and their clients from cybercrime and social engineering fraud. ALIA’s indemnity program covers subscribers against negligence and misappropriation in accordance with the terms of the group policy, but it does not provide coverage against cybercrime.

As previously advised in the November 21, 2018 ALIAdvisory, to make it easier for Alberta lawyers to purchase cyber insurance, ALIA has arranged with its Broker, Aon Reed Stenhouse, to make available a robust cyber policy called the Beazley Breach Response Policy (the “BBR Policy”) which is available for Alberta lawyers to purchase. For more information on purchasing this insurance coverage, please email ablawyers@aon.ca.

Cyber insurance can also be obtained from most commercial brokers or from the Canadian Bar Insurance Association/Lawyers Financial (“Lawyers Financial”), as well as from the Canadian Lawyers Insurance Association (“CLIA”). It is important to note that cyber products do vary and that not all products provide the same coverage.

For a general summary of cybercrime risks during the pandemic and steps that may be taken to help protect yourself, click here.
ALIA does not provide legal advice. ALIAdvisory notices, ALIAlerts and the content on ALIA’s website, notices, blogs, correspondence and any other communications are provided for general information purposes only and do not constitute legal or other professional advice or an opinion of any kind. This information is not a replacement for specific legal advice and does not create a solicitor-client relationship.

ALIA may provide links to third-party websites. Links are provided for convenience only; ALIA does not vet or endorse the information contained in linked websites or guarantee its accuracy, timeliness or fitness for a particular purpose.

If you believe you have been targeted by potentially fraudulent activity, please contact ALIAlert.