FBI Warns Scammers Are Targeting Law Firms For Phony Debt Collections

The U.S. FBI warns that scammers are attempting to trick law firms into transferring money as part of a phony debt collection scheme. 

The scam “may focus on any type of representation where a lawyer is hired to assist in the transfer or collection of money, e.g. real estate, collection matters, collaborative law agreements in family matters, etc.”

The schemes typically take the following steps:

1. A law firm is contacted regarding representation in an alleged debt collection matter by what appears to be a legitimate prospective client ("the Creditor")
2. The law firm agrees to help and sends a demand letter to the alleged debtor ("Debtor")
3. The Debtor immediately agrees to pay the debt and sends what appears to be a valid cashier's check to the law firm
4. The law firm deposits the check into their client trust account and transfers the value to the Creditor via wire, less any legal fees agreed upon
5. The law firm's bank then discovers that the check is actually fraudulent and the trust account is charged back the value of the check
6. Because the wire has already been sent to the Creditor, the law firm is left to suffer the financial loss

The FBI outlines some recommendations to help organizations avoid falling for these scams:

• “Be suspicious of requests or pressure to take action quickly. A number of potential victims were able to successfully identify the fraudulent check by adhering to policies which required a delay or hold on the funds until confirmation that the debtor’s check had indeed cleared into their client trust accounts.
• Consider additional financial security procedures, such as two-step verification or telephone calls (subjects tend to prefer written correspondence), to verify transaction details and identity information, prior to wiring funds.
• Contact your financial institution immediately and request that they contact the financial institution where any wire transfer was sent to determine if it is able to be recalled or the funds frozen in the deposit account.”

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