Trust Fund Deposit Fraud Alert

Trust Fund Deposit Fraud Alert

The Commission was alerted to a deposit fraud that occurred yesterday—thankfully the funds were recovered. The bank that released the funds by EFT was able to retrieve them after the fraud was discovered and reported. The Commission is advising licensees to be vigilant and carefully scrutinize deposit instructions before sending them to buyers. 

This deposit fraud had the following red flags:

• The seller's licensee sent the buyer's licensee banking instructions via email. The following day, the buyer’s licensee received a second email from what appeared to be the seller’s licensee advising that their banking instructions had changed. Two days later, the buyer’s licensee received another email which again appeared to be from the seller’s licensee. This email contained different information on how the brokerage will receive trust funds. 
• The buyer’s licensee forwarded these new instructions to their buyer client who then proceeded to make the deposit via EFT.
• Shortly thereafter, it was discovered that the deposit had not gone to the seller’s brokerage’s trust account. 

The fraudster email had the following red flags:

• The sender’s information section of the email contained an additional field titled “Reply-to” and included a separate email address in this field that did not match the seller’s license’s email address. This additional email address was an outlook.com email in the name of the seller’s licensee. 
• The instructions referenced a different bank in a different province. The Commission By-law requires brokerage trust accounts to be maintained at branch locations in Nova Scotia. 
• The instructions referenced a different bank account number, and the account holder was in a different name. 
• The appearance (font) of the second set of banking instructions was different than used by the licensee in the previous email.

In the event licensee emails change or banking instructions change, contact the licensee by a different method to confirm the instructions are legitimate. 

If you believe a fraud has occurred, notify the police. If you are working with a buyer, immediately contact the buyer and have them contact their bank. If you are working with a seller and your brokerage was to be the recipient of trust funds, contact your brokerage’s bank.