Won't Get Fooled Again: The Dangers of Missing Fraudulent ID Warning Signs

The transaction seemed simple enough. A lawyer we had been working with, who regularly handled foreign real estate purchases in his practice, was working with an overseas client who was looking to buy property in Canada. We walked him through our system and explained the steps that we would take to confirm his client’s identification, and make sure that they were the one making the purchase. The lawyer had never used any sort of ID verification technology before, but had handled these transactions routinely and never had a previous issue with a client. Nevertheless, he entrusted us to do our due diligence.

As soon as we ran his client’s ID, we knew that there was a serious issue. We phoned our client, and gently told him that his client’s ID appeared fraudulent, and that he was running a serious risk by putting this transaction through. Our client was taken aback, and thought that we were blowing things out of proportion. His client had given him no reason in the past to doubt his integrity or behaviour or to suspect that anything untoward might be taking place, and so he went ahead with the deal while ignoring our cautions. While the transaction did go through in this case, the authorities had indicated that there was a strong possibility that the ID was fake and that it should not be trusted. The lawyer in question needlessly ran a serious professional risk by engaging with a client using a piece of ID that had a very high probability of being fraudulent.

The reality of this situation was that it was entirely avoidable

Lawyers have a professional obligation to be on the lookout for fraud at all times. Yet it is far too easy to lose that ‘sixth sense’ when you have some years of practice under your belt and grow comfortable in the work. Whether you came up in the age before AI and legal technology, or you’ve simply never encountered a fraudster firsthand before, it may be difficult to spot a problem when you see it. The Law Society and LawPro provide guidance, but it feels entirely different when you’re in the middle of things.

The reality is that the practice of law has changed significantly in recent years due to seismic shifts in legal technology. The days of paper files and paper trails are quickly disappearing, with most documents and document management systems moving into the cloud. Even if it may be unfamiliar to you today, clients are quickly coming to expect virtual solutions incorporated into their transactions that will lower their end costs and make their legal engagement that much easier. 

Even if you traditionally ran a practice where you were mostly seeing clients in person, the COVID-19 pandemic has now become a blessing and a curse. The new technologies available mean that your practice can expand beyond just your immediate geographic area, and you’re just as able to act for clients hours away as you are for those next door. Yet without meeting clients in person, you can easily miss the credibility cues that you unknowingly utilized in the past. It’s difficult to engage with clients in the exact same way when only meeting virtually, and this can in turn make you and your practice more vulnerable. 

While improved legal technologies have their benefits, they also present new and innovative avenues for fraudsters to take advantage. There are new schemes being launched constantly that find new ways to take advantage of unsuspecting lawyers, and it is those same lawyers’ responsibility to stay vigilant against these schemes. It can be hard to know what you’re looking for when you don’t know what you’re looking for!

That’s why we’ve created Vaultie. We understand that the burden of detecting complicated fraud schemes can be daunting, especially when you’re not used to running a technology-based practice. Law has changed so significantly in recent years, especially since the pandemic, that lawyers from across the bar are now hungry for workable AI solutions that they can easily integrate into their existing workflow without unnecessary headaches. 

Vaultie’s digital signature tool confirms that your clients are who they say they are. While it’s helpful to check the validity of every signatory’s ID, that’s only one piece of the puzzle. If you are not in the same room with a person (or even at times if you are), it is not always easy to confirm that the person you are working with is presenting you with a valid ID. We match that ID with biometric scans to make sure that all of the pieces are lining up to help avoid facilitating a devious fraudster. 

We’ve been working hard to make our technology easy to use. We want to be able to integrate seamlessly into your practice so that it’s no hassle for you to be extra vigilant. In 2021 it’s simply not worth running the risks of engaging with a potential fraudster. Start a free trial today and check out first-hand how this solution can help you avoid fraud in your practice.