Bankers are often adept at spotting scams and quick to identify a suspicious situation. There are many different schemes designed to target bank customers, and maintaining an awareness of such methods is important not only to recognizing scam attempts, but also helping customers to do the same before it’s too late. The Wisconsin State Bar recently warned that attorneys should be on the lookout for scams targeting lawyer trust accounts. As such accounts must be maintained at insured financial institutions, it is important for banks to be aware of such scams in order to help thwart these attempts.
Under rules of the Wisconsin Supreme Court, lawyers and law firms are required to establish interest-bearing “Interest on Lawyers Trust Accounts” (IOLTA) for client funds that are so nominal in amount or which are expected to be held for such a short period of time that it is impractical to earn and account for income on individual deposits. The lawyer or law firm determines whether the account should be established as an IOLTA account, or other — so take note that you may see other types of lawyer trust accounts as well.
WBA has heard stories from lawyers and its members of scammers attempting to infiltrate these types of accounts. Typically, these schemes are directed at the attorney or law firm and involve email correspondence representing itself as a legitimate business. The scammer requests assistance with a transfer of funds (this could be for purchase of goods, outstanding debt or other collection, etc.) from another party, in exchange for a fee.
Because these scammers correspond with the attorney or law firm, it can be difficult for banks to spot. However, if bank notices something suspicious, it can help combat these schemes by communicating with its customers and providing further education about common trust account scams. For example, a simple phone call from the attorney to the alleged representative might reveal the nature of the scam quite blatantly. Note that not every scam will follow the same pattern, however, and WBA has heard of scams of varying degrees of sophistication.
Lastly, another method that might help bank’s lawyer and law firm customers combat these scams, is to clearly communicate its policies and procedures for remitting trust account funds. For example, if a law firm remits payment pursuant to the instructions of a scammer, and your institution has a policy of making lawyer trust account funds available immediately, there is little time to respond. If bank’s customer understands its funds availability policy, it might be better able to establish procedures of its own for processing client funds.
In conclusion, the best way to combat scams of all kinds is to be aware of common schemes, signs, and how to spot them. Communication and education with bank customers is an important aspect in stopping scammers.
If you have any questions on this topic or other matters of compliance, contact WBA’s legal call program at 608-441-1200 or email@example.com.
Birrenkott is WBA assistant director – legal. For legal questions, please email firstname.lastname@example.org.
Note: The above information is not intended to provide legal advice; rather, it is intended to provide general information about banking issues. Consult your institution’s attorney for special legal advice or assistance.