Moving forward after the fraud
In June this year, a fraud occurred in Victoria involving PEXA, Australia’s national e-conveyancing platform. This fraud involved the payment of sale proceeds of a house to a bank account that was not the sellers.
Paul Denny Conveyancing has been an enthusiastic user of the PEXA platform for nearly 4 years. In fact, we conducted the world’s first electronic settlement in November 2014.
The overwhelming advantage of using the PEXA platform is the elimination of anything going wrong at the very last minute. A traditional property settlement involves a group of participants (usually the representatives of the seller, the purchaser and their respective lending institutions) meeting around a table to exchange documents, cheques etc.
More often than is commonly known, something minor goes wrong during this process. It could be a spelling mistake or a missing “middle name” on one of the documents or cheques. The settlement is then aborted! Little consideration is given to the purchaser who is parked outside their new home with a removalist’s van full of their possessions, waiting for the go-ahead to move in! Why does this always seem be on Friday afternoon?
Is it any wonder that buying or selling a property is known to be such a significant emotional event in a person’s life?
With PEXA these last minute issues just do not happen. Everything is checked off and verified in the weeks and days approaching the actual settlement.
However, no-one would be surprised of the unimaginable stress caused to the young couple who recently had about $250,000.00 misappropriated from the sale of their property in Victoria.
We reviewed the reported facts of this incident and concluded that it was not caused by the PEXA system itself or by the hack of the practitioner’s email system, but rather by the inattention on the part of that practitioner. Specifically, the bank details recorded on the PEXA workspace (for payment of the sale proceeds to a vendor) were altered by a person who accessed that practitioner’s workspace.
The same thing could have happened even if the settlement was not conducted through PEXA. All it would take is for an email or fax to be sent to the conveyancer directing payment of the sale proceeds to a particular bank account. This only reinforces how critically important it is, when buying or selling property, to use a focused conveyancer – rather than one who cuts corners in order to discount fees.
Paul Denny Conveyancing has safeguards and processes in place to ensure that such a situation could not happen to our clients. The most important of these is the constant dialog with our clients and the verification and back-up systems we have in place.
Having said that, it is comforting to see that PEXA has now updated its own security protocols to prevent further similar incidents.
PEXA will not allow registration of a new “user” of the platform without first obtaining a verbal confirmation from the principal of the conveyancing firm of the bona fides of the person attempting to register.
Any changes to payment details made after the initial input of these details will similarly be verified directly with the principal of the conveyancing firm before being implemented.
It is a shame that it has taken the unfortunate event to prompt this upgrade of the security protocols. It is also of some comfort that PEXA has taken ownership of this situation and ensured that the people involved are not financially disadvantaged pending resolution of the reasons why they happened in the first place.
No new instances of this fraud have been found and we continue to believe, that with appropriate checks in place, PEXA is safe for us to continue to use for electronic settlements.