Young Tradie Loses $110,000 House Deposit to Email Scam
A young electrician from Sydney, Louis May, has shared the distressing experience of losing his $110,000 house deposit due to a sophisticated email scam. This incident underscores the increasing prevalence of scams targeting individuals engaged in significant financial transactions.
At just 24 years old, May had been tirelessly working long shifts as he saved up for a deposit on his first home. By July of last year, he had secured an affordable apartment that needed some renovation work, a prospect that thrilled him. His journey towards homeownership was on track until a deceitful email derailed his plans.
Throughout the buying process, May had communicated with his lawyer via two legitimate email addresses. However, when he received an unexpected email from a third address—a purportedly new account for his lawyer—he paid little attention to the unusual source. The email contained a PEXA (Property Exchange Australia) form instructing him to transfer the deposit money to an ANZ bank account, which he believed was a standard procedure.
Confidently following the instructions, he transferred the $110,000 to the account provided. It was only on the morning of the settlement, during a phone call with his lawyer, that he learned he had been scammed. His lawyer had never sent the PEXA form and expressed that he had no idea about the transaction. In that moment, May’s heart sank as he realised he had fallen victim to fraud.
The Australian Competition and Consumer Commission (ACCC) has noted that scams similar to May’s are becoming increasingly difficult to detect. Scammers often hack into a real business’s email or create near-identical email addresses by altering just a single character, making it hard for recipients to notice anything amiss.
In Australia, victims reported losses totalling $16.2 million from payment redirection scams in 2023. Alarmingly, despite a 28% decrease in reports to Scamwatch, the losses increased by 3%. The ACCC has indicated that industries regularly dealing with significant sums of money—like real estate, legal services, and construction—are particularly vulnerable to these scams.
To mitigate risk, ACCC deputy chair Catriona Lowe has urged individuals to verify the authenticity of invoices received via email. She recommends calling the business directly using a number found independently, rather than from the email.
The Australian Financial Complaints Authority (AFCA) has highlighted gaps in current legislation concerning fraud protection. AFCA CEO David Locke emphasised the need for enhanced regulations to protect consumers against such scams, suggesting that banks should implement confirmation systems to ensure payment details match recipient information.
Despite reporting the scam to his bank, May has been unable to recover his lost deposit. The bank did offer a $1,000 token payment, which he declined. Fortunately, with assistance from a family member, May was able to purchase the apartment, but he is now facing financial strain. Having to take a larger mortgage has left him grappling with higher monthly payments and insufficient funds for necessary repairs on his new home.
Reflecting on this ordeal, May expressed feelings of despair, stating, "I feel like I’m further back than I was last year." The emotional toll of the scam continues to weigh heavily on him.
As the threat of scams continues to evolve, it serves as a stark reminder for individuals engaged in significant financial transactions to remain vigilant and proactive in verifying payment requests. With scammers developing increasingly sophisticated methods, awareness and caution are essential in safeguarding personal finances.
