Three firms have between them lost £2.5m to phone fraudsters in recent months, an insurer said today - warning that this represents only a small part of an epidemic of crime. Office accounts as well as client accounts are being emptied by ‘incredibly clever’ callers posing as bank employees, Jason Smart (pictured), chief executive of professional indemnity insurer Elite, told the Gazette.

The so-called ‘vishing’ frauds typically involve an individual phoning a firm’s cashier ‘to confirm recent transactions’. The plausible-sounding caller will have obtained details about the firm by hacking into systems and researching via social media. The cashier is lulled into a false sense of security into giving out information such as challenge responses which the fraudsters use to empty bank accounts. 

Smart warned that the callers are highly convincing, often with insider knowledge of banking procedures. 

‘We've had claims adding up to £2.5m ourselves this year,’ he said, pointing out that Elite represents only 2.8% of the PII market. If his firm’s experience is representative, this suggests that the cost of this type of fraud is at least double the £40m figure generally quoted. 

He said the golden rule for avoiding these frauds is that the person who takes the initial call should not deal with the query but take the name and number for someone else to call back. This should be from a separate number to defeat the technique of pretending to hang up while remaining on the line. ‘It is incredibly dangerous to enter into conversation with these people,’ Smart said, warning that fraudsters were suspected of using hypnotic techniques to relax their victims. 

‘These people are very sophisticated,’ he said, ‘they're not 19-year-olds straight off the street’.

The Solicitors Regulation Authority said it receives three or four calls a week from firms that have been targeted either successfully or unsuccessfully, in this way. Its latest risks outlook warns of attacks using details gained from hacking the firm to impersonate a bank or client. ‘This is often referred to as the “Friday afternoon” scam as it often targets conveyancing firms at times when they are likely to be holding significant amounts of money.’