By Christina Kass
It’s no secret that real estate transactions involve numerous steps, a great deal of paperwork, and large sums of money. Unfortunately, the parties involved in these transactions aren’t the only ones who are aware of their complex nature.
Criminals also know that buying, selling, or refinancing a home or commercial property is a highly detailed process — and they may use this fact to their advantage when committing an increasingly prevalent form of cybercrime known as wire fraud.
What Is Wire Fraud and What Does It Entail?
Real estate wire fraud happens when a hacker poses as one of the parties in a real estate transaction, such as a title company agent, real estate agent, or attorney. The fraud occurs when the customer mistakenly “wires” money to the wrong person or entity.
The hacker may send you fake account details via email or other means and then convince you to divert your closing costs into a fraudulent account. For example, a criminal may use a similar email address and steal a company’s logo to make it look like the email came from your title company or real estate agent.
Often, hackers can obtain everything they need through just one hacked email account. They tend to strike just before your closing, when you’re on the lookout for instructions on how to submit your closing monies. Banks are not liable for this type of fraud. In many cases, once the money is gone, it’s gone for good.
How Common Is Real Estate Wire Fraud in the United States?
With the growing sophistication of tactics and strategies employed by hackers, the incidence of wire fraud is on the rise. In fact, according to FBI data, about 13,638 people were victims of wire fraud in the real estate and rental sector in 2020. That’s a 17% increase over 2019, with losses of more than $213 million.
What’s more, the highest reported fraud in real estate in 2020 was Business Email Compromise/Email Account Compromise (BEC/EAC), involving the scenario described above, in which a scammer sends a fake email instructing the victim to wire funds to a bank account that turns out to be the scammer’s own account.
Keys to Protecting Your Money from Wire Fraud Schemes
How do you avoid falling prey to real estate wire fraud, which can affect even the savviest consumer? The most important way to prevent becoming a victim of these lucrative scams is to arm yourself with knowledge and take precautions well in advance of deciding to buy or sell real estate.
According to the American Land Title Association, you can protect yourself and your finances by following these steps:
- Phishing emails: Phishing is a type of fraud in which the hacker attempts to gather information by impersonating a person or legitimate brand. When the user clicks on the link their credentials are harvested. The hacker will then communicate as that person or legitimate brand trying to steer funds back to them. Changing passwords often can prevent them from continuing to impersonate you.
- Email addresses can be spoofed: Never trust an email simply on the purported sender. Cyber criminals have many methods to disguise emails to trick victims into thinking a sender is legitimate. The common types of email spoofing look identical to legitimate email addresses and are slightly altered, but not easily seen at first glance. For example, they may use an “l” instead of an “I.” When this happens you think you are communicating with the legitimate brand, when in fact you are talking to the hacker. Look for these red flags and call the brand if you think you are being spoofed.
- Never Rush: Another tactic used is to bully and rush you to send monies.
- Social Media: Be careful not to draw attention to the fact that you are buying or selling real estate on social media. The hackers are looking for opportunities in these online forums.
- Call, don’t email – When it’s time to send money, confirm your wiring instructions by phone using a known number before transferring funds. Don’t use phone numbers or links from an email. Look independently for the phone number of the entity.
- Be suspicious – It’s uncommon for title companies to change wiring instructions and payment information by email.
- Verify immediately – Within four to eight hours, call the title company or real estate agent to confirm they received your money.
Be sure to remain vigilant and learn as much as you can about your closing process, timeline and due dates. Never give out your financial information over email or to someone who contacts you. It’s also a good idea to secure your computer, phone, and mobile devices, and practice good email and password “hygiene.” Above all, don’t be afraid to ask your title company and/or real estate agent for verification if something seems “off.” It’s better to be safe.
Steps to Take If You’ve Been Targeted for Wire Fraud
What if you find yourself in the unfortunate position of being a victim of a fraudster? According to the Coalition to Stop Real Estate Wire Fraud, detecting that you sent money to the wrong account within 24 hours is the best chance of recovering your money. The bottom line in this situation is that you need to act fast.
In addition, if you’ve been targeted, you should:
• Immediately call your bank and ask them to issue a recall notice from your wire.
• Report the crime to the Internet Crime Complaint Center at www.IC3.gov. The FBI monitors the complaints regularly.
• Call your regional FBI office and police and see if there’s anything they can do.
Vanguard Title Goes the Extra Mile to Protect You from Wire Fraud
We are dedicated to keeping you safe from wire fraud throughout the closing process. That’s why we’ve partnered with CertifID, an easy-to-use technology solution, to securely exchange wiring information and guarantees each wire transfer up to $1,000,000.
Plus, we guide buyers and sellers through the process every step of the way. This valuable service is part of our commitment to ensuring your peace of mind when buying, selling or refinancing a home or commercial property.