Real Estate Wire Fraud

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Coalition to Stop Real Estate Wire Fraud & Qualia Partner

Basically – in 25 words or less…. if homebuyers send closing funds to the wrong bank account, you get screwed! Don’t believe everything in writing. Pick up the phone and call.

Real estate wire fraud is a scam that targets individuals who make wire transfers during the home buying process. (Not to say that this scam doesn’t happen in other ways like spam emails and texts requiring immediate actions.)

In my opinion, home sellers, home buyers, and attorneys are indirectly responsible for this fraudulent “electro-criminal” behavior.

Historically, people could be trusted. Closing attorneys/offices would require you to get a certified check for the amount of money they estimated you needed at closing and if more was needed, they usually accepted personal check for up to a certain amount (i.e., normally $5,000). Hey, they knew where the property is located and if necessary, they can slap a lien on the property or send debt collectors to your home…

But based on dishonest Buyers that use high quality printers can produce fake certified checks. Also, Sellers fraudulently scammed a couple of real estate attorneys (by exiting the attorney office, photo depositing the check into bank account, and then going back into office asking for a wire transfer to their bank account without the attorney first cancelling the check…thereby double depositing funds and skating to Brazil or Costa Rica).

Now, to fight that fraudulent action, the closing attorney/office that is handling your real estate transaction will only accept wire transfers from your financial institution of your money you need at closing.

This now has created an environment to steal your money – electronically by your own actions.

The scam: The homebuyer receives an email from criminals pretending to be real estate agent, the closing attorney, or title agency involved in the transaction. The fraudulent email contains wire transfer payment instructions usually regarding the down payment or closing costs. Unwittingly, the homebuyer sends the wire transfer payment to the criminal’s account.

Criminals search out and compromise one or more email accounts belonging to the parties in the transaction. It’s a scam called Business Email Compromise or Email Account Compromise (BEC/EAC). In fact, the FBI reports that BEC/EAC bad actors are targeting the real estate sector.   Several factors contributing to the rise in real estate wire fraud:

  • Real estate transactions involve several different people and entities (including their computers, email accounts, and the servers they communicate through): attorneys, real estate agents and brokers, mortgage lenders, title companies, home service companies, home inspectors, buyers, and sellers. This gives the criminals multiple targets of hacking and spamming to compromise each entities security.
  • Criminals search Multiple Listing Services, as well as Zillow and Trulia for pending home sales. Next they identify and profile the parties. Because social media platforms, like LinkedIn, or Facebook, and publicly available websites, contain troves of information, this is quite easy. Homebuyers who are not adequately educated on the risk of real estate wire fraud.
  • Criminals know that buying a home is very emotional and once off balance, the homebuyer is more vulnerable and give attackers an advantage.  

Homebuyers can exercise some steps to protect themselves from this fraud:

  • First, acknowledge you are already a target for real estate wire fraud.
  • What should you do if you receive an email instructing you to make a wire transfer payment? Call don’t email: Confirm your wiring instructions by phone using a “known” number before transferring funds. Don’t use phone numbers or links from an email.
  •  Be suspicious: It’s uncommon for title companies to change wiring instructions and payment info by email.
  •  Forward, don’t reply: When responding to an email, forward it instead of replying and then type the previously “known” email of the requestor. Criminals use email address that are very similar to the real one for a company.
  • Confirm everything: Ask your bank to confirm the name on the account before sending a wire.
  •  Verify immediately: Call the title company or real estate agent to validate the funds were received. The sooner it is detected that money has been sent to a wrong account, the better chance you have of recovering the money.

What steps can the Agent take to protect their clients?

  • Warn Early & Warn Often: Make sure your clients know about the growing and looming threat of real estate wire transfer fraud.
  • Educate: Remind your client that you will not send changes to wiring instructions or payment information.
  • Call: Tell your client to call you to confirm all wiring instructions, and soon after they make any wire transfers.  
  • Create: Within your company establish a rapid response plan for wire fraud incidents.  

Source: Stop Real Estate Wire Fraud

Source: Real Estate Wire Fraud Has Devastating Effects

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