The Fishers had found their dream home. According to their interview with CNBC, they were ready to close on the home, and they received an email from their agent with digital copies of the closing documents and wire instructions for the more than $900,000 they had planned to wire ahead of the closing. Following the instructions, they dutifully wired the money. Then, only a few days later, they received a call from their mortgage lender asking where the wire transfer was.
The Fishers were among the thousands of American homebuyers who are the victims of wire fraud every year. Wire fraud, like other cyber crimes, takes a number of different forms, and can be difficult to guard against. Learn more about how to protect yourself against real estate wire fraud, and how your title company can be a key partner in the process.
What Is Real Estate Wire Fraud?
Wire fraud is distressingly commonplace, and it is on the rise. The Washington Post reports that in 2019, 11,677 victims were scammed for $221 million in losses as a result of wire transfer fraud, up from 11,300 reported victims and $150 million in losses in 2018. The Covid-19 pandemic’s effect on real estate transactions has spawned even more fraud schemes, as hackers take advantage of buyers who may never actually meet many of the professionals involved in their closing in person.
Phishing And Spoofing: The Tools Of Scammers
Real estate wire fraud generally refers to a scam in which a hacker gains access to information about a real estate transaction, usually through a technique known as “phishing,” and uses that information to divert payments of earnest money or closing costs to accounts controlled by the hacker.
Criminals monitor public records related to home sales, and use a technique called “phishing” to attempt to gain access to the email accounts of participants in the transaction, including agents, attorneys, professionals, or one or both parties to the transaction. This effort generally takes the form of innocent-seeming emails, website forms, or phone calls designed to induce one or more of the parties to disclose information that can then be used to access the accounts of one or more of the individuals or professionals involved in the transaction. These communications are designed to seem authentic, and are often targeted to multiple parties in the transaction, to maximize the chances that just one person will fall for the ruse.
Hackers also use “spoofing,” a technique in which a software program mimics an agent, attorney, or other professional’s phone number or email address. A spoofed account can be virtually impossible to distinguish from a real account, and criminals may even send copies of legitimate documents to convince a buyer, seller, or agent that their inquiry is legitimate.
Once the scammers have access to an account, they monitor communications related to the transaction, waiting for the right moment to strike. As the closing approaches, they will send a set of wire instructions that appear legitimate and are indistinguishable from the real thing, directing the recipient to wire funds to a real bank account. The messages often contain real website links and phone numbers that, when clicked or called, direct inquiries to the scammers.
The wire instruction message may also appear urgent, detailing a change in wire instructions previously sent, or imposing a new time constraint on the wire process — all techniques designed to ensure buyers are more likely to act quickly and without confirming or otherwise questioning the instructions.
Once the money has been wired, it can take days to discover the scam. Often, buyers are only made aware of the fraud when a lender or closing agent reaches out to inquire as to the status of the payment. By that time, the money has frequently been moved, and is often difficult for law enforcement to trace.
How Can You Best Guard Against Wire Fraud And Other Cybercrime?
Fraudsters are becoming more sophisticated, which means buyers and sellers must be more vigilant than ever. Protect yourself from real estate wire fraud scams by following a few simple steps:
- Confirm all wire instructions. If at all possible, confirm the instructions in person by speaking with someone you trust. If you can’t meet in person, don’t reply directly to an email or dial the representative by clicking on any links or phone numbers within the email itself. Always go to the representative’s website yourself through a search engine or typing in the URL yourself.
- Never send financial information over the internet unless you are sure the site is secure. Requests that you email bank account information or other sensitive data are not to be trusted. Confirm any requests you receive with your agent or attorney.
- Use caution when downloading attachments. Any attachments you receive, even if they appear to originate from a trustworthy source, may contain malware that can access passwords or other sensitive data.
- Keep your security up to date. Make sure your computer’s operating system and virus protection is updated, and use a password manager such as LastPass to keep your passwords and other login information secure.
- Work with agents and third party providers you can trust. Ensure that your agents, attorneys, and other professionals are aware of potential security risks and take active measures to protect against inadvertent disclosure of your information. Ask questions early and often, and never work with anyone if you don’t feel comfortable with their security protocols.
Landtrust Title: Your Partner for Results
When your real estate agent works with Landtrust Title, you get a partner for results. We do things differently than other title companies — whether it’s personalized support, convenient closing times that meet your schedule, or quick and easy payment methods ensuring everyone gets paid right away, our attention to detail will help ensure a smooth transaction. We’re obsessed with making your experience so seamless, you don’t even have to think about it. If you have questions about what to expect when your real estate deal closes, Landtrust Title Services can help. Please contact us today at [email protected] or by phone at 312.528.9210.