Wire Fraud: Safely Navigating the Movement of your Funds

Fraud in Real Estate Wire Transfers

These days, it’s easy to read a sensational story about a home buyer or seller getting scammed out of a large sum of money and think that it could never happen to you. Unfortunately, wire-fraud scams are not infrequent and not uncommon. In 2016, the FBI issued a warning called Business Email Compromise PSA (BEC).  The BEC is defined as a sophisticated scam targeting businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments. The E-mail Account Compromise (EAC) component of BEC targets individuals that perform wire transfer payments. Large sums of money change hands in most real estate transactions.  Often, a wire transfer is a part of that process.

Sadly, this actually happens all  the time. Earlier this year a Forbes writer shared that she was nearly  scammed out of $60,000 but realized that something was off about the email communications she received so she didn’t fall prey  to the scam The article goes on to say that in 2018 Americans lost $150,000,000 in real estate scams. In 2017, a Washington, D.C. couple lost $1.5 million in a phishing scam that compromised their title company’s email server. 

How does it happen? 

According to the National Credit Union Association,  what makes this type of scam so easy to pull off is the nature of the real estate closing process, which is often hurried, and the fact that email is a commonly used method for providing instructions for sending funds at closing.

Here is how the fraud works:

  • A fraudster hacks into a title company, agent or lender’s email server or computer system to search for upcoming real estate closings; and
  • The fraudster then emails the buyer or financial institution with bogus wire-transfer instructions related to a particular real estate loan closing.

The buyer or financial institution then follows the bogus instructions to generate the wire transfer request. Once the funds are sent, the criminal moves on.

How can you stay safe? 

  1. Be aware. Talk to your real estate agent about wire fraud in the industry 
  2. Its ok to be suspicious. Before transferring large sums of money, check and check again that the parties on the receiving end have actually  sent the instructions and are who they say they are
  3. Use the phone.  Become familiar with the parties in your transaction from the agent, to the lender to the settlement processor.  Ask questions and verify.
  4. Avoid phishing scams. As in your everyday  life, don’t click on strange links. Double check incoming email addresses to ensure they are correct and match those of the parties in your transaction. 
  5. Acknowledge that nobody is safe.  Real estate transactions move quickly and are often emotional.  Pay attention to the details and understand that you are as vulnerable as your neighbor

 

Written by Holly Billy | hbilly@ttrsir.com

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