Wire Fraud in Real Estate
What to know when buying a home?
What to know when selling a home?
Imagine spending months trying to buy your home only to find out at the closing table your funds never made it, they are gone.. vanished. Or imagine closing on your home to find out someone created a fictitious email and contacted the attorney to change out where you wanted your proceeds sent? It happens. A LOT.
As con-artists become more sophisticated and tech-savvy, parties involved in real estate closings, including buyers, sellers, realtors, and closing attorneys, are regularly being targeted with wire fraud scams. Most recently, the scams have focused on hacking into e-mail accounts of the parties involved in the transaction. Con artists can gain unauthorized access to third-party e-mail accounts when just one party involved in the transaction fails to utilize e-mail encryption software. They break into either the Realtors email or the clients email and secretly follow what is going on.
Assume that the buyer, buyer’s realtor, seller’s realtor, buyer’s attorney, and the seller’s attorney are all involved in an e-mail chain concerning the particulars of the closing. These emails would likely include sensitive information, such as wiring information, closing figures depicted on the settlement statement, and names/contact information for all parties involved. Now assume that just one of the parties involved in this e-mail chain failed to use encryption software to protect the e-mail from interception. With the assistance of readily available computer software, a con artist can easily intercept the entire chain of emails from any individual who replies to or forwards an email without using encryption software. Now the criminals have everything they need to engage in wire fraud. So what do you do? Safe practice is to literally go to the attorney office yourself and pick up your wire instructions. Sellers should bring a voided check to closing. Then verify when the wire is being sent and if it was received.
Criminals are posing as the attorney with a similar email account to send fake wire instructions to the client. Or, it could be the fake attorney posing to contact the seller to find out where they want their proceeds sent. In both cases, the money is either wired to a bank located in another county, or it is wired to a bank located in the United States at which point the criminal immediately withdraws the funds and wires them to a bank located in a foreign country. In either case, the funds are usually beyond the reach of the banks or the FBI well before the scam is discovered.
Many individuals and law firms have fallen victim to these scams, which have resulted in the victims going bankrupt and law firms and real estate companies going out of business. If you are an attorney, realtor or other professional involved in the real estate closing, and one of these scams succeeds due to your failure to utilize encrypted email, you can expect for the victim to look to you for reimbursement.
If you are involved in a real estate purchase, you should take steps to ensure that you don’t become a victim of wire fraud by verifying that you and the professionals representing you are using encrypted emails software. If you receive anything fishy or out of sorts do not email back. Call the correct number your Realtor should have, or that is on letterhead to verify.
They are getting very good at scamming to gather your information with texts, phone calls and emails. Remember, rarely will a company call and ask for your social or credit card over the phone. You are better off hanging up and calling back the main number that is correct. Be wary of Google. They might take a phone number for GODADDY and change one digit in their phone number. So, the person who quickly glances to ensure it is correct will be mistaken.
What does fraud look like? It comes in many different forms. Have you received one of these texts or emails?
Stay safe out there!