Wire transfer fraud is on the rise, and perpetrators are preying on unsuspecting homebuyers.
AARP The Magazine reported on a retired couple who were finally purchasing a new home perfect for their downsizing dream. Two days before closing, they received an email from their real estate attorney. It was a contract and wire transfer request in preparation for the closing. They wired $91,500, everything they saved and borrowed, to the account number their attorney provided in the email.
Or so they thought.
At the closing, they discovered their payment wasn’t in escrow. The transaction was bogus. They tried to reverse the payment with the bank, but the money was gone. Their insurance didn’t cover the loss because they were the ones who transferred the money.
Sadly, this couple’s story isn’t unique and neither is the scam.
The real estate industry is a target for wire transfer fraud
Based on Internet Crimes Complaint Center (IC3) victim complaint data, email scams targeting the real estate sector are rising. Between 2020 and 2022, victim reports of real estate scams increased by 27%. That accounts for a 72% increase in financial losses during those two years.
In 2022, real estate scams victimized 2,284 people, representing $446 million in losses.
How the scam works
Criminal networks target players in the real estate industry using business email compromise (BEC) scams. A BEC is a sophisticated phishing scam that uses compromised information to set up its victims. Here’s an example:
Let’s say you’re buying a house, and a criminal hacks the email account of an employee at your title insurance company. After gaining access, the criminal changes the employee’s email settings to intercept any messages relating to wire transfers. Unbeknownst to the employee, those emails are now going directly to the criminal.
When the fraudster sees emails referencing your upcoming closing, they send you a fake, highly realistic-looking email telling you to send a wire transfer. You think the email was sent by your title company, and that you’re wiring your funds to an escrow account. Instead, your cash is deposited into a cryptocurrency account held by the criminal operation.
By the time you get to the actual closing, the money is long gone. And that’s money you won’t get back since personal insurance doesn’t cover wire fraud.
Depending on the wording of your bank’s insurance and the terms of your account, you may have fraud coverage extended to you as a customer. In the meantime, you’d have to sue the companies involved, which could be worse. And you may never get reimbursed for the total amount.
How to protect yourself
The best way to protect yourself is to educate yourself and stay ahead of the scam:
- Call to verify all wire transfer instructions. Use the main phone number or business card your title insurance company provides. Don’t use the contact information included in any email or text. If it’s a scam, the contact information in the email or text will go to the fraudster’s network.
- Don’t give your account login credentials or personal information by email. Your financial institution won’t ask for your personal account information or login credentials. Anyone asking for that is highly suspicious, especially if the tone is urgent. Criminals play on your weaknesses and emotions.
- Scrutinize any last-minute changes or urgent messages from your title insurance company. Last-minute changes to scheduled closings are highly unusual, and you probably wouldn’t be notified via email.
- Check the links and email addresses in all your correspondence. Some scam emails look nearly identical to those sent by the business they’re impersonating, right down to signature lines and logos. Scammers might be impersonating your bank, your title insurance agency, your real estate attorney or another institution.
Don’t be shy about calling the official phone number — again, not the one in the email — to verify details and authenticity. Even if the correspondence in question is legitimate, no harm done! In fact, your financial institution will be happy you’re on top of things. And if it is a scam, they’ll want to know so they can stop it.
Your vigilance is a win-win for everyone.
Report suspicious activity
Don’t waste time when it comes to wire fraud. Contact your financial institution immediately. Request a recall of the funds and indemnification documents. Ask your bank how they handle fraud and if they offer assistance. Every bank works differently, so find out before you authorize a wire transfer. If you lose money, file a complaint with IC3. They’ll coordinate with your financial institutions and law enforcement.
Never worry about offending anyone when it comes to wire transfers. If a correspondence seems fishy, don’t respond. Verify it instead.
Stay cybersafe out there!