Thursday 15 August 2019

Be Wary of Wire Fraud

Posted by at 2:38 PM

Be Wary of Wire Fraud

By now, many of us are familiar with how real estate wire fraud operates and the "how" behind the scam is a familiar one.  After years of planning and dreaming for their family's future, many Americans are ready to take the step of purchasing a home.  Sophisticatd cybercriminals insert themselves into the process, sending emails pretending to be a legitimate real estate or title industry professional, instructing the target to wire money to scammers instead of the correct bank.

These emails will often come at times when homebuyers would expect to wire money, such as during the down payment or closing processes.  When homebuyers wire these huge sums of money, they think they've secured the next big step in their life plans, but they have instead fallen victim to a sophisticated scam.

The incidence of real estate wire fraud is distrubingly frequent and on the rise - more than 11,300 victims across America lost greater than $150 million in 2018 to these scams, per FBI statistics. That's a jump of 166 percent since 2017 and likely just the tip of the iceberg due to underreporting.

In Orlando, a buyer was duped by a fraudulent email thought to be from the title company directing them where to wire their money for their upcoming closing.  The buyer wired the $120,000 needed for their cash to close.  When the buyer spoke to the title company, they informed her that the funds were never received.  It was later discovered that a fraudulent email has been sent to the buyer where the fraudster was acting as the title agent and directing them to wire their funds.

Unfortunately, in this case the customer did not call the title company to verify the wire instructions. The customer lost the $120,000. This may have been avoided had the customer verified the wire instructions by contacting the title company via phone or in person. 

Many title industry professionals have taken important steps in recent years to equip our industry with tools and knowledge regarding best practices.  At Westcor, I always warn my agents about the possibility of real estate wire fraud.  I make sure they inform their buyers and sellers that they will never send changes to payment information via email.  Although many homebuyers expect to communicate via email in this digital age, when so much money is at risk, it is much safer to communicate sensitive payment details by phone.

But I also recognize that to fully combat real estate wire fraud, we need to bolster consumers' awareness and education even before they first connect with a title professional.  We also need to recognize who's most at risk of fraud: while it's important to educate all consumers about the threat, first-time homebuyers are especially vulnerable.

As the story of buyer in this transaction, reminds us, real estate wire fraud is a threat to our clients and a violation of the trust they bring to the closing table.  It's time we all took the next step in our efforts to educate and empower homebuyers and, ultimately, combat this threat.