Wire Fraud

How Home buyers can protect themselves from wire fraud

Unfortunately, there are increasing instances involving scammers tricking home buyers into wiring down payment funds to a fraudulent account.  The scammers are taking advantage of the chaotic nature of buying a home, selling another home, packing and moving, and relying on people acting quickly without verifying information.  They also know that a home purchase involves large sums of money and are spending vast amounts of time trying to make the scams look legitimate because of the amount of money they can make from their scam.  This post will explore how that scam normally works and ways that home buyers can prevent it from happening to them.

Hacking Email Accounts

Scammers will typically hack into email accounts of real estate attorneys, title companies or real estate agents and, without their knowledge, monitor their accounts by installing malware.  Once the scammers see that a closing date is approaching, they will use the compromised email account to send a legitimate looking email to the buyer.  The email will look like it is coming from the real estate attorney, title company or realtor and will have instructions about sending a wire transfer for the funds the buyer will need at closing.  Since the scammer has been monitoring the email accounts, the amount they are requesting is often the exact amount the buyer needs to bring to closing, but the wiring instructions are to an account belonging to the scammer and not to the title company to which the funds should actually be transferred.  The scammer’s bank account is typically an overseas account, out of the reach of U.S. law enforcement.  The email will usually also contain a phone number for the buyer to verify the instructions, however, that phone number will go directly to the scammer.  Sometimes, the scammer may also try to call the buyer to reassure them that the wire transfer request is legitimate.

What are the signs of a potential scam?

If you notice differences in the language used in the email requesting money and any previous emails, that is usually a good sign that you should pay close attention before acting on the email.  Since a lot of the scammers are not located in the U.S., the language used in their email may be a little different from the language used by the actual title company or real estate agent in prior emails.  If the email demands that the funds are sent immediately, especially if it is before the closing date, pay close attention and make it a point to verify any wiring instructions with a trusted source before sending any funds.  A title company or real estate agent should not threaten you if you do not send the wire, so if the email appears to be threatening, please pause and verify before responding.

How can I verify the correct wiring instructions?

The best way to verify wiring instructions is by calling someone involved in the transaction that you know and trust.  DO NOT CALL ANY PHONE NUMBERS LISTED IN THE EMAIL REQUESTING FUNDS UNLESS YOU HAVE VERIFIED THE PHONE NUMBER ELSEWHERE.  If you have already been talking to someone at the title company and feel comfortable with that person, especially if you recognize their voice, call that person directly to make sure you have the correct wiring instructions.  If you have had no contact with your title company, talk to your real estate agent and get the title company phone number from the agent (instead of relying on the emailed phone number).  Today, many title companies will not email the entire account number and will require you to call in order to get the full account number.  Sending funds by wire transfer is the best way to provide down payment funds for the purchase of a house, and in many situations is the only way to provide those funds, but please make sure you always verify the correct account number by talking to someone you know and trust.  If you have any questions about whether the account number is legitimate, let someone at your bank know before sending the funds AND let the title company know.  You could always stop by the title company office to physically pick up a copy of their wiring instructions.

What can I do if I have already sent funds to a fraudulent account?

If you have already sent the funds to an overseas fraudulent account, Immediately take the following actions:

  • Report the fraud to your bank and request a Fraud Wire Recall.
  • Report the fraud to the FBI’s Internet Crime Complaint Center at IC3.gov.
  • Contact regional FBI and local policy.
  • Report the scam to the FTC.
  • Inform your escrow officer or settlement agent.

The FBI may be able to recover the funds if the fraud is reported fast enough, but if not, the money may be in the scammer’s overseas bank account and beyond the reach of U.S. law enforcement.

Have you or a client had any personal experiences with wire fraud? If so, please share your experience so we can give everyone real life examples so we can prevent this from happening as much as we can.

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