Home buyers beware of real estate wire fraud!
You found your dream home, you’ve made an offer and now you’re working to close the transaction, including sending the rest of your deposit into escrow. Home buyers beware, you are vulnerable to the fastest-growing form of fraud in the United States: Real Estate wire fraud.
Scammers fraudulently pose as a title or escrow agent instructing home buyers to wire the funds needed to close the transaction. Hackers then withdraw the money and vanish with your life savings.
FBI crackdown on email fraud schemes
The FBI, the Department of Justice and other federal authorities recently announced a worldwide coordinated law enforcement effort to reduce business email fraud schemes targeting real estate consumers.
According to the FBI, “Operation WireWire involved a six-month sweep that culminated in over two weeks of intensified law enforcement activity resulting in 74 arrests in the U.S. and overseas, including 42 in the U.S., 29 in Nigeria, and three in Canada, Mauritius, and Poland. The operation also resulted in the seizure of nearly $2.4 million and the disruption and recovery of approximately $14 million in fraudulent wire transfers.”
FBI Director Christopher Wray said they are commitment to “disrupt and dismantle criminal enterprises that target American citizens and their businesses.” Since the data has started being tracked, there have been reported losses of over $3.7 billion! This operation recovered a mere $14 million out of $3.7 billion. That’s a drop in the bucket.
Don’t become a victim
Once a hacker gets your money, there’s very little that can be done. Imagine you saved your whole life to purchase your first home or maybe you’re retired and downsizing to live out your golden years with no mortgage on a fixed budget and suddenly, your money is gone!
- You found the dream home.
- You signed the contract.
- You are preparing to close.
- You get an email with wire instructions
- You transfer the money.
- You get a call. “We didn’t receive your funds.”
- Your heart sinks
In this video, National Association of Realtors (NAR) General Counsel Katie Johnson warns buyers about how to avoid being caught up in a wire fraud scam during the purchase of their home.
What can we do to stop this?
We need to create awareness (share this article), be diligent with our real estate wire transfers, never wire funds without taking proper precautions and pick up the PHONE and call your Escrow Officer (using a verified number) to make sure instructions and amounts are correct.
The California Association of Realtors (CAR) has recommended real estate agents and brokers use the Wire Fraud Advisory form in every transaction to give their clients information that might prevent future scams. This form advises buyers and sellers of the existence of wire fraud and what to look for to prevent becoming a victim of an illegal scam. Below is an excerpt:
“While wiring or electronically transferring funds is a welcome convenience, we all need to exercise extreme caution. Emails attempting to induce fraudulent wire transfers have been received and have appeared to be legitimate. Reports indicate that some hackers have been able to intercept emailed transfer instructions, obtain account information and, by altering some of the data, redirect the funds to a different account. It also appears that some hackers were able to provide false phone numbers for verifying the wiring or funds transfer instructions. In those cases, the victim called the number provided to confirm the instructions, and then unwittingly authorized a transfer to somewhere or someone other than the intended recipient.
ACCORDINGLY, YOU ARE ADVISED:
1. Obtain phone numbers and account numbers only from Escrow Officers, Property Managers, or Landlords at the beginning of the transaction.
2. DO NOT EVER WIRE OR ELECTRONICALLY TRANSFER FUNDS PRIOR TO CALLING TO CONFIRM THE TRANSFER INSTRUCTIONS. ONLY USE A PHONE NUMBER YOU WERE PROVIDED PREVIOUSLY. Do not use any different phone number or account number included in any emailed transfer instructions.
3. Orally confirm the transfer instruction is legitimate and confirm the bank routing number, account numbers and other codes before taking steps to transfer the funds.
4. Avoid sending personal information in emails or texts. Provide such information in person or over the telephone directly to the Escrow Officer, Property Manager, or Landlord.
5. Take steps to secure the system you are using with your email account. These steps include creating strong passwords, using secure WiFi, and not using free services.”
What if I already wired the money to a scammer?
Two anti-fraud/cybercrime industry experts put together a white paper “When Minutes Matter” to outline the IMMEDIATE steps that must be taken in order to improve the odds of recovering stolen funds. This is a comprehensive roadmap for the hours, minutes and even seconds after it’s realized that funds have been unintentionally sent to a fraudster.
“When it comes to wire fraud, the odds are very much against the mortgage professional or home buyer once the fraud has been put in motion,” co-author Kenneth Robb, founder of Citadel Cyber Solutions said. “With every minute allowed to pass, the odds increase exponentially that the stolen funds are gone forever. What needs to be done to even have a chance to recover some or all of the stolen funds is neither intuitive, nor understood widely.”
Highlights from “When Minutes Matter” whitepaper
- Recovery steps from hour one to six, yes it is that time sensitive!
- Have bank send fraud alert
- File a claim with the FBI
- Contact local FBI field office with complaint #
- Contact legal counsel
- Call all banks that received funds
- Call local authorities and file police report
- Plan and Prepare for the next incident
- FBI contact information by jurisdiction
- Legal sample pleadings
- Data Security and Best Practices Guide
Reporting fraud to the FTC
In addition, the FTC encourages consumers to file a complaint with them whenever they have been the victim of fraud, identity theft, or other unfair or deceptive business practices.
If you sent money to someone who contacted you, report it to the Federal Trade Commission (FTC).
- Call the FTC at 1-877-382-4357
- Go online: ftc.gov/complaint
The FTC uses complaints to build cases against scammers. Any information you can give helps investigators.
- Never open unsolicited links or attachments
- Avoid sending ANY sensitive financial information by email
- Use an independently-verified phone number to confirm wiring instructions for deposits or down payments
- Educate yourself on the constantly-changing wire fraud schemes