Between 2015 and 2017, the FBI reported an 1100% increase in wire fraud scams occurring in real estate transactions. Real estate buyers and sellers continue to use wire transfers to deposit closing costs and escrow despite the increased risk. At Bolan Law Group., our lawyers have helped many clients after things went awry in a real estate transaction. We hope the advice on this page will help you avoid a wire fraud scam.
What Is Wire Fraud?
Wire fraud is a federal crime. It occurs when a fraudster convinces a victim to send money via wire or money transmitters like Green Dot, Western Union, or MoneyGram. When wire fraud involves e-mail communication, it can lead to bank fraud, wire fraud, or money laundering charges.
Fraudsters commonly target real estate transactions because the amount involved is high-value, the parties communicate using e-mail, and the closing process is hurried. Out of the 166,349 incidents reported to the FBI between 2016 and 2019, many were Business E-mail Compromise (BEC) or E-mail Account Compromise (EAC) schemes.
In these sophisticated schemes, the fraudster targets title companies, law firms, real estate agents, buyers, and sellers using publicly available information from real estate listing sites. They use social engineering (like phishing) or computer intrusion techniques to compromise legitimate business e-mail accounts.
Then, the fraudster uses the compromised accounts to send a spoofed e-mail that appears legitimate to the recipient. The e-mail may convince the recipient to change the payment type or payment location to a fraudulent account. Once the recipient sends the funds to the fraudster, the money is nearly impossible to recover.
Wire Fraud Signs
While wire fraud continues to increase, the signs of wire fraud in real estate are easy to spot. A small amount of education and diligence can help you spot a fraudster.
The Biggest Red Flag: Last-Minute Changes To the Wire Instructions
The most obvious red flag is receiving a message with “new” directions for your payment. You should be especially cautious if you receive new instructions at the last minute and without prior notice from your agent. While impersonating a party to the transaction, the fraudster may ask you to change your payment method (usually from check to wire transfer) or make a transfer to a new account under their control. If the name on the account that the e-mail instructs you to send the money doesn’t match the person or company you’re supposed to send the money to, you should be very cautious as this is a common sign of fraud.
Be Cautious of Abrupt Changes in E-mail Correspondence
Be cautious of abrupt changes in business practices. For instance, the request could be fake if a current contact requests that you use their personal e-mail address after all previous correspondence was through a company e-mail or a phone call. If you’ve received an e-mail from your agent, take a look at the address. Make sure it is identical to the one you’ve been using. In many cases, the fraudster may attempt to make the address look similar to your agent’s actual address but with a minor change or spelling error, like swapped letters or a zero instead of an “o.”
Other Signs of Wire Fraud
Other signs that you may become a victim of fraud include:
- The communication is exclusively e-mail based,
- Someone purporting to be your agent contacts you to ask for personal information that you’ve already given,
- The fraudster pressures you to act quickly or secretly, and
- A company regularly uses unsecured e-mail and sends out sensitive information.
While fraud attempts via e-mail have typically been easy to spot, don’t assume that all communication is legitimate just because it looks legitimate. Be especially wary if an e-mail asks for personal information you’ve already given or to change the plan for a wire transfer.
How to Prevent Being a Victim of Wire Fraud
The biggest thing you can do to avoid being a victim of wire fraud is to know the signs of a scam and be diligent in protecting your personal information. Consider the following approaches:
- Verbally confirm requests for transfers of funds that you receive via e-mail;
- When calling for confirmation, use previously known numbers, not the numbers provided in the e-mail request;
- Double-check all sender e-mail addresses for accuracy;
- Be careful what you post on social media, especially about the timeline for purchasing your home;
- Don’t send personal information through e-mail;
- Be suspicious of requests for secrecy or pressure to take action quickly;
- Don’t open attachments or click on strange links; and
- If you receive a link, check for the “S” (as in HTTPS://) in the website’s URL, which guarantees the site has a security certificate.
These steps can help you ensure that you are communicating with the intended party. A little meticulousness can save you from sending your personal information and hard-earned money to a scammer.
One last tip is to monitor the status of your wire transfer. Because wire transfers can take time to complete, you should keep track of where the money is going and when the transaction completes. If the money does end up in the wrong place, the sooner you take action to recover it, the better your chances of recovering it.
What If I’ve Been a Victim of Wire Fraud in Real Estate?
You are not alone. The FBI reported BEC/EAC hacks have happened in all 50 states and 150 countries. When you realize you’ve been victimized, you should take action quickly. Immediately report the scam to your bank or wire transfer company. Then report the crime to your local police force, the FBI (via the Internet Crime Complaint Center), or the Federal Trade Commission (FTC). Filing a complaint can help these organizations track repeated instances of fraud. Further, law enforcement may be able to assist your financial institution in returning the funds to you.
The attorneys at Bolan Law Group. are here to help if you’ve fallen victim to a real estate scam. If a fraudster using a compromised business account scammed you, the business might be responsible for the security breach and any fraud that resulted. Call us today to discuss your case.