U.S. real estate transactions are prime targets for wire fraud. When you consider that diverting a single wire transfer offers an average payout of approximately $169 thousand, it is clearly evident that Buyers and Sellers should exercise the highest caution when managing their funds in escrow.
While technology continues to improve the ease of many workday functions, it also opens an additional avenue for a criminal to practice his evil craft. Most wire fraud begins with a Business Email Compromise. A fraudster finds his way into a personal or business email account by using a phishing technique, and any party to the transaction is a potential target for a hacker: the buyer, seller, real estate agent, lender, title company, or closer.
A criminal may begin by simply searching online for property listings, and note the email addresses of a selection of contacts. Then he will send a phishing email to a number of these addresses. The emails will appear to come from a reputable source — an industry service provider, for instance — and include a link to log in for account details or to receive a document. He only needs one person to bite. The link is false, and invites the criminal in to begin his work.
Now inside the target’s communications center, the hacker only needs to monitor activity and prepare to strike at just the right moment. All of the details of each active transaction and its participants can be followed. The criminal knows the email addresses of key players and the timelines for closings. He can set up rules that will divert the emails coming from the escrow company into a Notes folder instead of the Inbox, and have those emails forwarded to him for further action.
Email fraudsters are master impersonators. Their spoofed emails appear identical to others the Buyer has already received from legitimate sources, but will contain the scammer’s own phone number as a bit of insurance. When he sends the Buyer fake wiring instructions to his own bank account, he will be ready if needed to answer the Buyer’s confirmation phone call. Once the closing funds are wired, the criminal will take immediately action to transfer them out to other accounts – usually out of the country – and in moments they may be forever lost.
Our free download, Protect Yourself from Wire Fraud, explains how buyers, sellers, agents and escrow officers can and should protect themselves from wire fraud!
Learn How to Protect Yourself from Wire Fraud with our PDF