After five weeks of working with attorneys, realtors, and your lender, you are ready to close on your very first home purchase!  You wanted to avoid PMI (mortgage insurance) so you decided to put 20% of the $349,000 purchase price down…which means you need to bring $69,800 plus closing costs to the closing table.  You’ve worked hard for the past 5 years to save this money and you are excited to close on the house, move in, and make it your own.

It’s about a week prior to closing and you get an email from the title company with wire instructions.  This email says you need to wire $71,000 immediately so that the transaction can close on time, and it includes wire instructions.  You immediately head to the bank to set up the wire transfer (you want the money to get there in time).  You’re ready to close.

Three days later, your attorney emails you to say that the final numbers for the closing have been finalized with the title company, and you need to wire $70,435 to the title company at least a day prior to the closing.  Wait a minute?! You just wired the money to the title company a few days ago…for a different sum of money!

You check the wire instructions provided by your attorney.  They’re different.  In a panic, you call your attorney to figure out what’s going on and she says no one has reached out to you with the wire instructions.  She verifies the wire instructions for you and they do not match with the title company.  The wire instructions were fake.  You’ve just lost $71,000.

You were the victim of a wire fraud scam.

What is wire fraud?

Wire fraud is a form of financial fraud involving the use of electronic communications.  In the real estate world, wire fraud is commonly seen as a “spoofing” scam.  Spoofing involves forged or fake electronic documents, including emails from attorneys, lenders, realtors, or the title company involved in the transaction.

According to the FBI, about 1 in 4 U.S. victims respond to these emails by wiring money to the scammers.  In 2017, nearly $1 Billion in Real Estate transactions were the target of wire fraud.

How do these criminals do it?

Oftentimes, the scammers hack into a title company, realtor, lender, title company, and monitor communications and files.  They learn about upcoming real estate transactions and the parties involved.

Once they have the information they need, they spoof the email identity of your realtor, title company, lender, or attorney.  These are people you trust, and these criminals prey on that trust.  This email will look almost identical to their normal emails.  It will have their same signature line, and the sender line in your inbox will have their name on it.  These emails are also more sophisticated than the stereotypical, “I’m a prince and need your help to get my inheritance” emails that are riddled with grammatical and spelling errors.  These emails look legitimate.

They are not.  These emails contain fake wire instructions for the scammers’ bank account, not the title company’s bank account.  Once a victim wires the money to the scammer via the fake wire instructions, it can be impossible to get that money back.

How can I protect myself?

Here are a few ways you can protect yourself from becoming a victim and losing your hard earned money to these scammers:

1. Scrutinize the Email: The reason why these scams are so easy to believe is that the emails look exactly like it came from someone you trust.  Look at it carefully.  Don’t just look at the name of the sender, look at the email address.  Oftentimes, the email address is completely different, or there is a typo in there that doesn’t look too obvious.
2. Verify: Whenever you receive wire instructions, call the sender to verify them.  This does not mean call the number listed in the email. This means, look up the sender by an independent method (ex:  Google search), obtain their contact information that way, and give them a call.  Confirm the wire instructions with them.
3. Pay attention to changes: Wire instructions will not change.  If you receive an email stating wire instructions have changed, that’s a red flag.
4. Confirm: Ask your attorney to confirm the wire instructions.
5. Ask: If in doubt, ask.  Call your attorney, your realtor, or your lender.  They will be more than happy to help you determine whether the wire instructions are real.

What to do if you work in the real estate industry?

If you work in the real estate industry, warn your clients of this danger in advance.  It can be helpful to have a notice in the signature line of your email.  Here’s a great example!

          Warning!  Wire Fraud Advisory

Wire fraud and email hacking/phishing attacks are on the increase!  If you have an escrow or closing transaction with us and you receive an email containing Wire Transfer Instructions, DO NOT RESPOND TO THIS EMAIL!  Instead, call us immediately using previously known contact information and NOT information provided in the email, to verify the information prior to sending funds.

If you have any questions on how you, or your clients, can avoid being the victim of wire fraud, call or email the Law Office of Meghan Stokes LLC for help.