What is Wire Fraud?
An email pings in your inbox. You glance at it and notice it is from your title company. Since you are just days away from closing on your new home, you figure it must be important and so you open it immediately. It is important. Your title officer says that something has changed with the closing process and they need you to wire your down-payment through a couple of days early or the sale of the home could be pushed back weeks or even cancelled. Your heart begins to race and you get worried that your dream home might slip through your fingers. You think about contacting your real estate agent to double check the email, but then you notice that they are CC’d on the email so they must already know about it. You wire the funds via the instructions in the email from the Title Company. The funds never make it though and your downpayment gets whisked off to an offshore bank account and never seen again.
It almost sounds like the plot of some spy movie where we expect Liam Neeson to come swinging through the window to punch a few people and recover the money. Sadly, this is an experience that is becoming all too real to many American home buyers. Even more tragically, Liam Neeson, nor anyone else, is able to recover the money. There is no do-over, take-backs, or safety net. Hackers are stealing hundreds of millions of dollars from people and getting away with it.
A reporter from the National Association of Realtors writes, “One of the fastest growing cybercrimes in the U.S. is wire fraud in real estate. About 11,300 people were victims of wire fraud in the real estate and rental sector in 2018 (a 17% increase over 2017), with losses of more than $150 million, according to FBI data (https://www.nar.realtor/wire-fraud).
Over $150 million dollars sounds like the problem is bad enough but another article from Forbes reports, “the losses from these fraud schemes are likely worse than they look, too. According to Tom Cronkright (President of Sun Title), many victims—especially those on the industry side—are hesitant to report instances of fraud, fearing the reputational impact it could have. He estimates that only 15% of all fraud is actually reported
How it Happens
Wire fraud begins with scam artists trolling the multiple listings service (MLS) which is the database Real Estate agents use to list and report on homes for sale. They watch for homes to go into the “pending” status and try to hack into the email accounts of the parties involved. They try to hack real estate agents, title companies, assistants, escrow officers, loan officers etc. Anyone that they believe a buyer would trust is targeted. Then they wait until the transaction is just about to close and they send an email that looks so legitimate. They appear to carbon copy other members of the transaction and simply change one letter in the email address the buyer won’t suspect foul play. They give new wiring instructions, give the impression of urgency, and then wait while the unsuspecting buyer wires their savings into the scam artists bank account.
Even when it is reported, it is nearly impossible for authorities to return the money to the injured party.
What Buyers Should Do
The best defense is a good offense. The first step in preventing this from happening is for buyers to be aware of the problem. They should understand the way wire fraud works. In Utah, real estate agents are now required to provide their buyers with a form called the ‘Real Estate Wire Fraud Disclosure’ which explains what buyers should look out for.
It is always a good rule of thumb for buyers to double and triple check with their real estate agents before doing anything with wiring funds. They shouldn’t rely on email or text messages. They should get their agent on the phone to make sure that the information they were sent is correct.
There is almost nothing as heartbreaking as someone losing their life savings on the eve of buying a new home. Don’t let this happen to you or someone you love. Be aware of the problem and make sure you have great professionals who have your back.
Shauna Jo Larkin has been working in real estate in Southern Utah since 2001. She has worn many hats throughout her career as a Buyer’s Agent, Selling Agent
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February 25, 2020 at 04:00AM
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Shauna Jo: Real Estate Wire Fraud and How to Avoid It - Southern Utah Now
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