According to a recent article in the Wall Street Journal, worldwide losses from scams involving false wire transfer instructions amounted to more than $1 billion from October 2013 through June 2015, and most of the losses were in the U.S. The real estate industry is a big target of wire transfer fraud since large amounts of money are involved before a closing. Unfortunately, the money wired during these scams is typically unrecoverable.
This is a typical scenario that occurs: The Buyer will get an email from a real estate agent or title company where the wiring instructions have been altered. The Buyer then wires the money, but later finds out that the title company has not received the funds for settlement and the Buyer is out thousands of dollars to a thief. Or on the Seller side, the title company will get a request via the Seller's email to wire money to a different account than previously given. Later to find out, it was not a valid request.
Hackers are getting a hold of information by monitoring emails and following information about transactions online via MLS services or in the public records. They are then sending emails out requesting a last minute change to the wiring instructions or requesting a swift code which would mean that the wire would be going overseas. Many consumers believe these changes are coming from a valid source.
What preventative measures can you take?
- From day one, inform your client on how you will be communicating with them throughout the real estate transaction and how any other parties involved in the transaction (i.e. title company) will be contacting them. Let them know that you will never ask that they send sensitive information via an email.
- Prior to having your client wire funds, have them contact the intended recipient of the wire and confirm that the wire information is accurate.
- Do not open suspicious emails. If you do happen to open an email that looks suspicious, do not click on any links, open any attachments or replay to the email.
- Clean our your email on a daily basis and save important emails to a secure location.
- Make sure to change your usernames and passwords frequently and never use passwords that are easy to guess like password or 123456.
- Make sure you have anti-virus technologies installed and have and up-to-date firewall.
- Do not save wiring instructions on your desktop and send to the client. Land Title always sends the instructions via a secured email.
- Always double-check and verify the phone number contained in the email for the intended recipient of the wire.
If you do find that your email has been hacked into or compromised, make sure to do the following things.
- Immediately change all your usernames and passwords.
- Contact any clients that may have been involved during this time.
- Report the fraudulent activity to the FBI: www.fbi.gov/scams-safety/e-scam
- Also report any fraudulent activity to the state and local REALTOR® associations so they can spread the word.
Rest assured, Land Title and their in-house IT team have implemented measures to ensure that all sensitive information hat a client provides is encrypted and protected on secure sites throughout the real estate transaction. Our closing team will also be in continuous communication with all parties involved with the transaction from the beginning to the end of the closing.
Disclaimer: This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal or accounting advice or other expert assistance is required, the services of a competent professional should be sought.
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