For buyers and sellers alike, closing on a real estate transaction is the end of a long, and often stressful, process. Unfortunately, for a growing number of people, what should be a moment of relief can turn into a nightmare.
The reason: scammers are engaging in a type of wire fraud where victims are fooled into sending down payments and other settlement costs to the criminals’ account. Given the large sums of money that are involved, many of the victims suffer devastating losses. Last year, for example, a DC couple lost $1.5 million in a wire fraud scheme when they were trying to buy a home in Cleveland Park.
Often, the perpetrators start by sending someone involved in the transaction — a realtor, real estate attorney or title company employee — an email that contains malware. Using the malicious software, they’re able to breach the company’s email account and identify upcoming transactions that they can target.
Just prior to the settlement, they will send emails to the buyer or seller asking that they change the account number where they’ll be sending the closing costs. Because the messages look like they are coming from the realtor or attorney’s email system, it’s an easy trap to fall into.
Little do the victims know that they’re actually sending their money to a fraudulent bank account — one that’s often kept off-shore and therefore harder to trace. And because banks usually don’t reimburse customers for wire transactions that they personally authorized, customers have little recourse in terms of getting their money back.
The frequency with which these attacks take place is truly frightening. The cyber-security firm Proofpoint noted a 14-fold increase in mortgage wire fraud cases between the second quarter of 2018 and the same period a year earlier.
So what can you do to make sure you’re not a victim?
Take extra precautions.
Given how much money is at stake, it’s worth doing a little extra homework to make sure an email — or even a call on the phone — isn’t coming from a fraudster. Contact the real estate professional through an email address or phone number that you know is authentic, not one that you found in an email.
Be wary of attachments.
Malware becomes active when you open an infected attachment on your computer. So don’t open any files through email unless you’ve first verified the sender’s identify through a known phone line.
Put safeguards on your account.
If you ask, most banks are willing to place a note on your account that you only authorize wire transfers if they verify your identity first. Typically, that involves calling you ahead of time and performing a voice verification.
If you think you’re a fraud victim, contact your bank immediately and request a wire recall; those using a money transfer service like Western Union can call its complaint line. You should also call the FBI’s local field office and file a complaint with the bureau’s Internet Crime Complaint Center at www.ic3.gov
At Ray Gernhart & Associates, we regularly update our malware software and educate our staff members about potential cyber-security scams in order to minimize the threat on our end. After all, the safety of your real estate transaction is always a top priority.
For further questions about how to protect yourself from wire fraud — or to discuss any other real estate needs — call us at 571-992-0700 or send us an message. Do yourself a favor and Talk to Ray!
