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Tips on Avoiding Wire Fraud

You’ve heard the horror stories – an unsuspecting young couple who scrimped and saved for their first home lose their down payment or an elderly person transitioning from a private residence to senior living facility is swindled out of all their equity.

It happens every day: digital scans attempting to con people out of their money. 

While this can happen to anyone at any time, those individuals buying or selling real estate can be particularly vulnerable. Scammers often target these people because real estate transactions can often mean large amounts of money and wired transactions.

The Art of Scams

Most digital scams occur over email.

How it often works is a scammer gets ahold of email accounts by hacking a computer through malicious links. They lurk in an inbox and watch correspondence for a while, observing how different parties speak and what different email signatures look like. Then, they create a fake email account that is often just one letter or character off from the real account, send their request for funds using similar language and that’s that.  

The Increase in Wire Fraud

Due to the more digitized nature of the real estate business, the risk of fraud is rapidly increasing.

A recent Forbes article stated, “According to the FBI, Americans lost nearly $150 million to real estate scams just last [2018] year. Scams in the industry have jumped more than 1,000%.”

These digital con artists are also targeting real estate transactions more and more due to the industry’s use of wire transfers.

According to Tom Cronkright, CEO of CertifID, wire transfers are unique in banking because once they are received in an account they can be transferred out immediately. There is no waiting period for funds. This makes them hard to trace, and perfect for hackers.

Avoiding Falling Victim

With the constant warnings and example cases, it can feel like wire fraud is unavoidable.  But, simply by heeding those warnings you are already one step ahead.

There are also a few other steps you can take to ensure you have a safe transaction when buying or selling.

First, know the email and phone number of the parties you are interacting with. Having this information will help if you do receive a suspicious email. By knowing the correct emails, you can take a closer look at those included on the suspicious email and see if they match. Then, you can call the parties concerned and verify its contents.

Second, review information that is sent to you thoroughly. This helps you learn the correspondence styles of all parties involved in the transaction, and also ensures you are familiar with the closing process.

Third, use time to your advantage. Take time to review and ask questions. Take time to make phone calls to verify information. But, if you do become victim to a malicious email, act fast. The quicker you catch the fraudulent action, the quicker the perpetrators can be caught.

Additional Tips

A few red flags that can be helpful to watch out for are:

  • If the sender asks when you are going to send the wire

    • This can indicate the individual wants the money fast to avoid detection (Tom Cronkright, CEO CertifID)

  • Send documents safely

    • Use tools that have a login or need information verified before signing online

  • Voice verify wiring instructions

    • Never agree to wiring over email

 For Realtors and Title Companies, review Old Republic Title’s tips below:

Title Companies

  • Transmit data using encryption (Web applications, databases, file transfer, email)

  • Use two-factor authentication for remote access to your network resources

  • Maintain a contact log for all participants (phone numbers and email addresses)

  • Implement a multi-step funding process that eliminates urgency for transferring funds

  • Educate all participants to understand the threats to the settlement services transaction process

  • Perform a risk assessment to identify security gaps within your organization and develop a plan to close the gaps

Real Estate Brokers or REALTORS®

  • Avoid using free email services to conduct business

  • Use secure email whenever possible

  • Use two-factor authentication for email

  • Transfer files and data using encryption

  • Don't store data that's not required by regulation or legislation

  • Change passwords on a periodic basis

  • Educate customers on BEC, wire transfer fraud and the settlement services process

  • Consumers

  • Learn about the settlement services process and what you should expect

  • Confirm the authenticity of all communications

  • Only transfer NPI in an encrypted format (If you aren't sure if the method is encrypted, question the requestor)

  • Understand wire transfer fraud

  • Scrutinize wire transfer instructions, and don't accept changes in instructions unless you're 100% sure of the authenticity of the change

 

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