Real estate transaction cybercrime is on the rise.
According to The Wall Street Journal, hackers have targeted email accounts belonging to the parties in transactions, such as real-estate professionals, lawyers, and title agents, devising custom scams specific to the deals.
Profits from sales are then diverted from intended recipients to the hacker’s bank account.
It can take months to recover funds, and sometimes they are never recovered.
Earlier this year, a bipartisan group of 43 members of the U.S. House of Representatives sent a letter to Federal Reserve Chairman Jerome Powell asking him to explore ways of better protecting homebuyers from wire fraud.
Meanwhile, Sen. Doug Jones, D-Ala., along with the American Land Title Association and other real estate groups, started the Coalition to Stop Real Estate Wire Fraud, which seeks to educate homebuyers about wire scams, beginning with three cities that have seen surges in first-time homeownership: Pittsburgh, Pennsylvania; Virginia Beach, Virginia; and Birmingham, Alabama.
Lawmakers cite the FBI’s internet crime report, which counted 11,300 victims of real estate wire fraud for 2018, versus 9,645 victims in 2017, totalling $149,458,114 in losses.
One reason scams succeed in the U.S. is the fact that the name of a wire transfer recipient is not required to match the account into which the funds are transferred.
In the U.K., regulators are working to make it possible to confirm that the person receiving a funds transfer is the account holder. U.S. lawmakers are asking Powell to consider a similar solution.
In the meantime, follow these tips to protect your transactions from real-estate wire fraud:
Verify all wire transfer requests personally. Wire transfer requests, whether by email, text or phone, should be verified in as personal a way as possible. At the closing, ask the seller to sign wire instructions with his or her attorney present. Alternatively, ensure that instructions are included in the deed package, signed by the seller, with a notarized signature whenever possible. For additional protection, have the seller confirm wire instructions in a phone call with an attorney. Make sure that all contact information was received before the wire transfer. Then verify the plan via email.
For instructions received by email, verify in person or with a call back. When wire instructions are first received by email, schedule an in-person meeting or set up a call back with a phone number from a third-party source. Double-check the instructions with your attorney or title agent. When all else fails, check the website of the title company, settlement company or closing agent. Typically, instructions are posted there. If wiring instructions are changed for an ongoing transaction, review them carefully for inconsistencies.
Be wary of instructions sent via a free email service. Free email accounts tend to have significant security issues, and they may be mined by providers. Be aware that wiring instructions sent through free services such as Gmail, Yahoo or AOL.com may be fraudulent. Choose a more secure option for business transactions. Pay special attention if the sender name in an email is similar to the name of someone involved in the transaction, but not quite the same.
Check the details on the destination account. Make sure the name on the recipient account matches the name of the seller. Also, check the location to be certain it matches the seller’s location. While inconsistencies could be legitimate, they can be red flags and should be confirmed in person or by phone.
Make the transfer in person at the bank. Protect yourself by making the entire transaction in person. See the closing or settlement agent in person and then initiate the transfer in person at the bank.
Never wire money overseas. Funds sent overseas are nearly impossible to recover if sent to the wrong place.
Ensure that your passwords are secure. Update your passwords regularly and ensure that they are secure. That makes it less likely that a hacker will access your accounts.