If you feel as if spam emails and phone calls increased astronomically in 2020, you’re not wrong. It’s not just you deleting hundreds of fraudulent emails and ignoring a barrage of fake phone calls.
By far one of the costliest types of fraud occurs through a “business email compromise” (BEC) scheme that occurs when a criminal hacks into an email system. These BEC scams often lead to wire transfer fraud and are particularly prevalent during a real estate transaction because criminals target the large sums of money that are transferred during a property sale. According to the FBI, there were 11,677 victims in 2019 with $221 million in losses as a result of wire transfer fraud. This compares with 11,300 reported victims and $150 million in losses in 2018.
“More than ever, cyber criminals look to take advantage of the uncertainty caused by the health crisis,” says Bill Burding, president of the American Land Title Association and general counsel for Orange Coast Title Co. in Santa Ana, Calif. “That is why it is so important that consumers work with professionals who can educate them on the signs of wire transfer fraud when purchasing a home or refinancing. When making the most important financial decision of their lives, home buyers cannot underestimate the importance of having a partner who has top-notch cyber protections in place.”
Criminals begin the wire fraud process way before the attempted theft occurs, usually with a technique known as phishing, Burding says.
“This can take the form of email messages, website forms or phone calls to fraudulently obtain private information,” he says. “Through seemingly harmless communication, criminals trick users into inputting their information or clicking a link that allows hackers to steal login and password information.”
Once hackers gain access to an email account of a real estate agent, a title company, an attorney or a consumer, they will monitor messages to find someone in the process of buying a home. Criminals then use the stolen information to email fraudulent wire transfer instructions disguised to appear as if they came from a professional the buyer is working with to purchase a home.
“If you receive an email with wiring instructions, don’t respond,” Burding says. “Email is not a secure way to send financial information. If a consumer takes the bait, their money could be gone in minutes.”
Burding says that although attorneys and title companies have taken many steps to combat this problem — such as putting consumer warnings on websites and communications, securing email communications and sending notices to consumers and real estate agents informing them of the scams — criminals constantly alter their tactics to steal information and money.
“Everyone involved in real estate transactions must be aware of the potential losses as criminals phish for information and stalk home closings, hoping someone makes a mistake,” Burding says. “If someone does mess up, it could cost your savings or retirement.”
Burding shared the following tips for consumers to protect against wire fraud:
- Confirm all wiring instructions in person or by phone with a known number before transferring funds.
- Don’t email financial information. It’s not secure.
- If you’re giving your financial information on the Web, make sure the site is secure. Look for a URL that begins with https (the "s" stands for secure). Instead of clicking a link in an email to go to an organization’s site, look up the real URL and type in the Web address yourself.
- Be cautious about opening attachments and downloading files from emails, regardless of who sent them. These files can contain malware that can weaken your computer’s security.
- Keep your operating system, browser and security software up to date.
In addition, if funds are transferred to a fraudulent account, it is important to act quickly and take the following steps, Burding says:
- Contact the financial institution immediately upon discovering the fraudulent transfer.
- Request that the financial institution contact the corresponding financial institution where the fraudulent transfer was sent.
- Contact your local FBI office if the wire is recent. The FBI, working with the United States Department of Treasury Financial Crimes Enforcement Network, might be able to help return or freeze the funds.
- File a complaint, regardless of dollar loss, at www.ic3.gov.
Read more in Real Estate: