You dutifuly wire the money using the new instructions.
Then, the call comes from the title company the day before settlement, asking why you have not sent your funds for settlement. This is the moment you learn that you have sent hundreds of thousands of dollars to a thief.
This scheme is not new. But a recent resurgence of wire fraud in the real estate industry, and the increase in its sophistication, prompted the National Association of Realtors (NAR) and many national title insurance companies to issue warning bulletins to the industry.
“We don’t have any hard numbers about how much buyers have lost, but we do have an increasing number of reports that it is happening,” said Katie Johnson, general counsel of the NAR.
According to Johnson, the hackers are monitoring e-mails and waiting patiently to determine what is the best scam. They realized that real estate transactions involve a large amount of money right before closing.
“The scammers are following information about transactions online on the MLS [multiple-listing service] or in the public records,” said Matthew Alegi, a partner at Potomac law firm Shulman Rogers. “It is only a matter of time before someone local gets hit with a six-figure cybertheft.”
Alegi and his staff foiled a recent attempt by a hacker to have proceeds of a property sale wired to the hacker’s account.
“We received an e-mail saying that the proceeds should be wired rather than mailed,” Alegi said. “Our title processor checked with the seller and learned that the e-mail had not come from him.”
According to Alegi, if you wire money to a wrong account, the bank will not reimburse you. “There is usually no recourse to get your money back,” Alegi said.
These schemes are getting harder to catch. The hackers have improved their grammar, and they obtain an almost identical e-mail address, making it very difficult to identify it as a scam.
Patrick Weed, broker of Patrick Realty Company in Kensington, and his buyer client also prevented a potential $20,000 loss.
“I received a call from my buyer asking why I e-mailed her asking for an additional deposit of $20,000 for her purchase in Olney,” Weed said. “She told me that she responded to my e-mail, and that I sent her an e-mail back.”
The e-mails stated that the money was necessary to ensure a smooth and easy transaction.
Weed said he never sent his client an e-mail asking for an additional $20,000. The hacker monitored his e-mail and was able to garner exact details about the transaction. The hacker provided wiring instructions to a bank in Texas.
Unfortunately, some people have fallen for this scheme and have lost money.
“Someone in Chicago recently lost $130,000, and in Texas there was a recent loss of $30,000,” said Johnson. “It is prevalent, and it is increasing.”
“We have to be more vigilant than ever,” Alegi said. “Consumers need to be aware. Brokers need to be aware. Title companies need to be aware.”
Here are some tips for buyers and sellers to protect themselves from becoming a victim to wire fraud:
- Never send any sensitive financial information via e-mail, including banking information, routing numbers or PINs.
- Prior to wiring any funds, you should contact the intended recipient via a verified telephone number and confirm that the wiring information is accurate. Do not rely on telephone numbers or Web site addresses provided within an unverified e-mail.
- Clean out your e-mail account on a regular basis. Your e-mails may establish patterns in your business practice over time that hackers can use against you.
- Change your usernames and passwords on a regular basis.
- Make sure to implement the most up-to-date firewall and anti-virus technologies on your server or computer.
- Report any fraudulent activity to the FBI via its Internet Crime Complaint Center.
Jill Chodorov can be reached at email@example.com.
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