Bank wire fraud in real estate: What is it and how to protect yourself
Did you know that cyber scammers target individuals involved in real estate transactions? Wire transfers are part of every real estate closing, and through subtle tricks, buyers and sellers can fall victim to a scam that affects tens of thousands of people every year.
Bank wire transfer fraud has become so serious that in 2022, the FBI launched an investigation into email scams and real estate wire fraud with the U.S. Department of Justice.
Let’s dive into what you need to know about bank wire transfer fraud, common wire scam tactics, and what you can do to protect yourself.
What we’ll cover:
- What is real estate wire fraud?
- Real estate fraud statistics
- How does real estate fraud work?
- How to avoid wire transfer scams
- Priority National Title actively protects clients against bank wire fraud
What is real estate wire fraud?
Real estate wire fraud is an online scam in which cyber criminals target individuals involved in a real estate transaction.
Scammers will use phishing and trick buyers and sellers into wiring money to the scammer’s bank account. Hackers will target title companies, real estate agents, lenders, buyers, and sellers.
Real estate wire scam statistics
Did you know that real estate wire fraud ranks 7 out of more than 30 types of internet fraud tracked by the FBI? Wire transfer scams are real and often closer to home than we think.
Fast facts
- In 2021, there were nearly 12,000 real estate wire fraud victims, with losses totaling more than $350 million.
- The FBI noted a significant increase in online scams following COVID-19
- Most common methods of real estate wire fraud are phishing and email hacks.
- The states with the highest losses are California, Texas, New York, Florida, and Pennslyvania.
Source: FBI 2021 Internet Crime Report
How does real estate wire fraud work?
The most common way cyber hackers trick buyers and sellers with wire fraud scams is by gaining access to the email address of someone involved in the real estate transaction. This could be a real estate agent, representative of the title company, lender, or the buyer or seller themselves.
Then, the hacker might create a fake email address imitating the title company to request that the seller provide their personal banking information or that the buyer wire their deposit to a bank account that the scammer can access.
Sample scenario
Jill and Bob are buying their first home. They have been communicating with their title representative Sally at ABC Title Company over email and the phone to discuss their upcoming closing.
One day, they receive an email from Sally@ABCtitlcompany.com informing them that ABC Title Company’s banking information has changed. The email included an attachment with instructions on how to wire their down payment to the new bank account.
They are ready to proceed, but luckily, Jill and Bob have an experienced real estate agent who catches the misspelled email address. They call the title company and realize they have just avoided falling into a wire fraud trap.
The lesson: Email scammers often imitate the email addresses of title representatives to extract information or to get buyers to wire money. Sometimes the differences are subtle, such as in this example, with only one letter missing.
How to avoid wire transfer scams
Wire fraud is up in 2023, but there are ways you can actively protect yourself.
– Do not accept wiring instructions over email
Although it may be the most convenient option, never accept wiring instructions over email. You should also avoid clicking on any links or attachments you are not positive came from the title company or lender.
The safest option is receive wiring instructions is to call your title company and request them over the phone. The title company may also use a wire security platform with two-factor authentication to safely and securely deliver wiring instructions.
– Know who you’re working with
Do you know the name of your loan officer? What about your coordinator at the title company? Knowing the first and last names of those you are working with will help protect you against spoofing incidents.
Double-check the spelling of their email address, and if you notice something about your interactions with them changes, pick up the phone and call.
– Never send a wire without calling to confirm wiring instructions
You’ve likely spent a lot of time and effort saving money for your home. A quick phone call to confirm where you’re likely wiring thousands of dollars is well worth the effort.
Be sure to call the title company’s main phone number listed on Google or their official website. Beware of phone numbers provided over email that have no connection to the company.
– Trust your gut
If something feels off, it probably is. Never hesitate to contact your real estate agent or title company (over the phone, of course!) to confirm changes or information received over email.
– Choose the right title company
The people you work with can make or break a real estate transaction. Look around for reputable title companies, and don’t be afraid to ask what steps they take to prevent wire fraud.
While preventing scammers from imitating email addresses is impossible, the right title company will do what they can to stop wire fraud.
Priority National Title actively protects clients against bank wire fraud
With over 20 years of experience as a trusted industry name, Priority National Title puts safety first in all their closings. All staff members follow strict policies regarding wire transfers and are trained to identify signs of fraud.
Partnering with wire fraud prevention software Closing Lock, they work diligently to protect their customers’ hard-earned dollars safe from cyber scammers.
