Wire fraud is one of the biggest threats to the real estate industry today. In 2022 alone, the FBI reported $446 million lost to business email compromise schemes in real estate. At Landmark Title, we are highly aware of how scammers can exploit the complexity and urgency of property transactions in an attempt to deceive buyers, sellers and agents. As a part of our ongoing effort to educate buyers, investors, agents and brokers, this blog will share details on what wire fraud typically looks like to help empower individuals from falling victim to scammers’ tactics.
The anatomy of a wire fraud scam
Real estate wire fraud happens when a scammer tricks a buyer into wiring money to the wrong bank account. Scammers like to use “social engineering,” which is a form of deception used to manipulate individuals into divulging personal information. Below are the typical steps a scammer will take:
Step one: find a target
Scammers comb the internet for public records and data regarding pending real estate transactions. Once they narrow it down to a listing that meets their criteria, they have their target.
Step two: go phishing
A scammer will then send an email to the buyer designed to trick them into giving the scammer access to his or her email account. Once they gain access, the scammer can then monitor and intercept emails.
Step three: wait patiently
Now, all the scammer has to do is wait patiently for an email sent to the buyer with legitimate wiring instructions.
Step four: intercept and replace
When wiring instructions arrive, the scammer will intercept the authentic email and replace it with an email containing fraudulent instructions. Using either a hijacked account from the true sender or a spoofed account (an account very similar to the original so it is easy to go unnoticed), the scammer will send instructions on how to wire to their bank account instead of the seller’s. This is a specific type of business email compromise, or BEC.
Step five: hide the evidence
After the money is wired to the scammer’s account, they quickly get to work hiding the money, wiring it to other bank accounts, withdrawing cash, cashier’s checks and crypto wallets.
Warning Signs to Watch For
While scammers and the technology they use continue to advance, they still make mistakes. Here are some warning signs to watch out for:
1. Last-minute changes
Fraudsters typically send revised wiring instructions at the last minute. Be wary of any unexpected changes and contact your agent or title officer through another secure form of communication (i.e. phone) immediately to verify any requested changes are accurate.
2. Urgency and pressure
Emails or calls that pressure buyers to act immediately should always raise a red flag. Fraudsters rely on creating a sense of urgency, so their victims don’t thoroughly evaluate what is being asked. Buyers are always allowed to verify information and consult with their real estate professionals during a transaction. Never act simply because there is someone on the other end of a phone or email saying something needs done immediately.
3. Email anomalies
Scammers carrying out BEC schemes often use spoofed emails to send fake instructions. Always look for slight alterations in email addresses, such as missing letters or domain changes. These subtle differences are easy to overlook but crucial in identifying fraud.
4. Inconsistencies in communication
If the tone, language, or format of the communication changes suddenly, it might be a sign of a compromised account. There is a lot of communication taking place throughout a real estate transaction, so buyers typically get a good feel for the communication patterns of the professionals they are working with. This is why it’s also important to keep multiple lines of communication open and not just rely on email or text-based communication.
Responding to Wire Fraud
If you suspect wire fraud or have already fallen victim, immediate action is critical. Contact your bank to recall the wire, notify your title company and report the incident to the FBI’s Internet Crime Complaint Center (IC3), as well as your local FBI office. Swift action can increase the chances of recovering lost funds.
At Landmark Title, our mission is to safeguard your transactions. By staying informed and vigilant, we can work together to protect your investment from wire fraud. Landmark Title has a proven track record of facilitating successful transactions and providing personalized service. For more guidance and resources, get in touch with one of our experts today.