Closings 101: 5 Tips to Avoid Wire Fraud

real estate wire fraud

It’s sad to say, but there’s always someone out there looking to make a quick and easy buck.  There’s the “prince” from Nigeria, your “friends” who have gotten stranded in a foreign country and lost their wallet, even “grandchildren” calling their grandparents in despair needing cash.  All scams called wire fraud.

Thieves have even figured out how to have a big payday by scamming people during escrow closings, making off with thousands, or even hundreds of thousands, in down payment funds.  How often does this happen, you ask? In 2017, the FBI reported over $5.3B in wire fraud losses, with over 10% of that being in real estate alone.

What Does Wire Fraud Look Like?

The most common way wire fraud happens is that hackers will tap into the email systems of a title, escrow or real estate company, and start collecting data.  They then will create email accounts that look legitimate, but get rerouted directly to them. Closing instructions are sent from this email account, directing buyers where and how to wire their funds.  The unsuspecting buyer follows the instructions and, voila, money gone.

That all sounds so simple, and terrifying.  How can any one person possibly protect themselves from such a scam?  The solution is actually just as simple – be a savvy buyer. While the title, escrow and real estate firms continue to enhance and improve their internal security systems to prevent an attack like this, much of the power is actually in the hands of the buyer.  

Here are 5 tips to help you avoid being a victim of wire fraud:

Know All the Players

The first step you can take in preventing wire fraud related to your real estate closing is to be sure you know who everyone is who is involved.  Make yourself familiar with your realtor’s email address and phone number, and confirm with them the information for your escrow officer. You should only have one escrow contact email and phone number.  If that changes mid-process, be sure to double check this with your realtor.

Be Careful with Links

Cyber crimes are most often initiated by the simple clicking of a link.  Make sure you know what you are clicking on, and that you’re expecting to have received this link.  Your escrow officer may phone you, or your realtor may instruct that you will be receiving a link to a secure site.  But if you receive an unexpected link, see Tip #3…

Verify Instructions Over the Phone

The absolute best way to ensure you’re protected from wire fraud is to confirm instructions on the phone. This does not mean to call a phone number on the email.  Your realtor should have provided you with the direct number for your escrow officer so call that number only. If someone has hacked an email system, it’s very easy for them to put a false phone number, so only use the number that was given to you along with your transaction paperwork.

Look Out For Last Minute Changes

Last minute changes are a huge red flag.  If anything changes at the last minute, especially the instructions for wiring, you likely have a problem.  If you do see any last minute changes, go back to Tip #3 and call your escrow officer directly to inquire.

If It Doesn’t Feel Right, Ask

There’s no shame in doing a gut check, it just may save you hundreds of thousands of dollars.  If anything feels even slightly off to you, talk to your escrow officer. Even if things do feel ok, doing a final verbal confirmation isn’t a bad idea.  

Wire fraud isn’t an inevitability, so don’t let it happen to you.  With a little common sense, some gut checking, and a great team made up of your realtor and escrow officer, you should find yourself kicking up your heels in your new home in no time.

 

IMPORTANT NOTE: I have not and will not verify or investigate the information supplied by third parties.

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