Thousands of unwitting homebuyers fall victim to wire fraud schemes every year. And as the industry gets more digitized, the number of victims (and their losses) grows.
According to the FBI, Americans lost nearly $150 million to real estate scams in 2018. Scams in the industry have increased by 1000% since 2015, and real estate is now one of the top victims of malware attacks in the country.
These kinds of wire fraud schemes include emails that appear to be very real requests from lenders for money transfers as a normal part of the home buying transaction. They can often consist of phishing scams that compromise real estate and title company’s email servers. The methods for fraud are constantly growing and appear to be more and more convincing as time goes on.
Wire fraud is increasingly a problem for consumers and those in the residential real estate industry. Not only have attempts and incidents increased over the last few years; they continue to be under-reported. In the meantime, attacks have become more sophisticated and targeted due to the large amount of money moving in a transaction with multiple parties coordinating with each other.
Real estate wire fraud often starts with the industry’s Multiple Listing Service and syndication sites like Zillow and Trulia, where thieves can identify pending home sales. The fraudsters then profile all parties in the transaction (largely using publicly available websites) and attempt to hack one of the email accounts involved.
Once they’re in, they bide their time, watching ongoing correspondence until they can step in and send over false wiring instructions to steal away a down payment, closing costs or mortgage payoff funds.
This is usually done with a spoofed email account, one that’s one or two characters off from a trusted party in the transaction. It’s a very methodical approach to crime, and it pays quite well.
The sheer number of parties involved is part of the problem. Everyone is vulnerable, attorneys, lenders, agents, title companies, sellers and buyers included.
Experts agree that many victims, especially those on the industry side, are hesitant to report instances of fraud, fearing the reputational impact it could have. It is estimated that only 15% of all fraud is actually reported.
It’s important to know that you can fight back against wire fraud with your vigilance and attention to detail. Always examine requests for transactions in the real estate buying process closely. Confirm requests with a conversation with your lender or others involved in the process, and watch of phishing scams or suspicious attachments that might compromise your network.
Working with a real estate attorney you can trust goes a long way in providing peace of mind on your homebuying journey. Learn more about Borders and Borders attorneys to ensure your transaction is safe and efficient.