It's funny how criminals trying to take money from the unsuspecting keep finding new technology and digital communications to allow such schemes as wire fraud to fool even the most vigilant victims. Digital crime has grown exponentially as more and more business is transacted via e-mail, text or through other digital communications. According to breachlevelindex.com
, the total number of hacks compromised in the first half of 2018 was over three billion records. That represents a one year increase of 72 percent. One crime that keeps popping up in the real estate industry is closing transaction wire fraud. And it can seriously compromise a Hudson Valley home buyer's house closing and bank account.
How it works: The Hook.
Cyber-criminals infiltrate the email of one of the parties involved in a real estate transaction. This can be accomplished by several means. Some use "phishing," getting a buyer, their real estate lawyer or lender representative to take the bait and click on a link the criminal sends them in an email. This "click" automatically loads a program into the victim's computer that allows the crook access to the victim's email account.
Another trick is to get into the email of someone doing business over free Wi-Fi. Criminals can set up their own "free" WiFi sitting at a public cafe or bar, airport or anywhere people use their smart-phones and computers. When someone wanting to go online picks their WiFi, the crook can get access to their email, passwords or other sensitive data the user is sending out in wireless transmissions.
Once in, the thieves monitor messages in and out of the victim's email to get transacting info like closing dates, the property address, buyer's name, names of the brokerage, title company and financial institutions involved in the transaction.
Next Step: The Switch
When closing is imminent, a fake email is sent to the buyer. In it are wire transfer instructions. The message appears to be legitimate. It comes from the compromised email account, so it looks like the sender is one of the principals in the transaction. It includes relevant information about the transaction - the address of the property, selling price and other details. It is very convincing.
The victim, in most cases the buyer, follows the criminal's instructions and sends a wire transfer of closing funds such as a down payment to the criminal's account. And poof! That money is often gone. Once money moves offshore, there is typically no way to get it back. Banks rarely take responsibility for a wire transfer you authorized, even if you were tricked into it. Besides losing tens or hundreds of thousands of dollars - everything the buyer had to put toward the purchase of their home, the buyers now can't finalize the closing.
What can you do?
First, be aware that this kind of fraud happens, and not every communication you receive may be as it seems. If you receive an email message concerning wire transfers STOP. Don't trust any of the contact information in the email until you verify that it came from your lender, title company or attorney. Instead CALL YOUR BUYER'S AGENT, the one who is representing you in the transaction, and speak with them on the telephone to verify the status of your closing. Get the contact details for your wire transfer. Then CALL the actual recipient immediately before you send the funds to confirm the wiring instructions.
Person-to-person phone calls may sound old fashioned and can be cumbersome, but they are the only reliable way to defend yourself against real estate wire fraud.
As an additional preventative step, have your bank use voice verification or some other security measure before it wires your money anywhere. It may seem like a lot of bother, but it's also a lot of money, and worth protecting.