Wire Fraud and How to Avoid It

Buying

Notes: This article contains advice about how to avoid wire fraud and should not be considered legal or financial advice. The author assumes no responsibility for the accuracy or completion of this advice. If anyone has questions about wire fraud, contact your agent or a title company before making a transfer.

If you want legal advice you should get it from a lawyer. If you want financial advice you should get it from a financial adviser.

I hope you can see that wire fraud is a real problem in real estate, with new reports out every few weeks about it. It happens to ordinary, smart people, tricked by increasingly smart scammers due to the large amounts of money that can be had if they are successful.

What is Wire Fraud?

Simply put, wire fraud is the act of stealing money by wire (digital transfer). In real estate, it usually happens when buyers are making a purchase, and then scammers imitate emails from the title companies, giving them fake wire instructions, and then the buyers complete the wire transfer immediately before the actual transaction is supposed to close.

How do they find out the closing date and buyer’s information?

This is obviously the key component to wire fraud. They get this information in different ways, but most commonly

Phishing- the term for someone who sends out a real looking email that gets you to input your login information into another site. Most commonly used for email addresses to a site that looks remarkably similar in both the layout and the address to your actual email site, but isn’t. The rule of thumb here is: Never click a link in an email to login to anything. Always type in the address yourself.
Hacking- It’s possible that the scammers have either phished or hacked their way into the title companies servers to find the buyer’s contact details and the closing date, then send you an email with their wire instructions instead of the title companies. In some cases, they even were able to log in to the actual title company’s email servers and send from their actual email addresses.

Either way, the wire instructions will be out of country, usually to Eastern Europe or Africa, and this will never be the case with legitimate wire transfers.

If you have a question about your transfer, never rush. Just call your agent or title company at the publicly listed number for the company, never a number received via email or text.

How to Avoid Wire Transfer Fraud

Only transfer money at the actual title company office. Never click a link or follow instructions sent in an email.
If not signing in the title company office, they will send you instructions on how to wire money into their account and then you will have to wire remotely. In that case, never click a link in an email that takes you to another site.
If you have to log in to your bank account to transfer money, type the web address in yourself. Never click a link in an email.
Call the title company to verify all the routing and account numbers before making a transfer.
Never transfer money out of the country.
Regularly change your passwords to all your accounts including your email and your bank accounts before and during the real estate transaction. The vast majority of wire fraud happens through phishing for the buyer’s login information to their email, then secretly monitoring the emails throughout the transaction.
Never log in to your email or bank account on a public Wi-Fi. An agent did this recently in a Starbucks and inadvertently exposed his customers email address to a public server, and that was enough that a scammer imitated the title company’s email address and sent an email out the day before closing and the buyer’s lost all their money.

What to Do if You’re a Victim

Notify the bank, the FBI, the title company, and the agent right away. Don’t be afraid to report something right away before it is too late to get it back. Once the money has left the country, it is very difficult to recover.

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Closing Costs

Important Note: I am not a lawyer and none if this should be construed as legal advice. If you need legal advice, you should get

Closing Escrow

All repairs have been completed, the seller is moved out and all personal belongings are gone, you’ve done your Pre-closing Walkthrough, and it is time