Imagine this… You’re finally closing on your dream home, using more than $250k from the sale of your previous home as a down payment. You receive an email from whom you think is your real estate agent to wire the payment and complete the purchase, but within hours of the transaction your money has vanished from the account and cannot be recovered!
You have just become the victim of a spear phishing scam.
While it seems like a cautionary tale, this is the authentic story of Colorado couple James and Candace Butcher, whose misfortune led them to move into their son’s basement instead of their dream property. According to the FBI’s Internet Crime Complaint Center, nearly 10,000 people reported being victims of this kind of fraud in 2017 with losses over $56 million.
How could so many people become victims of such a preventable crime? It’s a lot simpler than you may think. Hackers attempt to phish victims every day by posing as trusted sources. They typically send phony electronic messages to targeted individuals in an attempt to trick them into revealing sensitive information. This may come in the form of an email, web form or phone message.
In the case of real estate fraud, a hacker may gain access to a company or realtor’s email account and search for home purchases ready for settlement. They will then create a fake email address that closely resembles the real thing (like adding a dot or extra letter), and impersonates the agent, instructing the customer to funnel money into their bank account. The email will seem personal and genuine, as the hacker can observe previous exchanges between the realtor and customers, and even include the correct signature and company logo.
On June 11, 2018, federal authorities announced a major effort to disrupt international cyber schemes designed to intercept wire transfers. Though the operation disrupted and recovered about $14 million in fraudulent wire transfers, the individual threat of cybercrime is far from over. Hackers have been stepping up their attacks on real estate transactions in recent years, raising the number of fraud victims 1110% and the amount stolen nearly 2,200% from 2015 to 2017. While real estate is just one business susceptible to email fraud, the loss can be particularly devastating for victims.
To protect yourself against cybercrime during your real estate transaction, you need to follow these tips for spotting an email scam, and learn what to do if you become the victim of fraud.
Signs of a real estate imposter email scam:
- The email address is not in your contact list or hasn’t been previously communicated with
- The email notifies you that previous wire transfer instructions were incorrect and provides new instructions
- The emailer offers an excuse for sending the wire transfer to a different account
- The emailer gives a phone number different than the one listed on your realtor’s website or business card
What to do if a hacker has targeted you:
- If you wire money and realize it was a fraudulent request, call the money transfer services complaint line or your bank and request a wire-recall immediately.
- Report the incident to the Federal Trade Commission and the FBI’s Internet Crime Complaint Center as soon as possible and provide all of the incident details. If your bank asks for a police report, give them a copy of your report to the FBI.
Best practices for safely completing real estate transactions:
- Be suspicious. It’s highly unusual for title companies to change payment instructions or wiring information
- Confirm all wiring instructions over the phone or in person using the phone number listed on a realtor’s website or business card
- Ask the bank to confirm the name and account information before sending a wire. Do not send any funds until you’ve double checked the accuracy of the account
- Verify immediately with your realtor to validate that your funds have been received
Remember that a wire transfer is an immediate form of payment. That means it is almost always irreversible, even when fraud is involved. Buying a house should be an exciting experience for you. Don’t let hackers steal the joy that comes from purchasing your next home.