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Wire Fraud When You’re Wired to Close - Tips for Identifying and Avoiding Wire Fraud in Real Estate Transactions
Friday, 26 June 2020
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Published in Firm Blog

Wire Fraud When You’re Wired to Close - Tips for Identifying and Avoiding Wire Fraud in Real Estate Transactions

You’ve finally found it – your dream home. This is the place where you are going to settle down, raise a family, and grow old with loved ones. The starter home you purchased when the market was low finally paid off. Timely mortgage payments and sweat equity have produced surprisingly high sale proceeds for which even Warren Buffet would give you a pat on the back. That first foray into real estate and those proceeds gave you the wherewithal to snatch up that dream home.

It is the day before you close on your dream home. You’ve been restless for days because you cannot stop thinking about what color the living room is going to be and which kid gets the bigger room. You get an email from the title company (your realtor is copied) stating that there are new wiring instructions and you need to send your down payment per the new wiring instructions. The realtor and owner of the title company in your little town knew you when you were just a kid so you naturally trust them. You don’t think twice about the new wiring instructions and initiate the wire.

You show up the next day for closing and the closing agent says you can’t close until your funds are wired. You have just discovered you are part of an unfortunately growing statistic – victims of wire fraud.

Wire fraud and hacking, to put it mildly, are rapidly increasing. The most common scenario begins with a hacker infiltrating the email account (via a “phishing” email) of an unsuspecting title company employee, realtor, lender, or yourself. Once hackers gain access to one of these individuals’ email, new but fraudulent wire instructions are then sent at the last minute from an account resembling that of a trusted party to the transaction. The soon-to-be wire fraud victim is none the wiser and sends the funds per the fraudulent email instructions. The funds are then diverted to the hacker’s international account instead of the intended recipient and are gone forever.

How do you safeguard against wire fraud?

1. Be suspicious of new or changed wire instructions. Wire instructions rarely change in the course of a transaction. Always call to verify wiring instructions (using a phone number obtained independently from any last minute email) and also verify receipt of funds immediately after sending.

2. Beware of “phishing” scams. Hackers infiltrate emails using “phishing” scams. Unsuspecting victims of these scams receive an email with an attachment or link that the unsuspecting user clicks on, thereby granting access to the user’s email account. Hackers then monitor that email and strike when the time is right (usually at the last minute). Be suspicious of any attachments or links in emails. Verify the sender’s email by calling the sender from a number obtained from a web search or use one already known and trusted.

3. Use Encrypted/Secure Email. Use encrypted/secure email for any and all sensitive information. Even if you get an email purporting to have an encrypted/secure link, make sure it is from a known and trusted source. Call the sender to verify the email and attachment.

4. Never transmit financial information via email. Financial information should only be communicated via phone or traditional mail.

5. FBI Financial Fraud Kill Chain. If you are the victim of wire fraud, notify your financial institution and local FBI office immediately as they may be able to initiate processes to stop the wire and recover your funds.

All parties to your transaction must stay ever vigilant to guard against wire fraud. This information can undoubtedly be scary. However, it is not intended to take the fun out of the home buying process, but rather to keep you and what is most likely your largest investment safe. Think of it like riding a bike. If you keep your eyes peeled, stay in your lane, and wear your helmet, everything will be fine and you will enjoy the adventure.

If you or anyone else involved in your real estate transaction has any questions regarding wire fraud or anything else, the team of attorneys at Lynn, Jackson, Shultz, & Lebrun, P.C. are here to help.

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