If you work in any part of the real estate industry, you’ve likely been warned about a dangerous practice known as wire fraud. According to the Federal Trade Commission, consumers lost an estimated 1.48 billion in wire fraud in 2018.
Wire fraud is becoming more and more common as those committing it come up with new victims to target. At one point, the only people experiencing wire fraud worked in big real estate companies or at investment firms. Now, however, everyone involved in the transaction might be a target—from the title insurance agent to the real estate agent, as well as the buyers and sellers they’re representing.
But, there’s no need to worry. All you have to do is stay alert when it comes to who you’re talking with, whether it’s over the phone or via email, and follow these tips.
How Does Wire Fraud Happen?
Hackers target everyone involved in a real estate transaction in an attempt to trick people into giving away their money—typically their down payment or closing costs.
When approaching a real estate transaction, fraudsters will gather information such as the involved title insurance agency, buyer’s agent, seller’s agent, buyer, and seller. They’ll find all of their contact information, including phone and email, in order to seem more convincing to the person they’re targeting.
Here’s an example: Sally is in the middle of closing on a home. One afternoon, she receives an urgent email from her escrow officer. The email says that Sally must wire her closing costs over to the title insurance agency immediately—or else she may delay her closing day even more.
Sally checks over the email, and it appears as though everyone’s contact information is correct. She doesn’t want her closing day delayed any more, so she quickly wires over the payment. After all, the email contained all the information related to her transaction, including the closing date, her agent’s email and phone, the seller’s agent’s information, as well as other sensitive information.
Unfortunately, Sally just lost an estimated 3% to 5% of the overall cost of her new home in wire fraud. Once she transferred the money over, the fraudster quickly transferred to an overseas account—making it much harder to trace and recover.
Protect Your Transaction from Wire Fraud
Sally is far from the only person affected by wire fraud. Fraudsters know that the best person to target in a transaction is the buyer—especially if it’s their first time buying a home.
While title insurance agencies and real estate professionals have a more thorough understanding of wire fraud, it’s important for them to educate their clients on staying safe and avoiding fraud.
What to Tell Your Clients
There are a number of preventative measures you can take to avoid wire fraud and protect your clients. As a real estate agent, title insurance agent, escrow officer, or lawyer, you need to give your clients some basic guidelines to follow during the course of their transaction. These include:
- Gather the official phone number and email address of everyone involved in your transaction and ONLY contact them directly through these channels.
- Never click on a phone number or email address within an email
- Use two-factor authentication on your email account
- Wire instructions will only ever come from your title insurance agent—not your buyers agent. Emails can be misleading, so double check that the wire request is legitimate by contacting your agent directly by phone. You may also be able to pay by cashiers check, depending on your agency.
- Be wary of any email that says RUSH or EMERGENCY. No legitimate wire transfer will ever be labeled as such.
Rely on a Professional Title Insurance Agency During Your Transaction
When purchasing a home, it’s important to work with an agency you can trust. If you’re in need of a thorough title insurance policy for your new home purchase, please don’t hesitate to reach out to us at Tryon Title.