If you’re buying a home or if you’re involved in any kind of real estate transaction, you need to be aware of a fast-growing cybercrime: Real estate wire fraud.
Both the FBI and the National Association of Realtors have issued warnings about this threat, which now claims thousands of victims per year in the U.S., who collectively lose millions of dollars.
What Is Real Estate Wire Fraud?
The way this crime works is simple to understand and unfortunately pretty simple for a cybercriminal to pull off:
- A cybercriminal gains access to the email account of a party regularly involved in real estate transactions – a real estate agent, a title company, a bank, a lawyer, etc.
- The criminal then monitors correspondence until an opportune moment presents itself, generally when a deal is about to close and funds need to be transferred.
- Then, either via email or even a phone call, the criminal impersonates someone involved with the deal and sends fraudulent payment instructions – usually regarding the down payment on a new home – causing money to be deposited into their own account.
Why Is Real Estate Wire Fraud Such a Growing Threat?
Two main factors are driving this trend:
- Low risk and high reward – Unfortunately, people involved in this kind of crime are not easily caught. What’s more, the crime is lucrative, with the median 30% down payment for a home in the U.S. currently coming in at over $67,000.
- Ease of execution – The Internet is an amazing thing, but it has made gaining access and information easier for criminals as well as for law-abiding citizens. From hacking emails, to spoofing web payment portals and phone numbers, cybercriminals have all the tools and tactics they need to help pull off this type of theft.
How Can I Avoid Real Estate Wire Fraud?
Especially since it’s so hard to recover losses in these cases – and because a loss like this likely represents your hard-earned savings, and hopes and dreams for a new home – it’s vital to do everything you can to prevent this crime if you’re involved in real estate. Here are some tips:
- Keep your wits about you – This is a crime that relies on the confusion, emotions and deadlines that often accompany real estate deals. Make sure to take your time and pay attention to all parts of the home buying process.
- Be suspicious and sweat the details – Especially if there’s an unexpected change – for example, in the personality of a person you’ve become accustomed to working with, in contact information, in the timing of messages or part of the transaction itself, etc. – be suspicious. Ask questions. Make sure that everything happening is legitimate.
- Confirm and verify everything with a phone call – Buying a home is one of the largest financial transactions most people will undertake in life. It’s worth the time to call your agent, the person you’re working with at the title company, etc. and make sure everything is correct – especially when the time comes for money to change hands.
Making the Complex Simple
Real estate cyber risks, particularly wire fraud, are becoming an even bigger problem.
For even more information on this topic, please see “Protect Your Money from Wire Fraud Schemes When Buying a Home,” a helpful video from the American Land Title Association.
If you believe you’ve been the victim of real estate wire fraud or even attempted fraud, the FBI requests you notify them through the Internet Crime Complaint Center (IC3).
Besides the ways to prevent this crime described above, more carriers are beginning to offer personal cyber protection for this growing concern. Please call us at (989) 752-8600 to learn more about protecting yourself.
Saginaw Bay Underwriters has made every attempt to ensure this information has been obtained from reliable sources. Current as of: May 2021