Understanding Wire Fraud in the Real Estate Industry & How You Can Avoid It

The most important part of the American Dream is to have a home that you can call your own which is why buying a home is an exciting time for every individual. People use their entire savings to purchase a dream home for their family and cannot wait for the day they finally move in. However, recently the real estate market has been under the attack of various scammers that are involved in carrying out wire fraud schemes to rob potential homeowners of their money for the down payment. These criminals are known to target potential homeowners across the country, and the issue at hand lead the FBI to finally make an official announcement in May 2017 warning homeowners of the frequent scams.

The gravity of the situation is reflected by the information shared by Business Trial Group, a contingency free litigation firm which shows almost $1 billion in Wire Fraud schemes in 2017. Also, considering the significant impact of losses in victims of such schemes, an operation under the name of Wire Wire resulted in 74 national and international arrests. The operation was carried out for six months by the Department of Homeland Security, U.S Postal Inspection Service, and the Department of Treasury.

What is Wire Fraud?

If you are interested in or currently in the process of buying a home, you need to first educate yourself about the intensity and understanding of the wire fraud that exists in the real estate market today. Since this time in one’s life brings about many emotions such as fear and excitement, the scammers can target a great number of people. Also, because digital transactions are becoming more and more common in the real estate industry, it is easy for scammers to identify an opportunity. Just like all the other phishing scams, a wire fraud also starts with an e-mail. The scammers will hack their way into the system of the real estate agent, buyer, attorney and/or the title company’s e-mail account.

The criminals begin their planning way before the scam takes place. They keep an eye on the progress of the deal, and when they realize that the closing is near, they make their move. The hacker will send you an e-mail that will contain important information about the wire transfer. All this will be done while taking up the identity of the title company so that you do not have any doubts regarding the authenticity of the e-mail. Becoming victim to such fraud is extremely easy because you have already agreed upon the exchange of funds to be done via a wire transfer. Since the hacker has already seen the communication taking place, they use this information to make their move.

Tips to Avoid Falling Victim to Wire Fraud

Apart from remaining aware of the phishing scams that are common in the real estate market at the time of your purchase, you can also use some other tips to avoid becoming a victim of Wire Fraud. Here’s how:

Look out for Changes: If there are any sudden wiring instruction changes, you should verify by contacting everyone involved in the transaction. Generally, last minute changes are considered to be a major red flag since there is a standard procedure followed by every verified and authentic title company.
Identify the E-mail Addresses: Look at the e-mail addresses of the parties involved closely. Many times, hackers use an e-mail address that has a minor change which goes unnoticed by the buyer. To avoid this from happening, you can also choose to forward e-mails rather than replying since you will be typing the e-mail address yourself instead of replying to a criminal in an on-going email thread.
Use of Language: If you witness the use of poor English in communication, you should be careful since most of the scammers are located outside the U.S and do not have English as their first language.
Verification: At first, when you receive the wire transfer details call the parties involved to verify every detail. Verbal communication is essential in such transactions since you are at risk of losing a great deal of amount if a scam occurs. Do not accept a phone number that has not been mentioned on the company’s website or business cards.
Confirmation of Delivery: Once you have transferred the money, it is strongly recommended to call the agent or the title company to verify the receipt. This is important because if you identify a scam within 24 hours, you are more likely to recover your money.
Use of a Secure Portal: Rather than exchanging sensitive information over e-mails, it is recommended to use a secure portal that has been set up by the agent or the title company for involved parties to access.
Cybersecurity: All involved parties need to ensure that their systems are updated and have the latest high performing anti-virus software installed.
Seeking help from USPS: Instead of choosing digital communication, you can also decide on using regular mail for exchanging your sensitive information.
Setting up a Unique Identity: You can also set up a unique personal identification number that you can every time at the time of verification of information. However, setting up the PIN should be done either verbally or through other non-digital means.

To simplify for you the steps that can be taken to avoid becoming a part of a phishing scheme, there is a 3-step process below:

Bottom Line

Buying a house can be an overwhelming process. However, it is important that as a buyer, you remain focused at all times during the long process and take proper measures to ensure the reliability of every step involved. With so many potential homeowners losing their life savings by falling victim to such phishing scams, it is natural for you to feel demotivated and extremely fearful. However, by using all the useful information shared in this article, you can better equip yourself for owning your dream house without having to run into an unfortunate situation.