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Real estate transactions are targets for wire fraud simply because we relied too much on the wire instructions received via email. 

In a nutshell - here's how the wire fraud scheme usually works:

  1. Hackers identify lenders and real estate agents as potential targets by
    navigating their websites and copying any personal or business information, including company logos, employee names, physical addresses, and email addresses of escrow agents, real estate brokers, and lenders. All of this information becomes useful in establishing a false identity in subsequent emails.
  2. The hackers then hack directly into the email accounts of the real estate agent and/or broker and identify emails referencing pending real estate transactions. From these strings of emails, the hackers pull out specific details about the deal, such as: the parties' names, the title company involved, the escrow officer in charge of the deal, and other information specific to the transaction.
  3. The hackers then use any gathered company logos, personal and/or business information, and transaction details to create a fraudulent email that looks legitimate on its face, and then send this fraudulent email directly to the buyer or lender, making it look like it was sent by the real estate agent, mortgage broker, or escrow agent. These fraudulent emails now direct the buyer and/or lender to wire the funds necessary to close escrow directly to a different bank account than provided in the escrow instructions. The new bank account is controlled by the hacker, not the title company or the escrow holder.
  4. Verify immediately upon sending your wire. Detecting that you sent the money to the wrong account within 24 hours gives you the best chance of recovering your money. 
  5. If the fraudulent email request is not caught by the buyer or lender, then the money is wired to the bogus account controlled by the hacker and is immediately withdrawn. Due to the amounts involved and the complex nature of investigating and prosecuting wire fraud, the odds are that the authorities will do nothing to help in these instances.
One way of combating this problem is for wire instructions and email communication to be be sent via encrypted email. There are other ways that we can be vigilant as well

Posted by Sam Kader on May 4th, 2018 8:45 AM

Wire frauds are on the rise. A hacker can break into a licensee’s email account (typically using phishing scheme) to obtain information about upcoming real estate transactions. After monitoring the account to determine the likely timing of a close, the hacker sends an email to the buyer, posing either as the escrow agent or as the licensee. The fraudulent email may contain new wiring instructions or routing information, and request that the buyer send funds accordingly. They could just as easily send an e-mail to the escrow agent posing as a Seller or a Real Estate Broker instructing the escrow agent to wire seller funds to different account rather than to the account provided at the signing. The wire instructions usually include legitimate American bank. However, once the funds are transferred, it will be wired out of the county. Once the money is out of the country, it is almost impossible to retrieve.

Here are steps to prevent you from becoming a victim:

1. Be sure to obtain, confirm and note the phone number and email address of both your real estate agent and escrow contact by direct phone call to them.

2. Review email instructions carefully and do not click on any links without confirmation that the email is from your escrow officer or real estate agent.

3. Always look closely at the email address of the sender. Be cautious of ANY variance in the sender's email address - for example JohnSmith@fnf.com is not the same as JohnSmithFNF@gmail.com.  When responding to an email, hit forward instead of reply and then type in the recipient's email address. 

4. Escrow company or the bank SHOULD NOT accept disbursement instructions or changes to disbursement instructions in the middle of transactions via e-mail. Should a circumstance arise that requires disbursement instructions be sent via e-mail, it must always be followed by contacting the client to confirm the information received using a pre-verified phone number.

5. Escrow company should always email wire instructions using encrypted email. If your client receives wire instructions via email - ALWAYS follow up with a phone call to escrow close before they wire funds. 

6. Pay attention to the wording of an email requesting funds. Many fraudsters are “offshore” offenders and their sentence structure may be broken and may contain misspelled words or improper grammar such as "routing number" as "routine number".

7. Beware of e-mail spoofing. E-mail spoofing is the forgery of an e-mail address so that the message appears to have originated from someone other than the actual source. For instance, you could receive an e-mail that you believe originated from your Escrow Closer or Broker because the e-mail address is the same as theirs (see item 3 above). However, if you click on the e-mail address it will disclose the true e-mail address of the originator. E-mail Spoofing is a common tactic used in wire fraud campaigns and if you are not familiar with the tactic you are very likely to follow the instructions contained in the e-mail, believing they came from the proper party.

8. Be wary of a sudden or urgent request for funds that were not anticipated or required as part of the transaction. Examples include a request for an additional earnest money deposit or extension fee that was not part of the purchase agreement.

9. Install effective malware on your computer an update it regularly (I use Norton security).

10. Think before you click on a link or open a zip file. If you don't know the sender, DO NOT click of open on it. This is how phishing scheme works. (If you feel that you've been hacked - disconnect all connection to the internet and consult with computer expert).

11. Do not use open/free/unsecured Wi-Fi, use strong, unique passwords along with using a secure authenticated email delivery system.

12. Avoid trigger terms as an email subject lines such as Proceeds, Payment, Funds, Wire Transfer, Account and Escrow.

Posted by Sam Kader on August 22nd, 2017 8:41 AM

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