The events leading up to the closing of a new home are often both stressful and exciting. Finally, the day comes when you initiate a wire transfer of the closing costs as per the instructions you’ve received. You’re likely feeling a mixture of emotions consisting of relief, anticipation, and delight. Within mere moments, you will be one step closer to finally owning your new home.
But those exhilarating emotions quickly turn to confusion and a heavy weight settles in your stomach. When you check with the closing agent to see if the funds have been received, the agent is uncertain what you are talking about. After a few moments of communication with the closing agent, confusion turns to despair when you realize that you have actually wired the money to a scammer. You’ve lost thousands of dollars. What next?
Wire Fraud in the Real Estate Industry
Real estate wire fraud scam is a very concerning cybercrime that has been steadily growing, affecting over ten thousand people each year and costing them over $150 million in total. In fact, real estate scams have jumped exponentially over the last few years (over 1,000% since 2015) with wire fraud at the top of the list.
If you’ve been a victim of wire fraud, your dream of owning a new home can quickly become a nightmare, as there is often little recourse. Recovering your lost money has proven hopeless for many, but it is not altogether impossible, though the process can be time-consuming, exasperating, and difficult.
During this time, you may be wondering how you could have fallen victim so easily to this scam. Try not to beat yourself up about it — thousands of individuals just like you who thought they’d never be fooled by cybercriminals are taken advantage of each year by this very common yet highly sophisticated scam.
How Did This Scam Happen?
There are a number of different techniques a scammer might employ to engage in wire fraud, but the most common is simply impersonating your real estate agent, title company, lender, or closing attorney. This method is referred to as spoofing.
Spoofing occurs when a scammer manages to obtain the contact information and additional credentials of one of the above individuals or entities, and then proceeds to contact you via phone or email. The scammer proceeds to provide you with instructions on how to wire the closing costs to proceed with the closing.
However, the funds are actually going to an account owned by the scammer, which is typically an overseas account, making it much harder to track.
The instructions are typically written with a sense of urgency, as this will cause you to act quickly, without giving you time to think much. As an example, the email might say that the closing could be delayed or the house could even be lost if the closing costs aren’t wired immediately.
A legitimate looking email from someone you trust, with important details and instructions, isn’t bound to undergo much scrutiny, especially when you are desperate to complete the closing after a tedious mortgage process.
And this is exactly how scammers continue to victimize and steal money from thousands of individuals just like you.
What Can I Do If I’ve Been Scammed?
Not everyone who has been scammed via real estate wire fraud can recover his or her funds. But that doesn’t mean you shouldn’t try. The first thing is to avoid panicking and instead follow a series of actions as soon as possible once you realize you’ve been a victim of a scam.
Request a Wire Recall
Once you know that you’ve been scammed, or even if you suspect that you sent money to a party that wasn’t who you thought they were, contact your bank or the wire service you used. Explain what has occurred to the contact and request a wire recall. If you act quickly enough, it is possible to have the funds returned before they are lost for good.
Contact the FBI
The FBI’s Internet Crime Complaint Center deals with real estate wire transfer fraud. Submit a report via their website, being sure to include as much detailed information as possible. In many instances, the FBI might already be working on similar or connected cases, and your information may help them further succeed in tracking down the scammers. This was the case with an individual in 2015 who initially lost over $180,000 on a real estate investment. The money was eventually tracked to an African crime syndicate and recovered.
Unfortunately, there is little else that can be done. However, there is plenty you can do to protect yourself and reduce the risk of falling victim to scammers in the future.
How to Protect Yourself From Wire Fraud Scams During the Mortgage Process
For starters, discuss the closing procedures in advance with your agent, lender, or the closing attorney. Being aware of how the closing is supposed to occur will help you to spot any red flags if you receive an email with different instructions. As an additional precaution, you can set up a password with the parties involved that can be used to confirm your identities during communications.
Keep a record of all the contact information pertaining to each party involved, and compare it to the contact information contained with each email or phone call. If there are any discrepancies, even in how the look of an email appears compared to previous emails, you may be able to identify a probable scam before falling victim to it.
Any communications with changes to the initial closing details are also a red flag. Rather than clicking on any links within an email or even replying to an email, use the contact information you have written down to communicate with your trusted parties to verify that the information is correct.
The best way to communicate to ensure you are speaking with a trusted party is either via phone or in person. Do not use phone numbers contained in the email if they are different than what you have written down. Scammers can spoof phone numbers as well to call you, pretending that they are a contact from your lender’s office, for example.
Keep Financial Information Secure
The mortgage process involves a lot of email communication, which is fine, but you should avoid sending any financial information via email if possible. Scammers can use phishing emails to hack the email accounts of lenders, title company contacts, and real estate brokers. If they have access to those emails they can discover a wealth of personal and sensitive information related to your real estate transaction and use that to further their efforts or even commit identity theft.
This is why those in the real estate industry must also be vigilant in ensuring that they engage in secure communications with their clients. It is also important to make every effort to recognize and avoid falling victim to phishing emails, the primary method use by scammers to commit real estate fraud.
Use a Secure Payment Service
Real estate brokerages and title companies should also utilize a secure wire transfer service such as Paymints.io. A fully electronic, secure, and compliant money transfer platform, Paymints.io saves borrowers, buyers, sellers, and real estate agents time and money and significantly reduces the risk of wire transfer fraud. Visit Paymints.io today to learn more about how you can complete closings more safely with your clients.