How Common is Mortgage Wire Transfer Fraud?

Real estate agents need to be at the top of their game to efficiently manage a multitude of daily tasks and provide sufficient attention to client’s needs. Doing so can often be stressful enough, but there is also another element that rivals all in terms of importance and its impact. It’s real estate wire fraud, and it happens a lot more often than you might think.

What is Mortgage Wire Transfer Fraud?

Put simply, a scammer or cyber criminal obtains your contact information, or the contact information of a party involved in a real estate transaction, typically by hacking your email account. The scammer then convinces the buyer or one of the other trusted parties to initiate a wire transfer to a bank account under false pretenses. And by the time anyone involved in the real estate transaction realizes what has happened, it is typically too late — the money is gone and the scammer is never heard from again.

How Often Does Mortgage Wire Transfer Fraud Occur?

Each year, mortgage wire transfer fraud affects thousands of home buyers, real estate agents, title companies, and other trusted parties involved in a real estate transaction. In fact, the FBI’s Internet Crime Complaint Center states that real estate scams have increased over 1,000% since 2015, resulting in losses of $150 million in 2018, and $221 million in 2019. And, according to the FBI, consumers in 2020 have already lost more than that.

The large increase in cyber attacks, hacking attempts, and other crimes against the real estate industry is a result of cyber criminals realizing two things — there is a large amount of personal and financial information being sent back and forth between trusted parties in a real estate transaction, and many of those individuals, real estate agents, and others don’t take the proper cybersecurity measure to protect that information.

How Does Mortgage Wire Transfer Fraud Occur?

While the end result is usually the same, there are a few methods cyber criminals and scammers might attempt to commit this crime, ranging from simple, old-school practices to sophisticated cyber crimes.

More often than not, cyber criminals are able to commit wire fraud via phishing emails. Cyber criminals will contact trusted parties in a real estate transaction with an email that appears to come from a trusted source — either someone involved in the real estate transaction or another organization, such as a financial institution or even your email server.

The email typically contains a message of some urgency, prompting the recipient to act by signing into an account (really a cleverly disguised fraudulent website). Once this occurs, the cyber criminal captures the targeted victim’s username and password and subsequently gains access to a wealth of information.

By gaining access to even just one email account, a cyber criminal can then access acquire contact information, email addresses, phone numbers, financial information, bank account numbers, and more — everything they need to easily commit real estate wire fraud.

Other methods a scammer or cyber criminal might use include simply hacking into poorly protected databases at real estate agencies or a title company, or using hacked email accounts to impersonate one of the trusted parties. A cyber criminal with the stolen contact information and credentials of a real estate agent, closing agent, or title company can send new wiring instructions to the buyer, asking for earnest money or closing costs to be sent.

Unfortunately, the money is actually sent to a bank account set up by the scammer, which is often untraceable, leaving little chance for the money to be recovered once it is sent.

This can be a nightmare for everyone involved in a real estate transaction. And while you might think you can easily spot a phishing email, or that the chances of mortgage wire transfer fraud occurring during one of your real estate transactions are extremely rare, you’d be very wrong.

Savvy cyber criminals have a great deal of experience in this type of scheme, and have become very adept at impersonating real estate agents, the title company, closing attorneys, and other trusted parties. With access to any of those email accounts, the scammer can use legitimate contact information, closing costs and closing documents, and other items to make their fraudulent attempts look much more authentic, easily fooling thousands.

How to Prevent Mortgage Wire Transfer Fraud

Reducing the risk of mortgage wire transfer fraud is a group effort. Everyone involved in a real estate transaction must engage in strong cyber security measures, such as always using strong passwords, and being able to spot and avoid falling victim to phishing emails. Parties should always use the phone to verify banking information and wire instructions for earnest money and closing costs to authenticate the instructions in an email.

And, rather than utilize a wire transfer for closing costs or earnest money deposits, real estate agents can work with a secure ACH money transfer system. ACH transfers are much more resistant to mortgage wire transfer fraud, since the electronic money transfers move through a clearinghouse and are subject to much more scrutiny and regulations.

Additionally, an ACH transfer system such as paymints.io also utilizes bank-level encryption and advanced identification protocols to ensure each transaction is safe, secure, and engaged by individuals who are exactly who they say they are. Ease of use, real-time tracking, and convenience also makes paymints.io an ideal ACH transfer platform for the real estate industry.

There are, of course, other ways to further reduce the risk of mortgage transfer wire fraud. For example, you can elect to only discuss financial information and money transfer instructions over the phone. You can also learn more about the importance of Internet security and other actions you can take during a real estate transaction to keep your personal credentials protected by visiting various online forums and blogs that offer useful information and resources.

If Mortgage Wire Transfer Fraud Happens to You

If you or someone involved in a current real estate transaction has been a victim of wire fraud, the first step is to contact the bank that was used to initiate the wire transfer. If you do so quickly enough, there is a chance the wire transfer can be reversed.

Whether or not this occurs, you should also then contact the FBI’s Internet Crime Complaint Center at www.ic3.govto file a complaint. On occasion, the FBI has managed to track down perpetrators of mortgage wire transfer fraud.

And, make sure all parties involved in the real estate transaction change their usernames and passwords for their email accounts, and take steps to further protect other personal and financial information that a hacker can use to engage in identity theft.

To learn more about how using paymints.io can be safer and more secure than a wire transfer, as well as especially convenient for both you and the home buyer, schedule a free demo today!

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