Who Investigates Wire Fraud?

Wire fraud is certainly not a new crime, but incidences of wire fraud have been growing exponentially over the last few years, especially in the real estate industry, a particularly attractive target for hackers, identity thieves, and cyber criminals. In 2019, according to FBI data, there were nearly 12,000 victims of real estate wire fraud, almost a 50% increase over the previous year.

Identity thieves and cybercriminals have been able to succeed in their criminal endeavors thanks to thousands of instances of compromised email accounts — accounts owned by real estate professionals, closing attorneys, and title agents. The scammers who manage to hack into these accounts acquire sensitive and personally identifiable information and use it to impersonate the real estate professional, subsequently providing false wire transfer instructions to the unsuspecting victim.

The FBI, reporting that consumers have lost over $220 million in wire fraud schemes in 2020, normally investigates such scams, which are covered in the United States under U.S. Code, Title 18. In cases where wire fraud is committed using interstate wire communications, as many often are, the Department of Justice may also claim jurisdiction on the case.

In larger cases where a group of scammers is suspected or a single individual has committed multiple counts of wire fraud, multiple agencies may be involved, such as the IRS or lesser-known agencies, including state and local authorities.

What is the Penalty for Wire Fraud?

Wire fraud is considered a federal crime, and penalties for committing wire fraud could be up to 30 years in prison, as well as fines up to $1 million. Additionally, the state in which the wire fraud was committed may also move to file charges against the scammer as they are also likely to be in violation of state or local laws, subsequently facing criminal hearings in the state.

It should also be noted that each incidence of wire fraud, whether successful or not, is considered a separate offense. Therefore, a person who committed 3 counts of wire fraud could have to pay fines and face jail time for each separate charge, i.e. up to 90 years in prison and $3 million in fines.

Wire Fraud and Real Estate

Because so many real estate transactions utilize a wire transfer to pay for things such as earnest money deposits, closing costs, and other fees or payments, it has attracted a lot of attention from hackers and cyber criminals. Using old-school techniques to modern phishing emails to malware and other sophisticated strategies, cyber criminals take advantage of vulnerabilities in a network or the trusting nature of an individual that doesn’t recognize a phishing attempt.

With newly acquired sensitive data and private account information, they can engage in any number of cybercrimes, such as identity theft, tax fraud, and, of course, real estate wire fraud.

If You Suspect Wire Fraud

If you believe your account has been compromised or sensitive data has been stolen, and/or if you suspect attempted wire fraud, you should first contact the bank. In some cases, it is possible to reverse the wire transfer if you act quickly enough. You should also quickly change the passwords for any accounts you think may have been compromised.

Then, contact the Federal Trade Commission at 1-877-FTC-HELP (382-4357), or online at www.ftc.gov. Because private information may have been obtained via the Internet, you can contact the Internet Crime Complaint Center at www.ic3.gov.

You can also submit a report at contact the FBI’s Internet Crime Complaint Center.

How to Avoid the Risk of Wire Fraud

With some simple security protocols and awareness, you can avoid a data breach by hackers as well as advise your clients on how to reduce the risk of wire fraud during a real estate transaction.

Passwords

For starters, always use strong passwords for private accounts, and a separate password for each account. Cyber criminals often gain access to an individual’s many different accounts because people commonly use the same password for all their private accounts. This greatly facilitates a hacker’s efforts and aids in a successful data breach. That’s why cybersecurity experts continuously recommend using different passwords for every account.

Understandably, it can be difficult to try to remember a multitude of passwords for different accounts, but you can use a password manager to help you keep track of them all. With a good password manager, you can not only easily generate strong passwords for each account, but you’ll only need to remember the password for the password manager itself. This will definitely serve to improve your security, because even if scammers and cyber criminals manage to get a password for one account, they won’t be able to use it to log into other accounts.

Be Aware of Phishing Emails

Phishing scams are one of the leading causes of a data breach. Recognizing a phishing attempt can definitely help to reduce the risk of a data breach. When working with your clients, it would be prudent to pass along this information so that they don’t accidentally fall victim to a hacker’s attempt to infiltrate their email account and other private accounts.

Always Verify Information Over the Phone

Receiving instructions via email for wiring funds for earnest money deposits, closing costs, and other payments related to real estate transactions is fairly common. But as an extra precaution, such instructions should always be verified over the phone or even in-person. This eliminates the risk of false information being used for wire fraud by imposters pretending to be a closing agent or another real estate professional.

Keep a record of everyone’s contact information when you first acquire it, and instruct your clients to do the same. This ensures everyone can easily verify important information with each other if anything ever appears suspect.

Try to Avoid Emailing Financial Information

In general, it is best to keep sensitive financial information out of an email chain. Of course, many documents are often transmitted via email these days, so this can be someone of an impossibility. However, you can work with clients, lenders, and other real estate professionals to set up a system that encrypts documents and email messages, ensuring they can only be opened by an additional, secure password method, such as 2FA.

Use a Secure Electronic Payment System

Instead of using wire transfers to have funds and payments sent to the respective parties, opt for a secure ACH transfer system instead. For example, many real estate agencies and professionals utilize paymints.io, an electronic money transfer system designed especially for the real estate industry.

ACH transfer platforms are much more secure than wire transfers since they follow different security protocols for the sending and receiving of money. Additionally, paymints.io utilizes advanced, bank-level encryption tools and ID verification to ensure that individuals sending or receiving money are exactly who they say they are, significantly eliminating the risk of wire fraud.

Keep up to date on the latest topics in the real estate industry related to buying and selling, and other news and other informative topics by visiting various online forums and blogs that offer useful information and resources.

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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