Beware of Real Estate Scams
Updated: May 2, 2022
August 16, 2019 – Sarah Vance
Online Money Transfer Scams are Rampant in Real Estate Industry
All Buyers, Sellers, and Real Estate Professionals should be informed and capable of conveying the truths behind the scams facing real estate transactions.
Electronic Funds Transfer
Wire fraud scenarios happen seamlessly. For example, just imagine, a hacker embeds a small attachment or virus into an non-suspicious email. When the recipient of the email, agent or client, opens this email a program is automatically implemented onto their computer. Then copies of agent, client, escrow, and title email communications are received by the hacker. When the time comes for a buyer’s funds to be wired to escrow, the hacker simply must switch the escrow account number in the escrow instructions to their own account number. Following the altered escrow instructions, the buyer completes the wire transfer into the hacker’s account. At the point when the parties figure out what happened, the money is gone and becomes almost impossible to recover. Hackers are using advanced and technologically savvy methods to maneuver and deceive people. For more information on countermeasures and reducing the risk of real estate wire fraud please read here.
Another version of real estate scam comes to agents and clients alike in the form of an escrow façade. The industry has seen an uptick in these cases where both agents and clients have been victimized by what is being coined as escrow fraud. An example of this scenario is when the listing office and brokerage may request clients to use their own, in house escrow company as part of the terms listed in the purchase agreement. The clients then deposit their earnest money deposit (EMD) into the requested escrow account. After collecting EMD on several transactions, the escrow company disappears. By the time the agent or clients realizes the scam, the money is gone to an undisclosed offshore or personal account.
Today’s real estate transactions often involve the wiring or electronic funds transfer (EFT) of money to complete a deal. We want to remind all real estate professionals that escrow, wire, and EFT fraud is still a current crisis in the industry even with growing awareness surrounding the scams. Here are some tips to ensure that you and your clients are protected from this kind of criminal activity:
When possible, use alternatives such as cashier’s checks. For smaller transactions, make the payment in person by check or credit card. Always receive the receipt for your records.
Obtain phone numbers and account numbers of real estate agents and escrow-holders at the beginning of the real estate transaction and use those numbers throughout the transaction.
Never act on a change of wiring or EFT instructions that you receive electronically (via e-mail) or via phone call. If you (or your client) receive an instruction change about wiring or EFT of funds, call the real estate agent or escrow officer and verify new instructions before sending money.
Do not send personal information (bank account numbers, credit card numbers, social security numbers, and financial details) by personal e-mail or text. Take steps to use a secure, encrypted site to send personal information, or provide this information in person.
Use established, reputable escrow companies. Do your research and due diligence!
If you (or your clients) are victimized, it is crucial that you or your client contact your depository institution and the Federal Bureau of Investigations (FBI) immediately in order to have a chance at halting the criminal transfer. File a report with the FBI by calling a local FBI office or reporting online at FBI Internet Crime Complaint Center. Their web site is: bec.ic3.gov