Trends In Wire Fraud
Wednesday, August 27, 2014
By Ryan P. Carbery, Esq.
It seems like criminals create new methods to commit real estate fraud with every blink of the eye.
For example, cashier’s checks had long been deemed a safe way to fund a real estate transaction. Then, because of so many fraudulent checks duping the systems in recent years, closing agents began to unanimously require funds over a certain dollar amount to be wired directly into their accounts.
Now, unfortunately, just because those funds are safe inside a closing agent account it doesn’t mean that criminals have given up on trying to get their hands on them.
Criminals use a variety of scams to misdirect closing funds to their accounts. They fraudulently misrepresent their identity. They hack into email accounts looking for upcoming closing information and use that information to ask for funds. This latter scheme even has several nuanced variations, for example:
1: The criminal poses as the buyer and sends an e-mail to the closing agent requesting return of earnest money deposit, or poses as a seller placing a change of wire information for the proceeds.
2: The criminal poses as the REALTOR® and contacts the closing agent with wiring instructions for where to wire the commission.
3: The criminal poses as the closing agent and attempts to induce the buyer or real estate broker to wire the earnest money deposit to a false account.
4: In a recent twist, the criminal poses as the closing agent and contacts the lender and give fraudulent wiring instructions of where to send the financed funds.
The e-mails that criminals sent often look completely legitimate and contain the relevant party’s correct name, contact information, logos, etc. They are even able to gain server access and monitor e-mail traffic about closings until they have enough specifics to craft a fraudulent correspondence designed to misdirect the funds.
To reduce the risk of fraud, REALTORS® should:
• Monitor your e-mail traffic closely and be on the lookout for unusual e-mails and replies to e-mails that you did not send.
• Contact your IT department to ensure that your company is up to date with the tips and technology to combat cybercrime.
• Verbally confirm wiring instructions with parties involved, using previously established contact information. It’s a red flag when wiring instructions are changed during the closing processing stage. Be wary of revised wiring instructions and any revised contact information that comes with it.
Ryan P. Carbery, O’Kelley & Sorohan, Attorneys at Law, LLC, is a member of the ORRA Affiliate Forum.
Affiliate Advice articles are provided by the ORRA Affiliate Forum as a service to ORRA members. Advice is not a substitute for individual consultation and should not be relied upon in specific situations without consulting a professional.