Wire fraud is on the rise. Here’s how to protect yourself and your real estate transaction.
There’s been a lot of talk lately about fraud of all kinds. We now have chips in our credit cards, two-step authentication to make sure our accounts aren’t hacked, and lately my email has been blowing up with notices about a new kind of fraud that’s been happening in real estate transactions — wire fraud.
Here’s what’s happening: criminals are hacking email accounts and finding out the individual is involved in a real estate transaction. They then send emails that appear legitimate to that individual telling the recipient false information for where they need to wire their funds. Many of these emails are being received after the transaction has started, and the buyer needs to wire funds for the close of escrow. That amount is typically their 20% downpayment minus their deposit. On a $500,000 purchase, that’s likely between $85,000 and $100,000!
As a result, hundreds of thousands of dollars have been lost by homebuyers, and the situation leaves them scrambling to try and retrieve their funds and save their transaction. It’s the very nature of wire transfers, though, that once it’s gone… it’s gone. Real estate companies are now being asked by title companies to get the word out about this problem and to let people know what they can do about it, so I wanted to sit down and blog about it today.
TIPS TO AVOID WIRE FRAUD
- At the beginning of your transaction, make sure to retrieve the name and contact information for your escrow officer. After you get that information, do not use any other phone number to contact your escrow officer.
- Even if you get an email from your escrow officer telling you the wire information, make sure you call him or her prior to initiating the wire at the number you got at the beginning of the transaction. You’ll want to verify, over the phone, the account numbers you received, as well as the amount of the wire needed to close escrow.
- Any legitimate title company is going to have their own website domain accompanied by their own hosted email service. If you receive an email from a Yahoo, Outlook, Hotmail, or Gmail account, this is NOT going to be a legitimate title company and you should disregard the email.
- Title companies will always have a trust account in their name that you will be wiring funds to. If you get asked to wire funds to any organization or account that doesn’t include the name of the title company you are using, you can bet this is fraud.
- Do not send personal information over email or via text. Always provide your personal information either in-person or over the phone.
- Make sure your own system is secure. Don’t handle your banking transactions or provide sensitive information like financial data or passwords over free or public wi-fi networks at places like coffee shops, etc.
Here’s the biggest thing: purchasing a house can be a long road with dips, bumps and turns, but when it comes to wiring funds into your escrow company, there should be no surprises. If you get a call with a sudden sense of urgency that your money has to be in “right now”, this should be a significant red flag. Do not send the money! Instead, call your agent and then call your escrow officer and verify the information you received with the information you’ve already been given.
Our office is proud to refer business to both Fidelity National Title in Walnut Creek, and Orange Coast Title in Pleasanton. Both of these companies use encrypted email services that require extra steps to see your correspondence, but that’s sometimes necessary to protect your personal information and privacy.