The Growing Threat of Wire Fraud
One of the most pressing threats facing our industry today is wire fraud. This sophisticated form of cybercrime can lead to devastating losses and prolonged legal battles, often targeting the most trusting parties in a transaction: the clients.
What is Wire Fraud:
Wire fraud involves the use of electronic communications—such as email, phone, or text—to deceive and defraud both individuals and companies of their money. In the context of real estate, fraudsters will gain access to communications with a client and send fraudulent wiring instructions attempting to redirect funds into their account.
How it Happens:
Wire fraud in real estate often involves email spoofing or hacking. Fraudsters will monitor communications between escrow officers, real estate agents, and clients. At critical moments in a transaction, like right before a large transfer of funds such as an earnest money deposit or final closing payment, the criminal will impersonate a trusted party and send updated wire instructions to the client.
These emails often look nearly identical to legitimate communications, complete with company logos, familiar signatures, and matching language. Because of this, unsuspecting clients may follow the instructions and send hundreds of thousands—or even millions—of dollars to a fraudulent account.
Red Flags for Clients
Clients should be on high alert for these signs of potential wire fraud:
- Last minute changes to wiring instructions
- Email addresses that are slightly off (e.g., john.dow@escrowcompany.co vs. john.doe@escrowcompany.com)
- Urgent language calling for immediate action
If a client receives communication that seems suspicious or rushed, they should call the escrow officer directly using a known, verifies phone number. Never use email addresses or phone numbers provided in said suspicious email.
Real-World Consequences
Victims of wire fraud often face irreversible financial losses. Unlike credit card fraud, which has some built-in protections, wire transfers are difficult to trace and nearly impossible to reverse once processed. If the money lands in a foreign bank account or is withdrawn quickly, recovery becomes even more unlikely.
To Prevent Wire Fraud, Clients Should:
- Verify wiring instructions by phone with the escrow officer before sending any funds.
- Avoid clicking links or downloading attachments from suspicious emails.
- Set up two-factor authentication for all email accounts.
- Request a secure communications method from escrow company.
- Monitor their bank accounts for any unusual transactions immediately after wiring funds.
Wire fraud is one of the most dangerous and costly threats in modern real estate. It is crucial for clients to pay attention and keep an eye out for suspicious attempts at communication. By staying vigilant, verifying all instructions directly, and understanding the tactics fraudsters use, clients can better protect their investments.
