Imagine that you are getting ready to buy a home. You looked for it, found it, negotiated on it and went through all the hoops necessary to close. Just prior to closing, you get an email from what you think is the escrow company with instructions to wire the necessary funds to close into their account. You then go to your bank and follow the instructions, only to find that the instructions you received were really to an account somewhere in Eastern Europe and the funds you sent were now lost, never to be recovered. Sound too crazy to be true? Think again, this is a real life story about a couple who wired approximately $500,000 into a hackers account. They lost it all.
Wire fraud has become a rampant problem across industries, but especially in real estate. It goes something like this. Hackers are able to break into the email correspondence between buyers/sellers and the escrow companies that are closing their transactions. By achieving what is called “Business Email Compromise” scammers send emails to the victims that appear to be from the escrow company. For example, an email might come from Peggie@Sunshine-Escrow.com when it should come from Peggie@SunshineEscrow.com. Not noticing the small difference in the email address, the victims follow the wiring instructions that lead right to the hacker's accounts. Unfortunately, there is nothing that can be done once the funds are sent, they are simply lost.
According to Ryan Kalember, senior vice president of cybersecurity strategy for email security company Proofpoint, attempts at this type of crime have risen to a level 14 times higher than last year. According to CNBC, the FBI has also warned that email compromise schemes are spiking and hackers are limited only by their imaginations.
So what should you do to protect yourself? First of all, if you are buying or selling real estate, you should never accept wiring instructions over email or online. My recommendation is that you receive said instructions over the phone, directly from the escrow company. At the very least, call escrow to “voice verify” that the instructions you received are correct. Or better yet, limit how much wiring of funds that you actually do. I always direct my clients to bring a cashier’s check in to escrow with earnest money deposits or funds to close whenever possible. I know that this creates an additional step, and wiring can be so much easier. But we are talking about thousands of dollars here and the extra time spent is worth every penny, so to speak.
Be Real,
Blair