Be alert against real estate cyberfraud

Although consumers have long been warned about online phishing schemes, a new type of cyberfraud targeting potential homeowners is on the rise, and it’s affecting Realtors, real estate brokers, title companies, closing attorneys, and homebuyers and sellers across the country at alarming rates.

Real estate cyberfraud often begins when a criminal hacks into an email account and obtains information about an upcoming real estate transaction. Communications between parties are monitored, and the criminal is able to estimate when closing will occur.

As closing approaches, the criminal sends fraudulent emails to the buyer, posing as an escrow agent. These emails appear to come from the buyer’s title company, real estate agent or loan officer, asking them for a down payment or other financial obligation required for closing. The emails include instructions for wiring funds to an overseas account that is controlled by the criminal and out of the jurisdiction of U.S. law enforcement. Some victims have lost entire life savings in these scams.

According to FBI reports, there was a 438% increase in attempts of cyberfraud from 2016 to 2017, and those scams involving real estate transactions have resulted in a loss of $1.6 billion in the U.S.

Even among local real estate agents and entities, there have been reports of persistent attempts to access client funds during real estate transactions. For criminals, real estate wire fraud is a lucrative undertaking because transactions involve large amounts of money and the criminal receives immediate payout. The use of online banking and electronic real estate contracts have made buyers and sellers vulnerable to being taken in by these schemes.

“This crime has been such an epidemic,” said Mike Brown, senior vice president of Security 1st Title.

Businesses are doing their part to curb the epidemic by training their agents to be aware of these scams. Agents and brokers have begun to include disclaimers on their email signatures informing clients that they will never email wiring instructions, and Realtors associations are including warnings about cyberfraud in residential real estate contracts.

Brown says there are steps the public can take to avoid falling victim to real estate cyberfraud as well.

“Stay in touch and communicate with the agent and title company,” said Brown. “Before they wire funds, contact the Realtor or title company closer to verify the instructions they received via email.”

He emphasizes that it’s important to verify the phone number of the agent or title company being used for the transaction with the phone number on the email as well. Never rely on the accuracy of the phone number given in an email requesting money.

The Sunflower Association of Realtors offers the following tips to protect against cyberfraud:

• Be on guard: Homebuyers should be aware that they may be a target for scammers and verify any suspicious requests they get.

• Require a wire fraud alert form notice: Realtors should require buyers and sellers to sign a document alerting them to the problem of real estate cyberfraud as part of their contract.

• Never use email or other forms of online communication to change wire instructions: Be aware that parties to a real estate transaction rarely change wire instructions in the course of the transaction.

• Don’t forward wire instructions to any other parties.

• Verify wiring instructions: Call the party who is receiving the funds directly and verify the bank routing number and account number.

• Avoid using the phone number on the wiring instructions: Use phone numbers you have used before or verify the phone number of your agent through a directory.

• Don’t send a return email to verify instructions. The email address may be incorrect or the email may be intercepted by a criminal.

If you do find yourself the victim of real estate cyberfraud, Brown says, contact your Realtor and bank immediately after the crime is discovered.

“The quicker you notify the bank, the more likely you can recover your money,” Brown said.