Wire fraud is here and doesn’t appear to be going away anytime soon. Frank McKenna, Chief Strategist for PointPredictive, a machine learning company that focuses on solving application fraud risks across several industries, asserts that wire fraud is a whopping $30 to $50 billion problem annually and is reaching historic levels here in the U.S. and around the world.
The FBI claims that the number of wire fraud scams reported by title companies spiked 480 percent in 2016.
If you are in the mortgage industry or involved in a real estate transaction in any way, you are at risk. Consider these statistics:
According to Reuters, the number of business-email compromise cases rose from 22, 143 to over 40, 000 from May to December of last year. U.S victims rose from 14,032 to 22,292.
Wire fraud schemes are evolving at a frightening pace. The threat is difficult to track, sophisticated, and wide spread.
The scam is growing because of how simple the process is. There are 3 basic steps:
1.Phishing Phase – Online hackers usually in Russia or The Ukraine will blast phishing emails out to small companies. Once opened, the computer will become infected with malware, a software that is intended to damage or disable computers. This allows the hackers to gain access to the network.
2. Account Takeover–From here the hackers go after the CEO or CFO’s email access and search for prior wire requests. Once found, they copy those same email requests and send them to companies the UK and Hong Kong.
3. Money Muling – Money Mules than receive the money into their accounts and funnel it back to the hackers or criminal organization.
Some criminals are now using tools like phone porting technologies to disguise their phone numbers into appearing to look like those of authorized parties to the transaction. Joseph Murin from HousingWire claims that even “call and verify” is no longer a guaranteed way to prevent wire fraud. So what can you do?
ALTA is working with industry groups to increase awareness about wire fraud and identify best practices. Daniel Mennenoh from The Hill reports on a few helpful ALTA tips:
“Real estate and mortgage professionals should alert home buyers at the outset of the transaction to never open unsolicited links or attachments, to avoid sending any sensitive financial information by email and to use an independently-verified phone number to confirm wiring instructions for their earnest money deposit or down payment.”
Along with these helpful suggestions, simply educating yourself on wire fraud schemes and becoming aware of these evolving techniques can help you to recognize when you have become targeted.