Closing day has finally arrived and you receive an email. It appears to be from your real estate agent, they are friendly and conversational, the email has their signature, their company’s branding, their headshot and their name. They tell you “make sure you wire your funds to XXX account immediately or your closing may be delayed.”
You don’t realize that the email came from Katiesmith_realtor@brokrage.com and not Katiesmith_realtor@brokerage.com. All of your life savings are about to be wired into a hackers off shore account. The money is long gone by the time you verify with your bank.
This is a typical Real Estate Wire Fraud scenario, it’s quick, thoughtless and happens in a matter of minutes.
Thousands of unsuspecting homebuyers fall victim to schemes like this every year. According to the FBI, losses in 2017 exceeded $1.4 billion. The real estate sector alone had more than 9,600 victims lose over $56 million. The FBI also reports that only an estimated 12-15% of all fraud is reported. These figures are likely much higher.
This type of Cybercrime is referred to as a “Business Email Compromise (BEC).” Business Email Compromise scams work often in this way. A fraudster will send the real estate agent or real estate professional malicious software known as malware. Malware can infect your computer in many ways, most commonly it is sent in an appealing “click here for..” link.
The fraudster can then monitor the professionals email and watch for upcoming transactions. Once closing day arrives, the fraudster will send the buyer an authentic looking email on behalf of the real estate professional. In some cases, the fraudster will even follow up with a phone call to assure the buyer it is legitimate.
According to Proofpoint’s Quarterly Threat Report, Business Email Compromise (BEC) attacks have seen an explosive 476% growth between Q4 2017 and Q4 2018.
The payment for these criminals is immediate and the funds are gone forever. It’s a devastating loss.
Just last year, a Kansas federal court upheld a jury verdict that determined a real estate agent was 85% responsible for the buyer’s losses. This occurred after the buyer transferred money to a fake account when the agent allegedly forwarded the email containing fake wiring instructions to the buyer. The loss was a total of $196,622, in which the agent had to pay $167, 122.
While these schemes are sophisticated and hard to identify, there are steps you can take to protect yourself.
The FBI recommends that you verify all wire instructions face-to-face or over the phone. The FBI also lists a few other techniques that many businesses have adopted.
Most importantly, educate yourself and your staff on real estate wire fraud. Make sure everyone knows the signs and the protocols. Have monthly meetings that go over new schemes, new warning signs and verify that the whole team knows what to do if they suspect that a fraudster has targeted them.