Fraudsters continue to implement new strategies to divert wire transfers in connection with real estate transactions. One of the most recent schemes they’ve developed is a “gift card scam” in which real estate agents have been targeted. This is simply more proof that fraudsters continue to become more and more creative as we develop techniques and safeguards to stop their scams. This newest scam, along with the other two most prevalent scams that currently target our real estate industry, are set forth below.
1. Gift Card Scam
The FTC, banks and gift card companies are warning consumers of this new scam. You receive a call, email or text, asking you to purchase a gift card. The contact is made by someone posing as an IRS agent, technical support person, a family member, your pastor or minister, or even your boss. They convince you of a need to purchase a gift card. In the recent scam involving real estate agents, someone posing as their Broker may convince them of the need to purchase two gift cards for an upcoming meeting with clients. An example of the e-mail will read: “Please let me know when you have them. I need the gift card numbers and the PIN for each. I will make sure you get reimbursed.” Gift cards are one of the favorite ways for scammers to steal money. Why? They don’t need the actual card, just the numbers from the back. The information, once provided, is like giving cash and is nearly untraceable.
Helpful Tidbit: The best way to prevent this is to be aware it is happening and to share this story with your friends, relatives, customers and co-workers. Don’t be a victim.
2. Man-in-the middle attack
The hacker inserts himself or herself in a communication session between two parties and eavesdrops or impersonates either party with the intention of stealing sensitive information. You’ve seen this in our industry when the hacker poses as a title insurance company or real estate agent and provides bogus wire transfer instructions to an unsuspecting buyer or borrower. Money intended to purchase a new home is wired to the wrong location and is never seen again.
- Helpful Tidbit: There are many strategies to lower the risk of fraud in real estate transactions. Educate all parties in a real estate transaction as to the risks of wire fraud-not only as to what they should expect, but also what they should NOT encounter. Ensure you are dealing with real estate professionals who only share information via encrypted email or other secure platforms. Confirm the identity of the party sending wire instructions each and every time. And, always verbally confirm the wiring instructions by calling a trusted number.
3. Altered Payoff Demands
This occurs when a written payoff of a loan is ordered by a title company or lender in anticipation of an upcoming real estate closing. A fraudster inserts himself in the middle of the communication and provides a last-minute update to the payoff letter, indicating the reason for the update is that an intermittent payment had been made. Everything looks identical to the original payoff letter, except that the wire instructions have unsuspectingly changed so that the money will be wired to the hacker instead of the appropriate party. The letters are structured so well that the average person would never notice a change in an ABA or account number from the original letter.
- Helpful Tidbit: Extreme caution needs to be exercised by the title companies and lenders ordering and receiving these letters. They should verify the wire instructions every time. Suspicion should be given if an updated payoff letter arrives that was not ordered – it just showed up.
Education is key in our industry in combating fraud. Some Realtors use handouts that caution against wire fraud when they are listing or selling a property, others have simple conversations with their customers about what to watch, what to do, and what to never do. Some use educational information online to share, such as: https://www.homeclosing101.org/protect-your-money/
Remember: Call – don’t email. Be suspicious. Confirm everything. Title Pros and Lenders cannot be too vigilant about their cyber security landscape or educating their employees. Use caution and common sense.