A couple weeks ago, Jaxzann Riggs (right) of The Mortgage Network was the guest speaker at our weekly office meeting, educating us on the important subject of cyber security. Here are some of the things we learned from her.
As we move into an increasingly digital age, cyber crime is rapidly becoming a major part of fraud. In fact, the Federal Bureau of Investigation’s Internet Crime Complaint Center estimates that there was an 11-fold increase in real estate email phishing scams between 2015 and 2017. Moreover, 2018 saw a 166% increase in the amount of money lost to real estate wire fraud compared to 2017. As these crimes become more and more prevalent, what can you do to ensure that you do not become a victim?
Cyber crime can take many different forms, but one of the most common is something referred to as EAC, or “email account compromise.” The FBI estimated that this type of fraud accounted for $1.2 billion in losses in 2018—just under half of all reported losses for 2018. In real estate transactions, this typically occurs as wire fraud. There are many different variations of this scam, but the basic idea is the same: just before closing, a borrower receives an email with instructions from what appears to be their title agent/lender/Realtor, informing them that their closing funds should be wired to a different account. The information about their property is correct; the name on the email signature is identical to the person the borrower had previously been communicating with. The borrower, having no reason not to believe the request, sends the money to the new account. In reality, however, a criminal has hacked or spoofed the email address—meaning that the funds meant to be sent to the title company for closing have now wound up in the fraudster’s account. Although there are occasionally “success” stories of money being recovered, oftentimes, the money is gone for good.
If you are going to be involved in a real estate transaction, an easy step you can take to protect yourself is to create a physical list of phone numbers for those involved in your transaction: this can include lenders, Realtors, title agents and more. If you receive a change in wiring instructions, you should always call the sender to verify that the instructions are real. If the instructions came via email, do not refer to the phone number listed in the email signature or reply to the email— if it is a fraudulent email address, your reply will divert back to the criminal, and it will almost certainly contain a fraudulent phone number that does the same. Because phone numbers can easily be spoofed to appear as a different number, do not immediately assume a phone call you receive with a change in wiring instructions is legitimate, either: before wiring anything to a different location, you should always call back the number on your list to verify that the instructions are real. Although this may seem tedious and repetitive, as the old adage goes, it is always better to be safe than sorry.
Unfortunately, even when taking steps to protect yourself, wire fraud does happen. If you realize that you have fallen victim to a wiring fraud scheme, the first thing to do is immediately contact your bank and ask them to attempt a wire recall. Criminals will often have the funds transferred into a bank account in the U.S. before transferring them to a foreign account. If the money has not left the United States, there is a much higher chance your bank can stop the transfer and that the money can be recovered. Be sure to contact your local FBI and Attorney General in addition to filing a report with the FBI’s Internet Crime Complaint Center at www.ic3.gov.
Though wire fraud is scary, the best thing you can do is stay aware and prepared. By working with a trusted professional and taking precautions, you can minimize your risk. Are you looking for more tips on staying safe in our digital world? Give Jaxzann Riggs a call at 303-320-3400.