As one might imagine, fraud is a word used abundantly in the real estate industry. Here are a few examples, and how to handle them.
Usually wire fraud is associated with email. In order for a hacker to get you to wire money to them, they’ll need to intercept and change account numbers for what would be an otherwise unassuming, planned transaction. Scenario: A hacker is monitoring a title company’s emails. The hacker sees that you plan on purchasing a property. He’s monitoring emails that have the key words “wire instruction”. He intercepts an outgoing message with the title company’s wiring instructions attached. He simply changes the numbers to reflect his bank account he previously setup with a fictitious name. You receive the instructions, and send the wire. Since wire transactions are usually instant, (the reason we like to use them) he immediately transfers or withdraws money, and it’s gone. This scenario is less likely to occur based on recent diligent efforts on behalf of these companies, but what if you received and impersonated email from your real estate agent? In almost all cases, these are honest mistakes, but they can cost the sender thousands of dollars of unrecoverable funds.
The Solution is easy. ALWAYS verbally confirm wire transfers with the recipient including the account numbers before sending any wire.
Paper Check Fraud:
Fortunately for the consumer, these cases are more typically aimed at real estate brokerages. Scenario: Thief 2 poses herself as a real estate buyer. She contacts an unassuming real estate agent and informs the agent she would like to make an all-cash offer on a property she viewed on her own the prior summer. She’s willing to offer full price, and wants to put down $10,000 of earnest money that can be refunded within 10 days to give her time to perform due diligence and inspections, which is very common. She is of course emailing using a fake name, and is working overseas, so prefers email as opposed to conversation. The real estate agent secures a contract very easily with her full price offer. She sends a fake cashier’s check in the amount of $10,000. Shortly after, she changes her mind and asks for a refund. Because she is traveling and working in Ukraine, she asks if the funds can be refunded via money transfer or wire to her account, of course setup using her fictitious name. The agent is disappointed, but she is still within her inspection time frame. He terminates the contract, and wires the money back to her. 10 days later, the bank notifies the real estate broker that the cashier’s check has bounced. Unfortunately these situations do occur, and cashier’s checks can be fraudulent as well.
There are many circumstances in which hackers and thieves can take serious advantage of consumers, the public, and even government as we have seen. It’s easy to fall into these traps, just remember, always verify. Confirm account numbers, call the bank associated with a cashier’s check, etc. Verbal communication with real institutions is absolutely key when dealing with these large transactions.