Imagine this – after years of saving and searching, you’ve finally found the home of your dreams. All that’s left to do before you can make your long-anticipated move is to complete the closing transaction. You receive an email from your title company with instructions for wiring the closing money and you follow them. But when you call your closer to verify the payment, they tell you they never received any payment. In fact, they never sent an email at all.
You’ve become the victim of wire fraud. All your hard-earned savings are now sitting irretrievably in a hacker’s account and you can no longer close on your dream home.
Sounds like a nightmare, right? Unfortunately, any time large sums of money are transferred, there will be thieves waiting for an opportunity to get their hands on it. According to a 2017 study of the top 10 types of fraud based on losses, wire fraud is responsible for at least $50 billion in losses annually, far more than any other type of fraud. This high number is attributed in part to a lack of public awareness of common wire fraud schemes and the red flags.
How Does Wire Fraud Happen In A Closing Transaction?
Wire fraud is a scheme in which a criminal obtains money by false representation via electronic communications. Unfortunately, wire fraud occurs far too often in real estate closing transactions. Criminals will typically hack into the email accounts of parties involved in the closing transaction, such as the closing agent, seller or title company, and obtain pertinent information about the transaction.
They then send an email with fake wire instructions and the buyer unknowingly wires payment to the wrong destination. By the time anyone realizes that the funds have not been deposited correctly, the criminal has withdrawn the funds from an offshore account. Such incidents are nearly impossible to trace and victims are often left with little legal recourse for recovering their funds.
Investors Title Company Tips for Preventing Wire Fraud
So, how can you protect yourself or your client from wire fraud?
- Thoroughly review the closing process with your real estate professional (or client). Walk through each step and make sure all parties know what to expect. Investors Title Company does not require that clients send a wire for closing, and will not email buyers to request a wire. We also require that customers complete a wire authorization form and include a canceled check of the receiving account. All of this is designed to reduce the risk of wire fraud.
- If you receive an email request for a wire transfer, be extremely cautious. Call the party requesting the transfer at a number you know is valid (not one contained in the email) to verify that the email is legitimate. Confirm that the amount, bank, routing number and account number are all correct.
- Be on the lookout for red flags, like last minute changes to previously communicated instructions. If you suspect that you have received a fraudulent wire request, do NOT respond or initiate any transfers. Contact the FBI and report the attempted fraud by visiting ic3.gov.
Following these tips and remaining vigilant can save you from a falling victim to criminals and a catastrophic loss of money.
At our title company, we offer real estate title and closing services focused on protecting both buyers and sellers. No other title companies in St. Louis match our commitment to customer care and excellent service.