Internet scams are all over the place lately, and they have infiltrated the real estate market, as well. Wire transfer fraud in real estate transactions became a problem back in 2015 and is still claiming victims, especially in the Southern California region.
In fact, in June, The California Association of Realtors released a Wire Fraud Advisory with precautions that buyers, sellers, and other interested parties should take when wiring funds as part of real estate transactions. The precautions include:
- Obtain the phone numbers of the escrow company and bank officers early on in a transaction.
- Call the escrow company or bank to confirm escrow instructions.
- Do not rely on a telephone number provided in the wiring instructions as confirmation.
How wire transfer fraud works
For those unfamiliar, wire transfer fraud starts with criminals hacking into the email accounts of real estate agents and brokers. They search for emails detailing pending real estate sales, gleaning information such as the names of the buyers and sellers, the title company involved, the escrow officer involved with the sale and other pertinent information.
The hackers then use the email account to send fake wire instructions via email to the real estate buyer or lender. The email instructs the buyer or lender to close escrow by transferring the funds to a different bank account than was named in the escrow instructions. The buyer/lender follows the instructions and wires the funds.
When the funds are never received by the escrow, the buyer eventually figures out that the funds were wired to the scammer, who has since emptied the bank account that was set up for purposes of the scam. At this point, there is little that police or anyone else can do to get the funds back.
Obviously, this is not something that anyone wants to have happen to them, so it’s important to follow the California Association of Realtors’ precautions when wiring funds as part of real estate transactions.