Don't Become a Victim of Wire Fraud
Wire fraud has become a very big problem for buyers and sellers involved in real estate transactions. Most of these fraud schemes are accomplished using email. To avoid becoming a victim the CFPB (Consumer Financial Protection Bureau) has published a list of “Do’s and Do nots” when you are involved in a real estate transaction.
Avoid email phishing scams
Phishing is when internet fraudsters impersonate a business to trick you into giving out your personal information. These tips may help homebuyers avoid this type of scam.
Discuss the closing process and money transfer protocols with your real estate and settlement agent.
If you receive an email requesting that you send money in connection with closing, even if it’s from a familiar source, STOP. Call your settlement agent to discuss. Don’t use phone numbers or links in the email.
Don’t email financial information. Email is not a secure way to send financial information.
Be cautious about opening attachments and downloading files from emails, regardless of who sent them. These files can contain malware that can weaken your computer’s security.
Before sending any wire transfer, ask your bank for help identifying any red flags in the wiring instructions. Red flags include potential discrepancies between the account name and the name of the intended beneficiary (i.e., your real estate or settlement agent). Your bank may also be able to compare the receiving account number to account numbers identified in past consumer complaints as the destination of fraudulent transactions.
Confirm receipt of the wire transfer by your real estate or settlement agent a few hours after the wire was transmitted. If you or another entity involved in the closing suspect a problem, report it to law enforcement and your bank as soon as possible to increase your likelihood of recovering the money.
It is very rare for a settlement agent to change the bank or bank account that they use for closings. Any last minute updated wiring instructions should be verified with the settlement agent at an independently verified phone number, not the number in the email. Even an email from your real estate agent giving you wiring instructions should be independently verified with your settlement agent directly. The beneficiary on the account you are wiring to should always be the same as the company that is handling your closing.