As a firm with a large real estate practice, we are keenly aware of the risks of wire transfer fraud in real estate transactions – which has exploded from a reported $19 Million in 2016 to almost $1 Billion in 2017.
Often this fraud is the result of the hacker compromising a legitimate email account and ‘camping out’ – quietly maintaining a foothold in the account and reading emails but not taking any action – until it’s time for a funds transfer to occur. The attacker will then use information from the email thread to change the wiring instructions: for example, by sending a last-minute change to the transfer account from a compromised agent’s email, leveraging DocuSign as the ‘agent’ to send the bogus instructions, or even calling the victim with last-minute changes while pretending to be from the title company.
How can you protect yourself?
- Be wary of any closing or wiring instructions sent via email, and verify by phone or in person with settlement personnel that all instructions are correct.
- Do not act on any changes to previous instructions without first contacting the agent/agency using their published contact information – versus any contact information you receive by phone or voicemail – and re-verifying the instructions.
- Consider completing the wire transfer while in the presence of an agent, just to be sure.
- If you are victimized, contact the FBI immediately.
While it’s possible the FBI can leverage the Financial Fraud Kill Chain to recover stolen funds it’s far from certain, any recovery may only be a portion of the funds, and the process takes long enough that you’ll likely fall out of escrow. For additional information on safely managing real estate transactions, please reach out to any one of our real estate lawyers, including Sylvia Arostegui or Devin McComb.