Cybercrime is a nearly daily occurrence. Whether it’s private businesses or even the government, nowadays it is commonplace to hear of hackers gaining access to the personal and private information of thousands of persons at a time.
It is also, unfortunately, becoming more common to hear of real estate transactions being hacked. The schemes and ploys are ever-changing, and new ones seem to develop as quickly as the older ones are exposed. Emails can be hacked, phones can be hacked, and supposed all-cash buyers can just be trying to obtain account information to divert funds.
However, it is the phishing scam whose ultimate aim is to divert the buyer’s earnest money deposit or down payment, or the seller’s proceeds into the cyberthief’s account that can be truly ruinous. To prevent you and your client from falling victim to the theft of thousands of dollars, common sense procedures are recommended.
The big scam: Stealing the earnest money and down payment or seller’s proceeds
The main scam begins with a hack into the account of an agent. After figuring out all the main players in the transaction, the cyberthief then impersonates one or both of the agents or even the escrow officer to set up fake parallel emails. These fake emails will often appear legitimate because the cyberthief, having infiltrated the accounts, knows all the real details of the transaction. At this point, the cyberthief lies in waiting for just the right moment to send fake wiring instructions to dupe the principal into a fraudulent wire transfer. Usually, it’s the buyer’s deposit of earnest money or down payment. But it can even be fake instructions to the escrow to divert the seller’s proceeds. (This type of scam is called phishing and/or spoofing).
How do you avoid becoming a victim? Here are the three key points.
- Never rely on disbursement instructions received via email, text, or mail. Immediately prior to wiring any money, the person sending the money must call the intended escrow/title company recipient to verify the wiring instructions. Only a verified telephone number from the escrow officer obtained at the beginning of the transaction should be used to make this call. The principal should not respond to any disbursement instructions received via email, text, or mail, but must always check directly with the escrow officer. Thus, the clients must be instructed to follow proper wiring procedures and exercise extreme caution when wiring the earnest money deposit or down payment into escrow/title.
- You should avoid free Wi-Fi with no firewall to protect against hackers capturing an e-mail password or other sensitive information.
- Always use strong passwords and change them regularly. It also wouldn’t hurt you to change your password before wire instructions are sent.