While there are many pitfalls to be aware of when buying or selling a home, perhaps the one most insidious and heartbreaking is wire fraud.
Over the last several years, wire fraud has grown to become a sophisticated, multibillion-dollar industry. Even in Chaffee County, criminal elements have attempted, and once or twice succeeded, in electronically diverting funds from their intended, lawful recipient into their own bank account, where it is generally lost forever.
Here’s how it works. The fraudster will hack into the computer system of a party to a real estate transaction, be it a buyer, seller, brokerage firm, bank or title company. Initially they do nothing except listen in as the transaction unfolds, learning the nuances of the transaction and the parties involved.
Then, a day or two before close, when a buyer is often arranging to have their funds wired to the title company or the seller their proceeds to their bank account, the fraudster will send an email purporting to be from the title company or a Realtor involved in the transaction, announcing a last-minute change in the wiring instructions.
If the unsuspecting party follows these instructions, their money is wired to the fraudster’s bank account instead. Unless extremely lucky, this money, often a person’s life savings or retirement nest egg, is lost forever.
So, what can you do to prevent this happening to you? An obvious solution is to not wire funds in the first place, but rather use a cashier’s check. While foolproof for wire fraud, there are circumstances where a cashier’s check is neither feasible nor acceptable.
So, if planning on sending or receiving funds by wire, first ensure your email is hosted on a secure server. Fraudsters tend to go after low-hanging fruit, and many of us are lax when it comes to online security.
Make sure your security settings are up to date and perhaps consider changing your password halfway through the real estate transaction. Do not open suspicious emails that have vague subject lines, poor grammar or incorrect spelling, and check the email address for minor differences from that of the supposed, legitimate sender.
If you receive a phone call from someone purporting to be a representative of a bank, title company or real estate company, hang up and call a trusted number yourself to verify.
For Realtors, our obligation is to educate our customers to never trust an email or phone call that purports to contain a change in wiring instructions and to always verify the instruction directly with the title company or lender prior to sending funds.
Following these simple, commonsense steps will ensure protection against wire fraud and ensure that buying or selling a home is a dream come true rather than a nightmare reality.