One of the fastest growing “business and compromise” scams in the country involves tricking buyers into wire transferring their down payments on or the day before their contract closing.
Targets of this scam are real estate professionals…agents, attorneys, title companies, retail and investment brokerages, etc.…and buyers.
Here’s the MO:
- Scammer hacks into the real estate professional’s computer systems.
- Scammer monitors the agent’s/lawyer’s title company’s emails to look for upcoming transactions.
- As the closing date approaches, (a day before or same day) scammer sends an authentic looking email to the buyer. The email will look as though the agent/attorney/etc. is sending this email to the buyer.
- In the email, scammer tells buyer there’s been a change of protocol and the buyer is to wire transfer the down payment amount to a bank account that is supposedly the seller’s bank account.
- That bank account belongs to the scammer, not the seller.
- Scammer sometimes follows up with a phone call to the buyer “to make sure the buyer understands the instructions.”
Here are the results:
- The real estate professional is clueless about the hack and the scam.
- The buyer wire transfers the amount of the down payment to the scammer.
- The buyer is clueless about the hack and the scam.
- The amount of the down payment is now in the scammers account and that account is offshore.
- US law enforcement CANNOT ACCESS that down payment amount since the bank account is offshore.
- This cam is UNTRACEABLE.
- The bank from which the buyer wire transferred the money is in NO WAY responsible for reimbursing those funds to the buyer.
- The buyer is out of luck and, perhaps, unable to make that down payment to the real seller.
- The real estate professional remains clueless until someone raises their hand and asks a question such as, “Did my wire transfer to the seller’s account go through?”
- The scammer has an immediate and lucrative payout without have to spend much time getting it.
The FBI informs us that email compromise crimes such as this one are “spiking.” This particular wire transfer scam is now happening 14 times more this year as compared with last year.
From 12/16 to 5/18, there has been an increase of +136% in reported losses relating to crimes like this. Fraudulent schemes have been sent to 115 countries globally. Since 2013, the FBI estimates losses of approximately $12B due to email compromise crimes. These crimes require little, if any, technical savvy…just con savvy.
Ryan Kalember, senior vice president of cyber-security strategy with Proofpoint, and the FBI suggest that real estate professionals and their buyers and sellers…
- Be vigilant. Know that scammers may target you. Verify any suspicious correspondence related to a home purchase or sale.
- Voice verify any follow-up emails particularly if you and/or your client is e-signing, logging into a new website, transferring money or providing any kind of financial information.
- Talk with your bank. Insist that you bank NOT allow any wire transfers without your voice verification or some other kind of checkpoint coming from you. Some banks will/will not do this.
- Be suspicious of any email purporting to be an attorney, agent, title company, bank. Do NOT immediately react to the email.