Update:  January 04, 2017

Fraudsters are Becoming More Aggressive in Their Effort to Intercept Wired Funds

A fraudster contacted a Buyer via email, sending them bogus wiring instructions using the title company’s letterhead. The correspondence instructed the Buyer to immediately wire funds for closing to a different bank account – one actually controlled by the fraudster. Even more alarming than the fraudster’s bogus letter, the perpetrator impersonated the Escrow Officer and placed a call to the Buyer to confirm the new wiring instructions. Fortunately, the Buyer was suspicious of the phone call and came to see the Escrow Officer at her office, only to learn that the Escrow Officer had not sent an email or called the Buyer.

According to REALTORS® and title companies across the state, Arizona real estate transactions are once again being targeted by hackers perpetrating wire transfer fraud.

It is customary for parties in a real estate transaction to receive, and comply with, wire transfer instructions. Unfortunately, it has become increasingly common that those instructions were not generated by a legitimate party, and that the funds are being wired to a bank account controlled by an online hacker.

Although the scam is perpetrated in a variety of ways, it typically begins with the email account of a party to a pending real estate transaction being hacked. The hacker then identifies specific details regarding the transaction, such as sales price, the parties’ names and contact information, identity of the lender, name of the escrow officer, close of escrow date, and escrow number. Upon ascertaining this information, the hacker begins directly emailing the buyer or lender making it appear as though the email was sent by the real estate agent or title company. These fraudulent emails contain instructions to wire the closing funds into a bank account controlled by the hacker. In one incident that recently occurred in Southern Arizona, the hacker went so far as to generate a bogus electronic signature authorizing the funds to be wired to an account belonging to the hacker. Once the money is wired as instructed, it is immediately withdrawn by the hacker and gone for good.

To combat this scheme, REALTORS® and their clients should remain vigilant and verify all emails that convey wire instructions for disbursal of funds from escrow. Fortunately, many title companies are now unwilling to accept an email from a customer containing wiring instructions without calling the customer to verify the information.
And while a myriad of technical precautions can be taken, such as the use of encrypted emails, perhaps the best advice comes via an alert issued by the Silicon Valley Association of REALTORS®, stating:

“Buyers and sellers should confirm all email wiring instructions directly with the escrow officer by calling the escrow officer on the telephone. In that conversation, the correct account number information should be repeated verbally before taking any steps to have the funds transferred.”

If you or your client believe that you are being targeted in a scam of this nature, immediately notify the title company and do not hesitate to contact the authorities.

Also READ:  the Fraud Alert!