In the fast-paced world of real estate transactions, the convenience of online communication and financial transactions comes with an increased risk of bank fraud. Buyers, sellers, real estate agents, real estate brokers, closing officers, and closing attorneys are all potential targets for cybercriminals looking to exploit system vulnerabilities. In this article, we will explore the prevalence of real estate bank fraud, its common tactics, and four crucial steps to protect yourself from falling victim to these frauds.
Understanding the Threat: Business Email Compromise (BEC)
Bank fraud in real estate transactions often occurs through Business Email Compromise (BEC). This sophisticated fraud scheme targets industries that regularly conduct wire transfers, such as real estate transactions. Through BEC, fraudsters gain unauthorized access to a participant’s email account and impersonate that participant or any other party involved to redirect funds in their favor. In real estate transactions, these criminals often target crucial funds, such as the buyer’s closing funds, the seller’s proceeds, the lender’s funds, or even the broker’s commissions.
The Deceptive Scenario: How Bank Fraud Develops
Imagine this scenario: You receive an email saying it’s your real estate agent requesting funds for the down payment or to close the transaction. Unbeknownst to you, a cybercriminal has meticulously crafted a fake email, exploiting information collected from your online activities, social networks, etc. This criminal is monitoring your willingness to make a payment, and when the right time comes, he strikes.
Buyers and Sellers Beware: You Are Targets
Bank fraud is a real and persistent threat, with home buyers and sellers being primary targets. Attempts to divert funds through bank transfers are widespread, and people are constantly at risk of losing all their savings. Scammers often trick buyers into sending their down payment and closing costs to the criminal’s bank account instead of the title company. Once the transfer is made, the money is quickly taken out of the account and often moved out of the country.
Four Steps to Protect Yourself Against Bank Fraud
Call, don’t email: Always confirm transfer instructions over the phone before completing any transaction. Use a reliable phone number obtained from the title company’s official website or from a business card.
Be Suspicious: Title companies rarely change transfer instructions and payment information. If you find unexpected changes, be cautious and verify the information thoroughly.
Confirm everything: When initiating a bank transfer, ask your bank to confirm not only the account number, but also the name associated with the account. This additional layer of verification can help prevent fraudulent transactions.
Verify Immediately: After making a wire transfer, immediately call the title company to confirm that the funds were received as intended. This proactive step can quickly uncover any discrepancies and enable quick action to mitigate potential losses.
By remaining vigilant and following these four crucial steps, buyers, sellers and all participants in real estate transactions can significantly reduce the risk of falling victim to bank fraud. Remember, a brief verification call can save you from significant financial losses and protect the integrity of your real estate transaction. Stay informed, remain cautious and protect your investments in the real estate market.