How to Protect Your Clients from Becoming Wire Fraud Victims
Each day seems to bring another real estate wire fraud theft of buyers’ funds. Criminals are targeting the real estate industry in general, presumably because there is a lot of money there, and buyers in particular, because they seemingly are less familiar with the scams.
No defense is foolproof, but you can take some simple steps to protect yourself and your clients:
- Consider implementation of a two-step verification process on your email
- Immediately report and delete unsolicited email (spam) from unknown parties
- Do not open spam email, click on links in the email or open attachments. These often contain malware that will give subjects access to your computer system
- Consult your IT professional on how to best protect yourself
How does it happen?
The basics of a buyer-targeted scam are simple. A criminal accesses someone’s email, either the buyer or seller or one of the real estate professionals. The criminal then waits for the right time to send an email to the buyer, pretending to be the closer or real estate agent. The email address will look legitimate but will have a minor change. The email might ask for money early, or for only part of the funds needed. It will likely be “re-sending” wire instructions, or changing the instructions because of a bank issue.
Buyer education is the key to avoiding a scam. Tell your buyers how the scam works. Tell them to call the closer before sending money, to verify the instructions. The buyers should not rely on a phone number in an email. They should get a valid phone number early in the transaction. Have the buyers call the closer after sending the funds, to confirm they were received.
If your buyers fall victim to a scam, the Federal Bureau of Investigation (FBI) recommends:
- Calling their financial institution immediately
- Requesting their financial institution to contact the corresponding financial institution where the money was sent
- Contacting their local FBI office, if the wire is recent; the FBI, working with the United States Department of Treasury Financial Crimes Enforcement Network, might be able to help return or freeze the funds
- Filing a complaint, regardless of dollar loss, at www.IC3.gov
For more tips from the FBI on how to avoid being a victim, and what to do if you get scammed, go to www.justice.gov and look at the publication titled “Best Practices for Victim Response and Reporting of Cyber Incidents.”
This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice. You are encouraged to consult your legal, tax or investment professional for specific advice. The material is meant for general illustration and/or informational purposes only. Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy.
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