The American Land Titles Association (ALTA) reports that more than 11,600 people fell victim to bank transfer fraud in 2019, resulting in more than $ 221 million stolen. Huge amounts of money are involved in the fraud. Fraud is sophisticated. People you never knew existed have fallen into the trap of these scammers. It is rare to get money back after placing it in the wrong bank account.
Ironically, this scam seems to be most successful when the borrowers have urgent action. Cheating by the bad guys is easy. Their goal is to get involved in the closing process right at the moment the buyer is about to transfer the closing funds into an escrow account. The fact that money must go into a secure escrow account can lull cautious people into a false sense of security. If the fraudster succeeds, the money will be transferred from a secure escrow to an account that is only controlled by the fraudster. All of this can happen in a couple of hours (or less), starting with a single click of the victim. This allows the fraudster to keep a close eye on the fake account for a short period of time. The moment money is deposited into a fake account (but appears legitimately), the fraudster immediately transfers the funds to a foreign bank account from which the deposit bank and law enforcement agencies cannot receive funds.
And … the crooks have become more sophisticated. All a scammer has to do is hack the email account of your real estate agent, escrow officer, or anyone in the loop to receive escrow instructions (this could be your own email account, which hacked). Hacking any of these accounts provides the fraudster with necessary information such as the legitimate escrow account number, the date and time of the transfer, and the amount of the transfer. Hacking one email account can create a chain of letters between all the parties involved that exchange information.
With legitimate email information at hand, the scammer creates a new email account that looks almost identical to the email account from which the home buyer expects to receive the final bank transfer instructions. For example, a legitimate email address might be Jane Doe @ ABCescrow. A fake email address created by a scammer could be Jane Doe @ ABCescrow.one or it could be Jane Doe @ ABDan escrow or any other very minor change. At first glance, a home buyer does not notice a slight change in address.
The fraudster then only needs to send the buyer a simple change to the instructions. The instructions may vary, but may be as simple as “urgently, we must use USA Trust Bank. Please transfer $ 200,000 to your #xxxajax escrow account immediately. ” This is NOT a legal escrow account. This account is completely controlled by the scammer. As soon as the funds are transferred, the fraudster transfers the money abroad to an account from which it cannot be received. With a single click, a prospective home buyer can lose $ 200,000 or more that he saved over the years to buy a home.
Scammers are constantly adding new levels of sophistication. Since the fraudster has access to all the information in the hacked emails, the fake letter may contain information that convinces the fake letter to be legitimate. The scammer knows your name, the name of your real estate agent, and the name of the escrow officer. The fake letter may say that everything was agreed and approved by other people. The fraudster knows exactly how much money is supposed to be transferred. They know to which bank and to which account the money should go. The fraudsters use this information to convince any of a variety of different claims, which could be, “The original bank escrow has computer problems because we are switching to XYZ Trust Bank due to the urgency of your transaction.”
Fraudsters have added a relatively new sophistication. Fraudsters copy and paste the entire chain of letters between legitimate people into a fake letter. The old thread will appear under the new instructions. This gives the impression that everyone is up to date with the new instructions. But it’s not like that. Only you get bogus instructions.
You can be sure that scammers will soon find new ways to convince you of the legality of the fake instructions.
It’s easy to think that you won’t fall for such a scam, but these schemes are complex and often look like legitimate conversations with your real estate agent or settlement agent. Here are the minimum steps you need to take.
- Early in the process, identify proxies prior to closure and write down their names and contact information. [Use this contact information rather than new contact information from an email.]
- Confirm closing and payment instructions twice in person or verbally at a known phone number.
- Avoid using phone numbers or links in the email, as scammers can spoof them.
- Be alert to phone calls, as some criminals call and impersonate your trusted professional.
- Do not email financial information.
You can also view the information that Consumer Financial Protection Bureau provides about this.
The ultimate cost may be the loss of your savings.
Please leave a comment sharing your experience or advice on the topic.
In addition, our weekly Ask Brian column welcomes questions from readers of all levels with knowledge of residential real estate. Please send your questions, inquiries or article ideas to email@example.com…
Author biography: Brian Kline has been investing in real estate for over 35 years and has been writing about investing in real estate for 12 years. He also has over 30 years of business experience, including 12 years as a manager for the Boeing Aircraft Company. Brian currently lives at Cushman Lake, Washington. A place to relax, close to the country and the Pacific Ocean.