Wire fraud has become a big problem in the pandemic



Carly Andreatos was only days away from buying her first home when an email came from her attorney’s paralegal. In it, she found instructions for transferring the down payment and closing costs – a total of $ 22,890.

Not wanting to postpone the closure, she quickly transferred the money – literally all of her savings – as instructed.

The next morning, however, began what Andreatos called a “nightmare.” Her lawyer never received the money. This letter? It was a fake sent by a scammer as part of an all too common scam scheme aimed at home buyers.

“It was the worst experience of my life,” says Andreatos, a 25-year-old veterinary technician based in West Palm Beach, Florida. “It was all I have ever saved.”

Now the purchase of Andreatos’ house remains in the balance, and she is not sure if she will get her money back. Since the house is the property she is currently renting, her entire life situation is at stake. “I sit here and think I’m going to become homeless,” she says.

Unfortunately, stories like Andreatos are not uncommon. Real estate fraud has been a problem for years, and it only got worse during the pandemic.

A survey of title agents – those who are responsible for transferring ownership of a home and managing the closure and escrow process – shows that a third of all real estate transactions in 2020 involved attempted electronic fraud. Meanwhile, 76% of agents say the number of fraudulent attempts has either increased or remained unchanged from the previous year.

The scam works like this: a fraudster gains access to an email account involved in the sale of a home – a real estate agent, lender, title agent, or even a buyer – usually through some kind of phishing attempt… They then track the email, observe the progress of the transaction, and insert themselves at the right time. That’s when they ask the buyer – using a very legit-looking email address – to transfer the funds to an alternative bank account.

“These fake emails are not your typical misspelled and misspelled fraudulent emails,” says Andy White, CEO of ClosingLock, which helps top companies prevent electronic fraud. “These are targeted, well-crafted fake emails that look like they were sent by a title company, escrow company, or law firm. With hundreds of thousands or millions of dollars at stake, you can bet it won’t take long for the scammers to make these emails look legitimate. ”

COVID Has Opened New Doors for Scammers

The FBI calls the scheme “compromising business email” – the operation is so widespread that it caused a whopping $ 1.8 trillion in losses in 2020. On average, the victim lost almost $ 100,000 last year.

The problem is probably even worse than it sounds. According to the FBI, only 12-15% of all cases are reported. According to Diane Tomb, CEO of the American Lands and Titles Association, “The problem is much bigger. This is a national epidemic. “

The COVID-19 pandemic – not to mention the real estate boom it provoked – has created an excellent environment for telegraph fraud to end last year. First, it just needed to target more transactions. The National Association of Realtors shows that 5.64 million existing homes were sold in 2020 – the highest since 2006.

Moreover, many of these transactions were made online due to security measures during the pandemic. This made it easier for scammers to infiltrate and, in many cases, made buyers relax a little.

“Technology has come into widespread use over the past 20 months,” says Tom Cronwright, CEO of CertifID, a money transfer fraud prevention firm. “So the buyer is thinking, ‘The fact that I’m being asked to transfer funds by email is now just part of the deal, I think.’

Housing prices rise, as well as growth cash purchases, also increased the temptation to scammers. As White explains, “High dollar transactions are inherently more risky. Fraudsters are lazy in the sense that they are chasing the lightest and biggest salaries. “

Stephen Dougherty, a financial fraud investigator and analyst with the Secret Service, investigates corporate email compromises on a daily basis and works with the Croncright team to help Andreatos recover his funds. According to him, over the past year, there has been an increase in the number of fraudulent schemes, especially in real estate transactions.

“The US Secret Service has seen an exponential increase in the compromise of real estate-oriented business email,” Dougherty says, calling the threat of these scams “very high.”

You can catch fraud with a telegram before it happens

Electronic fraud can become alarmingly common these days, but there are ways to protect yourself – and I am proof of that.

Two days before closing my current home, a letter came – apparently from my titular agent. It stated: “You need to transfer to our account the amount before the close of the transaction in the amount of 48,754.39 US dollars to avoid a delay in closing.”

The number was correct. The names and addresses were correct. The email signature was even accurate. Fortunately, I have heard stories of electronic communications scams, so I carefully reviewed the sender’s email. It was one character with a difference and a different host domain – immediate red flags.

When I called my title company (at the number listed on their public website, not email) my suspicions were confirmed: it was a fake. Ultimately, my gaze saved me nearly $ 50,000, not to mention my home.

Nick Ingalls, editor of Verywell Mind, had a similar story.

“I wonder if I wasn’t an editor and a common grammarist, I might have skipped that and just telegraphed our house,” says Ingalls, who suspected fraud over the wrong phone number.

However, incorrect information is only one way to detect fraud. Successful fraudulent emails often share four things in common, Cronwright says: a call to action, some new or updated information, a confirmation request (so scammers can quickly redirect funds), and the word “kindly.”

Scammers are also increasingly using COVID-related excuses, he said.

“They’ll say something like, ‘Because of COVID, we are currently understaffed and you need to send this to me today,” says Cronkright. They can also mention vaccinations, office outbreaks, local restrictions and other timely pandemic issues to make the message seem more urgent.

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To begin

How to protect yourself from electronic fraud

If you’re gearing up for a home purchase, setting up strong passwords and multi-factor authentication – for both your email and social media accounts – can help prevent scams long before they reach your inbox. Fearing any links or attachments in emails can also help.

“Criminals begin the process of electronic fraud before attempting to steal,” says Tomb. “More often than not, they start with a common social engineering technique called phishing. This can take the form of bogus emails, phone numbers, or websites to fraudulently obtain confidential information. Criminals trick users into entering their information or clicking a link that allows hackers to steal their login information and password. ”

You should also talk to your lender and the title company about what you owe, when you owe, and how you will be asked to pay so that you know when to be suspicious. It’s also wise to ask about corporate digital security measures.

Finally, if you receive instructions by email, always check by voice before submitting any funds.

“Buyers should never trust telegraphic instructions or phone numbers in an email,” White says. “Instead, they can google the company they work with and call the head office number to confirm the telegraph instructions. Once the funds have been transferred, buyers must confirm receipt by the settlement company. Again, use a trusted phone number. “

And don’t forget: you can always ask to pay with a cashier’s check instead of transferring funds. While this will require an actual office visit, it will ensure that the money ends up in the right hands.

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Act quickly if you are a victim of an electronic scam

Regardless of your precautions, you can still fall prey to electronic scams. In this case, you need to act quickly.

“Finding that you’ve sent money to the wrong account within 24 hours is your best chance of getting your money back,” says Tomb. “Victims are often ashamed of being deceived and do not report the theft. But if the victims act quickly, there is a chance to get the money back. ”

Andreatos says her situation was “the most embarrassing situation that ever happened,” but nevertheless, she reported a scam – within 12 hours. Although her funds have not yet been returned (they are currently on hold while banks are considering the issue), they have not been sent to the fraudster either.

However, be careful: Andreatos’ case is not the norm. Only 29% of victims see their funds fully refunded. In 40% of cases, 10% or less recover.

If you think you have been a victim, call your bank and ask for an immediate withdrawal of the bank transfer. Then report the crime to the FBI Internet Crime Complaints Center at: IC3.gov… You should also call your regional FBI office and local police department as they can help as well.

“Buying a home is fun, but it can also be stressful,” says Tomb. “When you’re dealing with multiple stressors at the same time, it’s easy to let your guard down. These criminals rely on your trust. They know you trust real estate professionals, and they use that trust to steal from you. If you are not vigilant in the home buying process, you can quickly become a victim. “

More from the money:

How to detect a phishing email (and what to do if you fall for the bait)

Buying a home with cash can save you thousands, and you don’t need to be rich to rent.

What to do with all those We Buy Homes shady signs?


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