Wire Fraud

Criminals are hacking into email accounts and using information in those accounts to dupe homebuyers into a fraudulent wire transfer.

These hackers send homebuyers an email that is spoofed to look like it comes from the real estate agent, title representative, or attorney involved in the transaction. The email is sent right before closing and claims that there has been a last-minute change to the wiring instructions.

Following these new instructions, the homebuyer will wire funds directly to the hacker’s account. As real estate transactions become increasingly digital, cybercriminals continue to get more and more creative in their efforts.

Risk Reduction Tips

Alert homebuyers at the outset of the transaction. Many brokers are requiring signed disclosures.

Instruct homebuyers to call wire recipient using an independently-verified phone number.

Avoid sending wire instructions (and any sensitive financial information) via email.

Use a secure transaction management platform to share documents and information.

Use good email security practices – never open unsolicited links or attachments, keep operating system and anti-virus updated, and use strong passwords and two-factor authentication.

Immediately report suspected fraud to the bank from which the funds were transferred.

Get to know your local FBI field office and contact them immediately if fraud is suspected.

Report fraud incidents to www.ic3.gov.

How to Respond If You Discover You Are a Wire Fraud Victim

There are a number of practical concerns to address after a business discovers it has been the victim of a wire fraud scheme:

1. Getting the Money Back: Recouping the transferred funds becomes less likely as time passes between the fraudulent transfer and contact with the bank from which the funds were transferred. Contacting your bank followed by calling your local FBI, Secret Service field office or privacy counsel and reporting the incident on the ic3.gov website immediately upon discovery are essential first steps.
   
2. Determining How It Happened: Identifying whose email account was compromised by the bad actors is important when negotiating whether the vendor or the customer should shoulder the loss. But there can be greater implications. Attackers often use compromised accounts to find other personal information – such as Social Security numbers, W-2s and financial account information – to perpetrate additional fraud. If this type of information resides in the compromised email account, the business whose email was compromised may have additional legal obligations based on state or federal data breach notification laws or contractual clauses with other business partners. A forensic analysis of how the incident happened also can help determine whether any other customers or business partners were similarly contacted or whether other email accounts within the organization have been compromised and used maliciously.

Determining What Insurance Covers: Whether insurance covers wire fraud depends on the policy. Your insurance broker can help you determine what coverage you have or could obtain for this type of loss and in what circumstances coverage responds.

Resources:

RE Fraud Prevention Coalition tips and tools
How to Avoid Wire Fraud video
Video Alert for Buyers
Client alert handout
Directory of Local FBI Field Offices (link is external)
Data Security
Cyber Insurance

The Wire Fraud Advisory is updated in all of Arizona REALTORS® forms provider platforms.  You may also find the newly updated Wire Fraud Advisory in PDF and Word format on Arizona REALTORS® website.