In the Director’s Corner of the Colorado Division of Real Estate’s latest quarterly newsletter, Director Marcia Walters shared ways to avoid wire fraud.
She began by stating the division has been hearing growing concerns of real estate related wire fraud schemes happening.
“The typical scenario is as follows: A buyer goes under contract to purchase a property,” Walters wrote. “The buyer receives an email instructing the buyer to wire the funds necessary for closing. The email may appear to be from the buyer’s broker, a title company, or a lender. The email may indicate that the funds need to be wired immediately or the buyer’s closing is at risk. The email may also indicate that under no circumstances is the buyer to call regarding the funds transfer, maybe because the sender is in a meeting or is on vacation, or for some other plausible reason. The buyer wires the funds, as instructed in the email, only to learn later that the funds did not go to the intended recipient. Instead, the funds went to an account created by the person or organization perpetrating the scheme and the wire transfer cannot be recalled. Given the price of real estate in this state, the loss incurred can be huge and the impacts can be devastating.”
She noted most real estate-related wire fraud occurs because the buyer’s broker or the buyer has their email hacked, and she recommended not opening links sent via email.
“If sensitive or confidential information is going to be sent through email, the broker should ensure that they are using encryption,” Walters wrote. “In many situations, hackers get transaction specific information from a broker’s email account because emails with sensitive information are not encrypted. This enables the hackers to send emails to the buyer which appear to be legitimately coming from the broker because the email references information specific to the buyer’s transaction. These types of attacks are commonly seen in free email accounts. If a broker is going to use free email accounts, two-factor authentication should be enabled. This is free and can be found by searching Two Factor Authentication at Play Store or App store.
“If a title company will be providing settlement services for the transaction, most title companies have secure portals that brokers and buyers can use to set up accounts to access information that is specific to their transactions,” she continued. “Additionally, if the buyer’s broker is going to be taking the earnest money check to the title company, that is a good time to pick up a hard copy of the wire instructions.”
Walters provided these additional red flags buyers and brokers should look out for in phishing emails:
- Pay close attention to syntax and diction. Many wire fraud schemes are perpetrated internationally. Be on the lookout for emails that contain a lot of mistakes, do not make sense, have grammatical errors, or use strange or uncommon salutations.
- If the email informs the recipient not to contact the broker or the title company, that is a red flag. The buyer should contact their broker or the title company, but not at the phone number or email address provided within the suspicious email.
- A title company is not going to change the wiring instructions or their account numbers. Emails that indicate a sudden change in either of those items are indicative of a scam.
- The timing of the wire transfer may be a clue to fraudulent activity as well. If the buyer receives an email indicating the wire transfer must be made weeks in advance of the closing, the buyer should be contacting their broker and the title company.