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Cyber Bytes: Criminals Target Real Estate Industry for Wire Transfer Fraud

The real estate industry is a rising target for wire transfer fraud. In 2022, there were nearly 2,300 real estate scams, according to the wire fraud recovery and prevention software company CertifID. That represents a whopping $446 million loss, which includes victims on all sides of the process:

  • Title agents
  • Real estate agents
  • Attorneys
  • Sellers and buyers

However, the scam starts long before the wire transfer occurs. And businesses don’t even realize the heist is happening right on their computer networks. Ultimately, buyers and sellers lose their funds, while businesses lose their reputations and face cyber liability from the breach.

Learn how real estate wire transfer fraud works and how to protect yourself and your clients.

How it starts

A criminal network targets players in the real estate industry using a business email compromise (BEC) scam. A BEC is a sophisticated phishing scam that uses personal information to set up its victims just days before their closing. The deception goes like this:

A criminal network targets your thriving real estate business. They buy your employee emails and passwords off the dark web for less than a dollar each. (Hackers know that even if the password list is old, they have a place to start. They’ll use variations of the original passwords.)

Or they send your employees a legitimate-looking email posing as your company’s email provider or tech team. The email warns of suspicious activity and asks employees to verify their login credentials.

While your employees log in, the criminals nab their login credentials. The login screen usually times out or gives a bogus all-clear screen, so your employees don’t know anything happened.

Then the swindlers go to work.

What the hackers do to frame a wire transfer fraud

Hackers log in and set up inbox management rules to forward emails to their accounts. They use keywords like “wire transfer” and “closing” to target sellers nearing their closing dates. This is so the idea of a wire transfer won’t be suspicious. The hackers are vigilant about covering their tracks, so you might not notice they’ve breached your networks. They use inbox management tools to delete forwarded emails and intercept replies automatically so your employees won’t see the evidence.

The criminals either use an employee’s email, which they now control, or an identical spoofed account. They instruct your client to wire funds for the closing. Instead of going to the bank, the cash goes to an account controlled by the criminal operation.

By the time your client gets to the closing, the criminals have disappeared with their savings.

This same scam can work on commercial institutions. Hackers have convinced banks to wire funds into bogus escrow accounts. They’ve even convinced escrow companies to redirect real estate agents' commission checks to their criminal accounts.

Most of the time, the victims don’t get their money reimbursed.

Verify your insurance coverage

Most wire transfer fraud falls under a combination of the following policies:

  • Errors and omissions, or professional liability insurance, covers damages from unintentional negligence or poor work.
  • Cyber liability insurance protects against risks associated with electronic activities or data breaches. (Cyber coverage is highly customized, so make sure your agent sources a policy that fits your needs.)
  • Fidelity bonds protect against losses from theft or dishonest acts by employees.
  • Escrow bonds protect title and escrow agents from loss due to fraudulent activities, including theft of escrow funds.

Talk to your Rathbun Insurance Account Manager about a protection package that covers your employees, third parties and clients. Victims may never receive full reimbursement for their losses, but you can try to cover part of the liability.

Prevention tips to fight wire transfer fraud

The National Association of Realtors offers these wire fraud prevention tips:

  • Ensure your employees can view complete email addresses on their accounts. Company email address books often display names and not actual email addresses. This makes it challenging to spot phony emails.
  • Consider turning off the auto-forwarding functionality on your global email settings.
  • Use encrypted email and cybersecurity software.
  • Confirm all wiring instructions by phone with a known number before transferring any funds.
  • Don’t email your financial information, such as routing or account numbers.
  • Go to the organization’s website for URLs instead of using email links.
  • Use caution when opening attachments, no matter who sent them. They can contain malware to weaken your computer security.
  • Update your internet system browser and network security software.
  • Don’t enter your credentials to verify fraudulent activity or unlock your account. Instead, call your IT department or email provider directly.
  • Don’t fall for communications that scare you into acting rashly. These are scams, and they don’t want you to think or verify anything.
  • Educate your clients on wire transfer scams. Tell them it’s OK to question anything that seems suspicious. Encourage them to call you using the contact information on your business card.
  • Share information about the closing process. The Consumer Financial Protection Bureau includes information on the path to homeownership.

Prevention is the best option when fighting fraud. If you’re a victim, report the scam to the Internet Crime Complaint Center. Stay vigilant and validate the request before you wire funds.