Real Estate Wire Fraud & Buyer Psychology
July 30, 2017 | Linda Ash
Real estate is one of the industries plagued by the BEC scam. Real estate Buyers routinely wire large sums of money to close deals. Most are not trained to recognize fraudulent emails, and can be easily deceived. The typical real estate scam does not require cyber-criminals to employ sophisticated technology tools. Instead, it mostly depends on them having detailed knowledge of real estate deals, and psychology of home buyers.
Buyers have to deal with mounds of paperwork to purchase a home, and most fine it very stressful. They rarely scrutinize every single document or analyze details of every transaction involved in the purchase. Instead, they simply trust the agents they hired to do it for them.
How does it Work?
It all starts with a compromised account. You can count on the Ash & Rose Real Estate Team at Watson Realty to only use a highly secured email account when sending information to you about your transaction. Once criminals get access to messages (either though phishing or keylogging), they collect identifying details on each deal that is about to close. Pretending to be the buyer’s agent, they message the buyer with money wire instructions, urging them to quickly transfer funds to close the transaction. Thinking the email came from their agent, targeted buyers transfer the money requested into the hacker’s account. From there, it is either immediately withdrawn by the hackers, or transferred overseas, making it very difficult to trace and recover.
After the Fact, or Recovery Efforts
Numerous real estate associations and banks have recently issued alerts, attempting to curb the quickly spreading scam. Unfortunately, once funds are transferred into the wrong account (and are cleared out by cybercriminals), it’s often impossible to get them back. Prosecuting wire fraud is a difficult and tedious task, and the success rate is very low.
While it is possible to purchase cyber liability insurance, wire fraud is rarely covered by such policies. According to a survey conducted by Betterley Risk Consultants, in 2015, only 8 out of 31 leading insurance companies covered fraudulent wire transfers. The rest argued that if funds are transferred voluntarily (even if the victim was deceived to do so), the cyber insurance liability does not cove the loss.
The best way to protect buyers’ funds is to take preemptive measures. Many agents who work alone or for a small office don’t have a dedicated IT person to help them choose the best technology to protect themselves and their clients from electronic fraud and cyber-attacks. Here are some reasons why you should use an agent on the Ash & Rose Real Estate Team at Watson Realty Corp.:
- Our email accounts have additional forms of authentication making it much harder for hackers to get access to emails. Using our own domain has much better control over security.
- Watson Realty Corp. has a secure firewall to block suspicious activity.
- Passwords are changed regularly.
Pay attention to details and trust your instincts, a lot of things can be spoofed and look genuine, from email signatures to complete websites. However, if your instinct is telling you something is not right, examine the email further. Is the contact information in the email match the one you have in your records? Is the email address correct? If you don’t feel right about the message you received, don’t reply to the sender. Always verify money transfer requests over the phone. The easiest way to ensure the money request came from the person you know is to talk to him or her over the phone. Obviously, it’s important to use the phone number you have in your records, rather than the one provided in the email asking you to transfer funds.