Tech Savvy Crooks Look to Separate House Hunters from Their Money

As we approach peak house hunting season, homebuyers may have a few items on their checklist. Finding a cozy colonial near a good school and making forever friends in a new neighborhood are exciting memories that every family should look forward to when searching for a new home. However, there is one growing threat that many homebuyers are not aware of when closing on a new house. The crime is still underreported, even when it costs families millions each year — before they receive the keys to their house. No, it’s not flooding or termites. It’s wire transfer fraud.

Business email compromise (BEC) or email account compromise (EAC) are modern burglary tactics that cybercriminals use to commit wire transfer fraud and syphon funds from unsuspecting homebuyers. Recently, the FBI released their 2019 Internet Crime Report and reported that last year alone they received nearly 24,000 complaints about BEC, which resulted in more than $1.7 billion in losses. Additionally, more than 11,600 Americans fell victim to real estate wire fraud in 2019 with losses totaling $221 million, up from $150 million in 2018. This is just the tip of the iceberg as the FBI estimates that only 12-15 percent of all wire fraud is reported.

These crimes leave many victims wondering how it could happen to them — even with so many preventative measures in place. The answer is simple: the most advanced cybercriminals do not look like criminals. They look like everyone else.

Today, most transactions are conducted virtually. Communicating through emails and text messages may be more convenient, but it also offers cybercriminals a window into a homebuyer’s life. Once a cybercriminal infiltrates your email account, they may know the names and email addresses of real estate agents, how to look for signs that you are about to close a deal and the best time to disguise themselves as people you know and trust.

In February 2018, a victim of wire fraud located in New York received a compromised email from an account that looked like their closing agent during a real estate transaction. They initiated a $50,000 wire transfer into a fraudulent bank account. Similarly, a victim located in Colorado reported initiating a fraudulent wire transfer of nearly $60,000 in September of 2018 after receiving a spoofed email from a lending agent during a real estate transaction. And just last week, it was reported that Barbara Corcoran, the co-star of ABC’s Shark Tank, fell victim to an email phishing scam costing the real estate guru nearly $400k.

Sadly, in many cases, a customer may initiate a wire transfer through a bank without speaking to their real estate agents or title insurance companies in-person or over the phone to confirm that the money is being sent to the right account.

Title professionals take many steps to safeguard consumers against the ever-evolving tactics of cybercriminals and have rapid response plans should a wire fraud incident occur.

As technology becomes more sophisticated, so do cybercriminals. Each day, thieves are finding new and innovative ways to commit fraud — and consumers have to remain vigilant and aware of the signs. Real estate wire fraud doesn’t just cost Americans money, it costs them their sense of security and peace of mind. Buying a home is arguably one of the most important financial decisions a person makes, and these scams have the potential of shattering the dreams of millions of hard-working Americans.

Title professionals know the key to keeping these crimes from happening in their community is awareness, and they cannot do it alone. This needs to be a coordinated awareness effort involving real estate agents, policy makers, consumer groups, title insurance companies, title and settlement agents, real estate attorneys and homebuyers and sellers. It is time for the industry and policymakers to work together to ensure consumers are educated on these threats and that the proper safeguards are in place to ensure every family’s homebuying experience remains under lock and key.

Diane Tomb is chief executive officer of the American Land Title Association.