Author: Heather Connor
Wire fraud is a federal crime that involves telecommunications or the internet. In the case of real estate, and especially in a resort location such as Crested Butte, large sums of money are being transferred via wire. After all, primary and vacation homes are usually one of, if not the biggest investment you will make in your life.
In our town, funds from a real estate transaction are usually wired to a title company that will act as the escrow agent throughout the transaction. We have a handful of title companies that are physically located in the Crested Butte and Gunnison areas. As well, there are several outside of our resort market that are sometimes utilized when our local companies are full. With all that being said, local or not, wire fraud can occur at any time and the methods are surprisingly stealthy.
3 Ways that Scammers Create the Scam
1. Phishing: Usually it begins with what is called phishing – in which a hacker uses a fake email, phone number (including utilizing texts) and/or websites to impersonate someone you trust. Examples could be your real estate agent, title company or lender. These communications can include sensitive information that they have gleaned from previous emails, and cause you to believe their authenticity.
2. Spoofing: Spoofing occurs when the hacker uses special software that mimics your agents or title company’s email or phone number. Alarmingly, when a spoofer sends you an email or calls you, it can look like it is coming from your agent or title company’s phone number or their email address.
3. Faking an Error: Once they have information or the software to impersonate your agent, lender or title company, they will then send communications about an error in the process. The scammer may state that there has been a last-minute change or that they sent the incorrect information the first time. Usually there is pressure and urgency for you to complete the wire quickly and to a new account not previously listed. This should always be a red flag and you should take the proper precautions to verify the accuracy of the information. Once money has been sent to an incorrect account, it is challenging if not impossible to retrieve.
While you may think you would never fall for a scam, reports of mortgage/wire fraud are rising and according to data from the Federal Trade Commission, in 2017 alone, consumers lost over $1billion in real estate transaction costs to such scammers.
5 Ways to Protect Yourself Against Wire Fraud
- Understand the Closing Process. Speak with your agent in-person or over the phone and understand the closing process and be aware of dates and deadlines. Ask about valid payment methods and discuss with your title company directly about how best to wire funds.
- Write down contact information for everyone that is involved in your real estate transaction. This may be your real estate agent, mortgage lender, title company, etc. Write down each party’s name, email address, phone number.
- Always confirm wiring instructions by calling the title company. You will want to use the trusted number that you wrote down prior, or perform an independent internet search and use the phone number listed. Do not use the phone number provided in the wiring instructions as they could be falsified.
- Never e-mail important information. Even if this information was sent safely to the correct party, scammers could always hack this information at a later date.
- Trust your gut. If someone calls you from what appears to be a correct phone number or e-mail- but something seems “off” – pay attention. Hang up and call back using one of your trusted numbers to verify the call or email. As well, if someone seems to be pushy and/or causing unnecessary urgency or panic – go through your process of calling from your trusted contacts that you wrote down previously.
There will only be a few points in the transaction in which you will need to involve wires, whether from the purchase or sale side. In general, it is best to take the stance of caution and ensure you take the extra step to protect your funds.