Why is Wire Fraud a Growing Threat in the Real Estate Industry

By: Owner, Brad Richardson, Bradley K. Richardson, P.C.
June 1, 2024

Why is Wire Fraud a Growing Threat in the Real Estate Industry

In the digital age, wire fraud has emerged as a significant threat, particularly in the real estate industry. With transactions often involving large sums of money, real estate is an attractive target for cybercriminals.

What is Wire Fraud?

Wire fraud involves the use of electronic communications to carry out fraudulent activities. In real estate, wire fraud typically occurs when these cybercriminals intercept and manipulate communication between buyers, sellers, and their clients, agents or attorneys. These criminals deceive their victims into transferring funds to fraudulent accounts, resulting in significant financial losses.

How Does Wire Fraud Happen in Real Estate?

  1. Phishing: Cybercriminals send phishing emails to real estate professionals and or their clients to gain access to their email accounts. These emails may appear to come from trusted sources, tricking the recipient into providing login details.

  2. Email Spoofing: Once these criminals gain access, they monitor the email traffic, waiting for the right moment. They then spoof the email address of a trusted individual, like the real estate agent or attorney.

Fake Instructions: These fraudsters send an email to the buyer, mimicking the real estate agent or attorney, with fake wiring instructions. Believing the email to be legitimate, the buyer wires the funds to the fraudster’s account. *Please visit your attorney’s website for the accurate phone number and ALWAYS call your attorney to verify wiring instructions.

Once the funds are transferred, the criminals quickly withdraw the money and vanish, making it challenging and often times unsuccessful to recover the lost funds.

What is the Real-Life Impact?

It’s profound! Victims can lose their life savings, and transactions can be delayed or fall through entirely. In some cases, the stolen funds are unable to be recovered.

How do I Protect Myself Against Wire Fraud?

1. Stay Educated and Aware

Educating all parties involved in real estate transactions about the risks of wire fraud is crucial. Recognize phishing attempts and suspicious emails.

2. Verify Wiring Instructions

Buyers should always verify wiring instructions by calling a known, trusted phone number for the real estate agent or attorney, rather than relying on information provided via email.

3. Secure Your Emails

Using encrypted email services can help protect sensitive information from being stolen.

Wire fraud in the real estate industry is a growing concern that requires vigilance. By understanding how these schemes work you can better protect yourself and your clients against this viable threat. Staying informed and cautious is the key to ensuring that your dream home doesn’t turn into a financial nightmare.

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