Wire Fraudsters Scamming Home Buyers for Billions

Imagine getting ready to close on your first home.  It’s a beauty.  It’s in the right neighborhood. It’s close to restaurants and you can even walk to get coffee in the morning.  It was expensive, but you saved for years to buy it.  If all goes well you will close in 2 days and move into your dream home.

The day before closing you get an email from your real estate agent.  They send you wiring instructions and request that you send in $200,000 from your bank account to the bank and include the routing number.

You send the wire, and breath a sigh of relief.  You did it.  You closed. You own your dream home!

Not so Fast

But you don’t own your dream home. In fact, you were just the victim of one of the fastest-growing scams in America- Wire Fraud.

Those wire instructions you received didn’t come from your real estate agent but from sophisticated hackers.  Not only do you lose $200,000 of your hard earned money, but you will likely lose your dream home too since you don’t have funds to pay the real closing anymore.

The Scam Targets Real Estate Agents and Home Buyers

The email might have appeared legitimate but it was all part of a sophisticated hacking scam that targets real estate agents.

Hackers will find real estate agent emails on the internet or their websites. They will then send carefully disguised emails that contain harmful links in them.  If the real estate agent opens the link accidentally, it will install malware on their computer which gives the hackers full access to their computer.

The hackers will then monitor the agent’s emails and look for homes that are about to close. Right before the home closes, the hacker sends an email (from the real estate agents email) to the buyer instructing them to send a wire transfer to a fraudulent account.

To the buyer, it all seems legitimate.  To the real estate agent.  They are clueless. They never sent the email and they have no idea what happened.

This Scam is Growing Fast

Because hackers have been so successful with this type of scam, it is growing like a wildfire.

The impact of wire transfer fraud on home buyers is very large. Since 2013, American homeowners have been defrauded over $748 million of their hard earned savings.

The scam is so bad that it even prompted the FBI to post alerts to businesses and consumers to be on high alert.  By last year, the FBI had projected that fraud losses due to wire fraud had doubled.

Hackers are making a goldmine by scamming consumers with these sophisticated schemes. I am glad the FBI is stepping up their efforts to crack down.

Mortgage Companies Responding

All of this fraud and risk is being noticed by mortgage companies that are also cracking down on the scam.

First American published notices about this scam back in 2014 when they saw it emerging. They notified real estate agents nationwide to be on high alert for these phishing and hacking scams that could cost their customers money.

Be on Alert

First American also published a handy infographic for real estate agents that provides many recommendations of how to avoid falling victim to this scam.   These are some practical recommendations that can help you from becoming a victim

Thanks for reading and watch out for the fraudsters!

Frank McKenna is the Chief Fraud Strategist for PointPredictive and a Fraud Consultant based in San Diego California