In our industry, the news consistently shares that wire fraud is still prevalent, and we share tips and strategies to combat fraud. Today, a true story of wire fraud and its effects when it hits home is an opportunity to understand how difficult it truly is when a scammer steps in.
This story begins similarly to most other homebuying experiences. There is a buyer and seller with everything going smoothly until it doesn’t.
The buyer was to bring $40,000 to the table for settlement. He was sent an email with wiring instructions. While it was never truly discovered how the scammer broke in, the transaction was compromised and monitored.
Let’s stop here to mention that the FBI states that agents’ emails are often the entrance points for scams. Agents can be found online, and scammers will email the agent with a questionable link in the email. When the agent clicks, it may seem as if nothing has happened on their end. However, spyware may have been placed in the recipient’s computer through that click, so the scammer can monitor incoming and outgoing emails to find just the right one to infiltrate.
While it’s not been proven that’s what happened in this instance, the scammer may have entered an agent’s computer in this manner. Then, the scammer created an email address very similar to the title processor’s email involved in the transaction, essentially one letter off. It was a subtle change that set this deal in the wrong direction.
A typical scammer email creates a sense of urgency. For example, the buyer receives wiring instructions a week before settlement. Then, he receives another email stating that the first one was incorrect and funds must be transferred immediately. Stopping to confirm these instructions isn’t top of mind; the buyer needs to get to the bank.
Scammers also want funds sent as far from the settlement date as possible. For example, a scammer wants the funds sent a week before settlement. The hope is that the buyer won’t know the funds went to the wrong place until he shows up at settlement and is notified that the money isn’t there. It’s probably too late to get the money back at that point, as the scammer will have moved it to a different account.
In our true story, the buyer received his correct wiring instructions only to receive the email with the change to the instructions three to four days before settlement. He ran out to the bank, ordered the wire, had it sent to the scammer and went to his settlement appointment as scheduled.
Once the buyer was there, he was asked if he had brought $40,000, to which he responded, “Oh! I sent that a couple of days ago.” The settlement agent went to confirm that the wire was received…only to find no money there.
Together, they reviewed the wiring instructions, and it was clear to the settlement agent that the email was a fraud. The form used by the scammer looked very similar to the one used in typical settlements, but the account and phone numbers were changed to the scammer’s information. Then, the FBI was contacted.
Typically when a wire is sent, it can’t be recalled, but the receiving bank can be contacted and asked to freeze the account and hold the funds. However, that bank may be hesitant because how do they know the person asking for the hold isn’t a scammer?
In this case, the FBI stepped in and stopped and recovered some of the money. It took a few days, but they were able to claw back over $30,000. This was only possible because it hadn’t been long since the initial wire was sent. Despite the actions of the FBI, the buyer still lost close to $10,000 in the scam, and there was no insurance protection for the money lost. However, there is good news; the buyer was able to work with the seller and still bought the home. It often goes the other way if the money isn’t fully recovered.
The Highland Title + Escrow team wants to reinforce the importance of verifying wiring instructions by phone or in person. Asking questions regarding instructions is encouraged and can be the difference maker at settlement.