Nowadays, a crook can steal infinitely more money with a laptop computer than a gun. Hardly a week goes by without news of some large company’s computers being hacked. Given the real estate industry’s increasing reliance on internet commerce (and the seeming inevitability of e-closings), it was only a matter of time before cyber criminals turned their attention to home sales. Now, they have.
Earlier this month, Chicago Title Insurance Company issued a bulletin about a down-payment scam that has victimized numerous home buyers. As part of the con, hackers gather publicly-available information about lenders and estate agents, like employee names, company logos, physical addresses, and email addresses. The hackers then breach the email accounts of the lender or real estate agent and look for information about upcoming sales. Armed with those details, the hackers then create fraudulent emails—which appear to be from the broker or real estate agent—instructing the buyer or lender to wire closing funds to a bank account that differs from that identified in the preliminary report or escrow instructions. That new account is of course controlled by the hackers, who quickly withdraw any deposited funds and disappear forever.
Real estate companies can do several things to protect themselves from scams like this. First, they can use encrypted emails when transmitting sensitive information like wiring instructions. Second, they can teach employees to be alert for possible frauds, by looking for tell-tale signs like escrow accounts held in a third-party’s name or emails being sent outside normal business hours. Third, businesses should make a point of scrutinizing every email that deals with money or wiring instructions. The California Land Title Association wrote an instructive notice called Steps You Can Take to Avoid Being a Target of Wire Fraud Scams, which offers real estate professionals valuable guidance.