Real Estate Fraud Via the Internet
With every technological advance, new dangers arise for the consumer. And the internet is no exception. Unscrupulous actors create new methods to scam the innocent. Home buying offers just such an opportunity for these cyberage thieves.
Since real estate transactions require moving large sums of money from buyers to sellers, the internet scammers have all the enticement they need.
According to the National Association of Realtors (NAR) and the FBI, cybercrimes in the U.S. (usually wire fraud) is rising sharply in the real estate sector. “The FBI reports that more than 13,000 people were victims of wire fraud in the sector in 2020 – an increase of 380% since 2017.” The total sum stolen in 2020 using wire fraud during real estate transactions was $213 million.
One of the most common scams is Business Email Compromise (BEC). Using this method the cyber criminals create a replica of the website of your bank, title company, etc. In this scam the email you received is to visit the website for instructions about transferring funds. You then click on the link and are brought to the fraudulent website. But your mind immediately recognizes the site as legitimate, as you have visited your bank it many times, but as stated above, it is a copy. The life savings of many of the victims is then lost.
In essence, according to Tom Cronkright, founder of CertifID, a wire fraud and prevention company, “Cyber perpetrators use social engineering to impersonate a [bank or] title company and introduce fraudulent wiring instructions so that closing funds are diverted to bank accounts under the fraudster’s control.”
But guess what? Home sellers are also at risk. For example, a title company can be tricked into sending their closing proceeds to a cyber scammer rather than to them after the transaction closes. These thieves often impersonate home sellers and provide title companies with phony wiring instructions to divert the seller’s funds to fraudulent bank accounts.
Other methods to scam a buyer include sending a fraudulent notification to wire a down payment to an escrow account. When people see the word “escrow” it triggers a positive mental response, as most people know that the purpose of escrow accounts is to prevent fraud and to hold money until everything is approved and agreed to. Again, the website looks perfect and professional. So, it’s extremely important to verify account numbers and other details about wire transfers by making a phone call to the receiving party in real time. Always verify!
According to Cronkright, “Cyber scammers use a precise playbook to deploy BEC scams in real estate transactions:”
-
Profile an active real estate transaction.
-
Identify the parties involved.
-
Send phishing emails to gain email account details.
-
Access email and harvest details of an upcoming money transfer.
-
Impersonate a trusted party and send fraudulent wiring instructions to someone responsible for sending funds.
-
Divert the wire funds transfer to an account under the fraudster’s control.
-
Engage a network to transfer the funds to other accounts or crypto wallets to avoid the return of funds to the victim.
Other types of real estate cyber scams involve mortgage payoff wire fraud, impersonating property owners to sell or mortgage property and steal the transaction proceeds and mortgage origination fraud.
Dear readers, please be aware that once money has been stolen over the internet, it is notoriously difficult to get it back. As mentioned above, please exercise extreme caution.