Erica Christoffer is a multimedia journalist and contributing editor with REALTOR® Magazine. In addition to writing print and online articles, Erica oversees the magazine's Broker to Broker content, co-manages the 30 Under 30 program, and manages the YPN Lounge. Connect with her via email: email@example.com.
The Threat of Wire Fraud Is Real
Help buyers avoid falling victim to a growing real estate scam that dupes them into giving their purchase money to hackers.
May 19, 2016
When NAR General Counsel Katie Johnson asked a group of real estate professionals whether they or someone they knew had clients that were victims of wire fraud, more than one-third of the audience at the Idea Exchange Council for Brokers raised their hands.
Johnson laid out the top legal friction points currently facing practitioners during the REALTORS® Legislative Meetings & Trade Expo in Washington, D.C. last week. Wire fraud topped the list as a sophisticated scam causing consumers to lose millions of dollars each year.
Hackers are gaining access to e-mail accounts through captured passwords, and they’ll search inboxes for messages related to real estate transactions, Johnson said. Once they find a victim who’s in the process of buying a home, they’ll send a spoof e-mail that looks like it’s from their agent, title representative, or attorney, and it will say there are “new” wiring instructions, which includes a fraudulent account. The home buyer will then unwittingly wire funds directly into the hacker’s account, Johnson said.
“Once they send it, the money is gone,” she added. “Millions of dollars are lost on this.”
Jessica Edgerton, NAR associate counsel, presented suggestions during the Professional Standards Forum & Committee Meeting to help clients avoid falling victim to wire fraud. “The more we raise awareness of these scams, the more red flags consumers will recognize,” Edgerton says.
Here are six tips for keeping the transaction secure:
1. Build a standard warning about wire scams into your e-mail signature or include a disclaimer at the bottom of your e-mails that says you will not discuss personal financial information over e-mail.
2. At the beginning of every transaction, tell clients what your communication practices are.
3. If you or your agents do engage in a wire transfer with a client, call them on the phone immediately prior to the transfer of funds so they know they’re sending money to the legitimate source.
4. You and your clients should avoid free Wi-Fi with no firewall to protect against hackers capturing an e-mail password or other sensitive information.
5. Always use strong passwords and change them regularly; advise your clients to do the same. It also wouldn’t hurt for your client to change their password before wire instructions are sent.
6. Brokers should consider employing a staff person who’s responsible for monitoring, updating, and implementing information security systems and procedures at your company.
“We can implement every technical safeguard we can think of, but if our people [agents and staff] aren’t following protocol, it’s like leaving the door to the citadel wide open,” Edgerton says.
The video below will also help educate your clients on the threat of wire fraud. Feel free to embed this video on your website or share it with your clients via e-mail or on social media.