I am frequently asked questions about wire fraud in real estate transactions. Some of my answers stay the same year to year, while others can change. The reasons for the changes vary but generally fall into a couple of categories; cybercriminals change what they are doing, and new tools are available to help protect companies and consumers. Here is an updated list of questions and answers with guidance on protecting yourself.
How prevalent is wire fraud in real estate transactions?
Wire fraud in real estate transactions has become increasingly prevalent in recent years. In 2020, the FBI reported a rise in real estate wire fraud scams, with losses exceeding $1 billion. Scammers use various methods to trick buyers and sellers into sending money to fraudulent accounts, often posing as a trusted party such as a title company or real estate agent. To minimize the risk of wire fraud, it is essential for all parties involved in a real estate transaction to exercise caution and follow best practices for safeguarding personal and financial information.
What are some examples that a person can use to reduce the risk?
Here are a few examples of steps that can be taken to reduce the risk of wire fraud in real estate transactions:
- Verify the identity of all parties involved: Before sending any money, verify the recipient’s identity by calling the title company or real estate agent directly using a known phone number, not the one provided in the email.
- Use secure methods of communication: Use secure email or file-sharing platforms to communicate sensitive information and avoid using public Wi-Fi or unsecured networks.
- Be cautious of unexpected changes: Be wary of changes to wire instructions, especially if they come via email. Confirm all changes with a phone call to a known and trusted source.
- Use strong passwords: Use strong, unique passwords for all accounts related to the transaction and enable two-factor authentication whenever possible.
- Educate yourself: Stay informed about the latest scams and frauds in the real estate industry, and educate yourself and others on how to protect against them.
- Consider insurance: Consider purchasing cybercrime insurance to protect against financial losses due to wire fraud.
Remember, it’s always better to be cautious and take extra steps to protect yourself, especially regarding financial transactions.
How do cybercriminals find out about the transactions in progress?
Cybercriminals can find out about real estate transactions in several ways, including:
- Phishing scams: They may use phishing emails or text messages to obtain sensitive information, such as passwords and login credentials, by posing as a trusted party.
- Data breaches: They may obtain information through data breaches at title companies, real estate agencies, or other organizations involved in the transaction.
- Public records: They may find information through public records, such as property listings, or by monitoring online real estate forums and websites.
- Social engineering: They may also use social engineering techniques, such as impersonating a trusted party, to gather information and trick individuals into sending money to a fraudulent account.
Focus on being cautious of unexpected emails or wire instructions changes, using secure communication methods, using strong passwords, and being vigilant about with who you share sensitive information. It’s essential to be aware of these methods and take steps to protect yourself and your personal and financial information. Additionally, it’s vital to educate yourself and others on the latest scams and frauds in the real estate industry and stay informed about the latest security practices and technologies.
Are there any technologies available to help reduce the risk?
Yes, there are several technologies available that can help reduce the risk of wire fraud in real estate transactions:
- Secure email platforms: These platforms use encryption to secure the transmission and storage of sensitive information, making it more difficult for cybercriminals to access or intercept the information.
- Two-factor authentication: This technology adds an extra layer of security by requiring users to provide two forms of identification, such as a password and a one-time code sent to their phone, before accessing an account.
- Digital signatures: Digital signatures allow individuals to sign documents electronically, reducing the need to send sensitive information through email or fax.
- Blockchain technology: Blockchain technology can be used to securely store and track real estate transactions, making it more difficult for cybercriminals to interfere or tamper with the transaction.
- Cybercrime insurance: Insurance can provide financial protection in the event of a successful cyber-attack or wire fraud.
These technologies can help reduce the risk of wire fraud in real estate transactions. However, it’s still important to be vigilant and follow best practices for protecting personal and financial information. Individuals can better protect themselves from wire fraud in real estate transactions by combining technology with education and caution.
Do secure email platforms reduce the risk if you are communicating with someone impersonating a transaction member?
Secure email platforms can reduce the risk of communicating with someone impersonating a transaction member. Still, they are not a guarantee against email impersonation or wire fraud. While secure email platforms use encryption to protect the transmission and storage of sensitive information, they do not prevent cybercriminals from impersonating a trusted party and tricking individuals into sending money to a fraudulent account.
To reduce the risk of email impersonation and wire fraud in real estate transactions, it’s important to follow best practices for protecting personal and financial information. Such as verifying the identity of the recipient before sending sensitive information, using unique email addresses for each transaction, checking the email address carefully, enabling two-factor authentication, educating others involved in the transaction, and reporting suspicious activity. Individuals can better protect themselves from wire fraud in real estate transactions by combining technology with caution and education.
What should I do if I fall for one of these scams?
If you fall for a wire fraud scam, it’s essential to take the following steps as soon as possible to minimize the damage:
- Contact your bank: Contact your bank immediately to report the fraud and request that they stop the transfer of funds. In some cases, banks may be able to recover the stolen funds.
- Report the scam: Report the fraud to the local police and the FBI’s Internet Crime Complaint Center (IC3) at www.IC3.gov.
- Contact the title company or real estate agent: Inform the title company or real estate agent of the fraud to help prevent others from falling victim to the same scam.
- Review your accounts: Review your financial accounts to ensure that no additional unauthorized transactions have been made.
- Consider cybersecurity insurance: Consider purchasing cybersecurity insurance to provide financial protection in the event of a successful cyber attack or wire fraud.
It’s essential to act quickly and take these steps to minimize the damage and help prevent others from falling victim to the same scam. It’s also important to educate yourself and others on the latest scams and frauds in the real estate industry and stay informed about the latest security practices and technologies to help reduce the risk of wire fraud in the future.
Is cyber security insurance available to a consumer?
Yes, cyber security insurance is available to consumers. Cybersecurity insurance, also known as cyber liability insurance or cyber insurance, provides financial protection in the event of a successful cyber-attack or wire fraud, such as the loss of funds due to a phishing scam or a data breach.
Consumers can purchase cybersecurity insurance as an individual policy or as an endorsement to their existing homeowners or renter’s insurance policy. The coverage can include protection for personal information, reimbursement for costs associated with identity theft, and coverage for lost funds due to a wire fraud scam.
It’s important to carefully review the terms and coverage of a cybersecurity insurance policy and work with an insurance agent or broker to determine the right coverage for your needs. By purchasing cybersecurity insurance, consumers can better protect themselves and their finances in the event of a successful cyber-attack or wire fraud.
Do you have any other recommendations?
Yes, here are some additional recommendations to reduce the risk of wire fraud in real estate transactions:
- Be cautious of unsolicited emails or emails that contain unexpected changes in wire instructions, even if they appear to be from a trusted source.
- Use a trusted source for wire instructions: Only use wire instructions from a trusted source, such as the title company or real estate agent, and verify the instructions with a phone call to the trusted source using a known phone number.
- Avoid using public Wi-Fi: Avoid using public Wi-Fi when accessing sensitive information or sending wire transfers. Cybercriminals can easily compromise public Wi-Fi.
- Keep software up to date: Keep all software, including antivirus and anti-malware programs, up to date to protect against the latest security threats.
- Use strong passwords: Use strong passwords and unique passwords for each account to protect against password-based attacks.
- Monitor financial accounts regularly: Regularly monitor financial accounts, including bank and credit card accounts, to detect any unauthorized transactions.
By following these recommendations and staying informed about the latest security practices and technologies, individuals can better protect themselves from wire fraud in real estate transactions.
