Real estate licensees around the world are facing increasing threats from wire fraud scammers. These scammers are becoming more sophisticated as they try to obtain financial benefit from defrauding others. When their efforts are successful, you and your clients could be facing significant financial losses, plus your reputation as a licensee could be forever tarnished. It’s crucial to keep up with the latest developments in wire fraud scams so you know what to watch out for. We’ll discuss these new scams, take you through recent real-life cases, and share tips to help you avoid getting caught up in a wire fraud scam in your business.
SMS/Text Message Deception
SMS/text message scams are on the rise. These days, scammers try to impersonate people known to their target. This includes family, friends, and even service providers such as real estate licensees. Imagine if one of your clients receives a deceptive text message from someone pretending to be you, advising about a supposed change in bank account or wire details. A real estate licensee just like you could also receive a message seemingly from a client or a supplier, such as a home staging service, with a similar motive.
Common tactics used by SMS/text message scammers include:
- Payment requests – these may be small amounts, for example, a processing fee, or a registration fee. But the scammers then use the information to access more funds. It’s common for these messages to have a time component where the target has to do something immediately, to try to prevent the target from verifying whether the message is legitimate.
- Questions asking you to verify your identity or requesting personal information they can use to access accounts and other personal data.
- Including suspicious links in the text messages that lead to scam websites. On these websites, a person will likely be asked to enter personal information or create an account (and the scammers are relying on the fact that many people will use the same password for multiple platforms and accounts). Links can also lead to malware being installed on your computer.
Email Spoofing
Email spoofing is where a scammer pretends to be someone else, usually someone their target would trust. They do this for deceptive reasons to try and coerce a person to take a particular action. Typically, this involves a request to click on a link, log in or register for something, or send money.
Email spoofing has been around for a long time, but with the onset of so many artificial intelligence (AI) tools, they are getting harder to spot. In days gone by, the red flags of email spoofers could be quickly and easily identified due to spelling and grammar mistakes, poor sentence structure and formatting, and generic greetings that seem not quite right for an email. For example, “Greetings Sir/Madam” or “Dear Esteemed Friend”. Nowadays, spoofers have the tools available to write flawless copy, making it more of a challenge for readers to identify them as scam emails.
To protect yourself and your clients, do not click on any attachments, especially PDFs, that come from someone you don’t know. Find the agent or broker online and call them to verify they’ve sent you an email. Learn more about email phishing attacks.
Email Takeover
An email takeover is another example of a ‘Business Email Compromise’ scam. In this instance, a fraudster will gain access to an email account of a key party to the transaction, for example, an escrow officer, or a real estate licensee. They will then monitor communications, waiting for a transaction to happen. The email account is then used to send new instructions that direct a person to send money to the scammer’s accounts, in what appears to be a legitimate request.
The best practice for your clients is to advise them to call you at the number you’ve provided previously, before they wire any money or respond to any email requests for more information. Taking this extra step can help your clients avoid losing hundreds of thousands or even millions of dollars to wire fraud.
Recent Cases
The AARP reported last year that a New Jersey couple lost over $90,000 to scammers in a wire fraud scam. As they prepared to sell their family home and downsize to a smaller property, they were subjected to a wire fraud scheme. Someone impersonated their real estate attorney and asked them to wire their payment to an account. However, they discovered days later that the request was not actually from their attorney but a scammer instead.
The U.S. Sun also reported a case where a family lost $160,000 of their savings when trying to buy a property in Ohio. Because Ohio state law requires a $10,000 wire transfer, a request to transfer the funds didn’t appear to be that unusual. They even called to confirm the details were correct. However, soon they discovered it was all a scam and the money did not go to the Title Company as planned.
Tips for Real Estate Licensees to Avoid Wire Fraud Scams
If you’re a real estate licensee who wants to avoid being embroiled in a wire fraud scam, follow these useful tips that will protect both you and your clients:
Educate Your Clients
Educate your clients about the transaction process, so they know exactly when payments will be required and how they will be made. Ensure they are aware of red flags to watch out for and have measures in place (i.e., to call you at a number you’ve previously given them) to confirm any changes to the transaction, so they do not find themselves being a victim of a scammer.
Keep Updated & Aware
Licensees should keep updated and aware of any emerging wire fraud scams and trends so they can protect themselves. When new scams arise, ensure your clients are informed and aware of any additional risks. Get our latest posts by email so you don’t miss any!
Ensure Your Systems Are Secure
Keep your IT systems safe and implement security measures such as two-factor or multi-factor authentication to safeguard against scammers. Always use strong passwords that cannot be easily guessed with a mix of uppercase and lowercase letters, numbers, and symbols. And never use public Wi-Fi without using a VPN.
Follow Documented Internal Protocols
Ensure you follow documented procedures and internal protocols when it comes to dealing with payment instructions and transaction information. If you’ll be meeting with your clients in person, print out the wire instructions and hand them the paper, which should include your correct phone number and the escrow officer’s correct phone number. Be sure they know not to call any other numbers they may receive, or blindly follow any change in wire instructions, even if the change looks like it came from you or escrow.
Include Warnings & Notices in Your Communications
The National Association of REALTORS® recommends its members include a warning or notice in their email signatures to warn against the dangers of wire fraud scams.
Be Skeptical
Real estate licensees should remain skeptical about any communications requesting sensitive information or advising about a last-minute change of plans to a transaction. Licensees should also recommend to their clients to use caution when dealing with these requests.
Approach any communications with caution and ensure you verify instructions or changes through other methods before taking any action. For example, phone the escrow officer, title company, client, or other organization in question directly with the phone number you have on file. Do not click on any links or use any phone numbers sent to you in the email.
Protect Yourself and Your Clients
Let CRES find you the best coverage for the best price. CRES real estate E&O + ClaimPrevent® even includes access to qualified attorneys pre-claim to help you avoid legal troubles. Contact the CRES team at 800-880-2747 for a confidential discussion today.
