How to avoid real estate scams | #phishing | #scams


We consulted two experts for advice via email: Tom Cronkright, co-founder and CEO of CertifID, a wire fraud recovery and prevention company; and Adam Levin, author of Swiped, founder of CyberScout and co-founder of Credit.com and host of the podcast “What the Hack with Adam Levin.” The following was edited for length and clarity.

Are real estate related scams more common now than in the past?

Levin: Real estate was a booming industry during the coronavirus, and the scams that target real estate kept pace with the record number of transactions. In general, real estate scams have become more common in recent years, with double digit increases reported for the past three years. During the height of the covid-19 pandemic, real estate transactions were all done remotely, which allowed criminals to do their thing.

Cronkright: Yes. Wire fraud is now the single largest threat to real estate transactions. Unfortunately, a vast majority of these scams go unreported, so it is hard to determine the true size and scope of the problem. Multinational fraud syndicates use wire fraud to monetize what has become the fastest growing cyber fraud in the country — business email compromise (BEC). With a single email, we’ve seen home buyers tricked into sending their life savings to a fraudster.

Are buyers or sellers more vulnerable to cybersecurity threats or are they both equally vulnerable?

Levin: Buyers and sellers are equally vulnerable, but they are targeted differently. Buyers are more likely to encounter wire fraud. Sellers are more likely to be the target of foreclosure scams and identity theft-based title fraud where scammers open new lines of credit leveraged against homes.

Cronkright: Home buyers are more susceptible to falling victim to a wire fraud scam because they are responsible for sending closing funds to the title company. With the median home sale price now above $400,000, home buyers frequently wire $80,000 or more to satisfy their closing obligations. Cyber perpetrators use social engineering to impersonate a title company and introduce fraudulent wiring instructions so that closing funds are diverted to bank accounts under the fraudster’s control.

Home sellers face the risk that a title company is tricked into sending their net closing proceeds to a cyber scammer rather than to them after the transaction closes. On average, sellers are receiving over $100,000 in net proceeds payouts on the sale of their home. Cyber scammers often impersonate home sellers and provide title companies with spoofed wiring instructions to divert the seller proceeds to fraudulent bank accounts. Once the money is gone, it is very hard to recover which could jeopardize the transaction and lead to the commencement of legal proceedings between the parties.

What are some of the most common real estate scams?

Levin: Wire fraud is by far the most common real estate scam. Prospective home buyers get a notification to wire a down payment or closing costs to an escrow account. It could be legitimate, but it could also look like a call or email is coming from a legitimate company when it’s actually a scammer. Money sent by wire transfer is notoriously difficult to recover. Always verify account numbers and other details about wire transfers by initiating a call to the receiving party in real time.

Cronkright: Wire fraud is the most common scam in real estate. Cyber scammers use a precise playbook to deploy BEC scams in real estate transactions which includes the following steps:

⋅ Profile an active real estate transaction.

⋅ Identify the parties involved.

⋅ Send phishing emails to gain email account credentials.

⋅ 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 forms of real estate scams involve mortgage payoff wire fraud, impersonating property owners to sell or mortgage property and steal the transaction proceeds, and mortgage origination fraud.

What can consumers do to protect themselves from a scam?

Levin: Consumers need to take their time with every incoming email, text and phone message to make sure the person they’re communicating with is who they claim to be. Are the domain names in email addresses the same as in previous communications? Add your real estate agent and lender to your contacts to ensure texts and calls from them can’t be spoofed. Any urgent notification about transferring funds or sensitive data should be viewed as suspect.

Cronkright: Here are five strategies to lower the risk of real estate scams:

⋅ Ask your title company about how and when closing funds are transferred.

⋅ Independently verify wiring instructions before sending funds. Do not call the number on the wiring instructions or reply to the email used to deliver them.

⋅ Confirm the receipt of funds by the proper party after they have been transferred.

⋅ Be suspicious of any new or updated wiring instructions.

⋅ If something feels off, pick up the phone or stop by the office of your real estate agent or title company.

What if someone is victimized? What should they do first? Where should they report it?

Levin: The first thing you need to do when you’ve been victimized in an online crime is file a police report. Ask if the report will be filed with the FTC, and if they aren’t sure, do it yourself. Then go to www.annualcreditreport.com, get a free copy of your credit report from Equifax, Experian and TransUnion. Review them for suspicious activity (you can have them put a one year fraud alert on your file or better yet, freeze your credit) and monitor your accounts for any unauthorized activity. Go to HaveIBeenPwned at https://haveibeenpwned.com/ to see whether your email and passwords or your phone number show up on the dark web.

Cronkright: If you’ve been victimized by a real estate wire fraud, the following steps will provide the best chance of recovery:

1. Contact your financial institution and request that they notify the financial institution that received your funds of the fraudulent transfer.

3. Contact your local office of the United States Secret Service or local law enforcement.

4. Notify your insurance carrier if you have protection for identity, cyber or funds transfer loss.

5. Be persistent and continue to inquire as to the status of your funds.

6. If you are a company, notify your IT department or provider and request a full incident investigation and responsive measures if necessary.

Can victims get back their money or the title to their house if they’ve been scammed?

Cronkright: Yes, but they must act fast. The chance of recovering stolen funds after 48 hours of a wire transfer is low. Cybercriminals coordinate the movement of stolen funds in nearly real-time through elaborate networks that utilize bank accounts, cashier’s checks, cash withdrawals and crypto wallets to launder funds.

If you are sending money, it’s important to verify that it was received by the proper party within 24 hours of the transfer. If you are receiving money, contact the party sending you the funds and verify when the transfer was initiated. If a wire transfer does not show up to the proper bank account within a day, act as though something went wrong and start the recovery process outlined above.

Levin: Scammers will typically target older people, especially with title-based identity theft. If you have elderly relatives, be sure that they’re aware of the dangers that are out there. Suggest to your older friends and relatives that they get copies of their credit reports from all three credit reporting agencies and that they enroll in an identity monitoring program that notifies them whenever their sensitive personal or financial information is involved in credit transactions. They should also freeze their credit at all three credit reporting agencies.

Cronkright: All parties in a real estate transaction must work together to avoid a scam from taking place. Home buyers and sellers should hire real estate professionals and title companies that understand the importance of protecting email accounts, private information and funds transfer from cyber perpetrators.



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