While so many of us have been focused on staying healthy and safe during a global pandemic, cyber criminals took note that much of the population shifted to working remotely, were more dependent than ever on technology, and thus were more vulnerable to wire fraud. The FBI’s Internet Crime Complaint Center (IC3) reported a record number of complaints in 2020.
Fraud Complaints Up 69% with Losses Topping $4 Billion
More than 790,000 Americans reported losses exceeding $4.1 billion -- a 69% increase in total complaints from the previous year! Not surprisingly, Business E-mail Compromise (BEC) schemes continued to be the costliest with 19,369 complaints and loss of approximately $1.8 billion. Phishing scams were also prominent with 241,342 complaints and losses of over $54 million.
Real Estate Wire Transfers Are Successful Targets
The real estate and title industry continue to be a big target for cyber criminals because they typically involve large sums of money, lots of correspondence between parties and urgent deadlines. Most real estate transactions involve wire transfers which are attractive targets for criminals seeking to divert funds into their fraudulent accounts.
According to ALTA’s 2021 Wire Fraud and Cyber Crime Survey, “title insurance professionals reported cyber criminals attempted to trick employees to wire funds to a fraudulent account in a third of all real estate and mortgage transactions.” Nationwide, 76% of title agents reported the number of wire fraud attempts held even or increased in 2020.
Recovering Lost Funds Successful in Only 29% of Cases
According to IC3, a full recovery of lost funds was only possible in 29% of cases. In 40% of the cases, less than 10% of the funds were recovered.
The absolute best chance you have of getting money back is speed. Immediately contacting the financial institution involved with the wire transaction has been shown to aid in recovery of funds. According to the IC3 report, 58% of the companies that were able to recover funds started the process by contacting their bank early.
The Devil’s in the Details
Vigilance and attention to detail is the absolute best way to identify wire fraud and avoid being a victim. Here are some quick tips.
- For buyers, sellers and borrowers, it is important to understand the closing process and know what to expect from whom and when.
- Educate yourself about ways to avoid being a wire fraud victim using resources like the wire fraud advisory on our website or NAR’s cybersecurity checklist.
- Verify important contact information with all participants and parties (attorney, lender, realtor, etc.)
- Be suspicious of last-minute changes. Urgent requests to send money and any change in wiring instructions are huge red flags.
- Always confirm wiring instructions via trusted contact methods – pick up the phone and call your agent, lender or attorney and don’t just use the contact information in the email. Unfortunately, you cannot assume the contact information contained on the wiring instructions or in the email is correct – it could all be fraudulent.
- Follow up right away to confirm funds were received by the appropriate party. If there is an issue, the faster you know about it, the faster you can act and potentially recover the money.
- Training and awareness are paramount so educate employees and stress how important it is for them to also alert clients and all other parties. The more employees and consumers who understand that changing wiring instructions is a huge red flag, the more likely we can make these wire fraud attempts and cybercrime scams unsuccessful.