The Internet Complaint Center of the Federal Bureau of Investigation has seen an almost threefold increase in the number of identified victims who have lost money since January 2015. Within the last half-decade, many people have begun operating remotely, and most real estate transactions are now virtual. Over the years, more and more instances have occurred in the real estate industry in which buyers have wired funds, either for a purchase and sale deposit or closing funds, to a hacker, and have had their hard-earned money vanish into thin air.
Imagine this scenario: You have worked hard and saved up money to buy your dream home. You find the perfect home, make an offer that the seller accepts, the home inspection goes well, and you are excited to move forward. Then, right before your purchase and sale agreement is due, you get an email from your agent…or so it seems, asking for the deposit to be wired to their brokerage or the listing brokerage.
Unsuspecting, you wire the money over because you believe it’s from a reputable source. Your agent calls you two hours later to set up a time to meet and sign the purchase and sale agreement. During that call, your agent says, “Don’t forget to bring your deposit check!”. At that moment, you realize the money was not wired to the brokerage and that your agent never sent that email! The money is GONE!
This has happened with both purchase and sale deposits and closing funds, and it has occurred on multiple occasions. It has also happened to very reputable REALTORS®, real estate agencies, responsible buyers, and law firms. Do not be fooled into thinking this couldn’t happen to you!
The Scam and How it Works
This money wiring scheme is complicated and crafty. First, the scammers infiltrate a real estate agent’s email account. Then, they monitor the time frame from offer acceptance through purchase and sale execution, and all the way to the days leading up to the closing. Once one of these events is within sight, they create an email address very similar to that of the agent involved.
Let’s take this example: The agent’s name is Joe Smith, and he works for The REAL ESTATE Company, and Janet, the home buyer, has recently decided to purchase one of his listings. Can you spot which correspondence is legit and which is a scam?
Email A
*All of the information in these emails are fabricated, these numbers are not actual account numbers.
Email B
*All of the information in these emails are fabricated, these numbers are not actual account numbers.
At first glance, these emails seem identical, but if you examine the “From” fields more closely, you’ll see that they have switched the email name from joesm[email protected] to joesn[email protected]. This is what makes the scam work; the email is just similar enough to fly under the radar, and their timing is at the most vulnerable point in the buying process.
The buyer will receive an email from this slightly different email address with instructions on how to wire the money before the purchase and sale signing or closing. It may even include wording about how doing this will help everything go more smoothly. And there you have it, the money is gone!
How to AVOID These Scams
If you remember nothing else from this blog, remember this: DO NOT wire any money without speaking directly to your REALTOR®!
If you are in the process of buying a home and you receive any emails about wiring money, STOP. Immediately call your REALTOR® to alert them of the message and to verify its legitimacy. If it turns out to be a farce, you and your agent should report it to the FBI immediately.
Tips to Prevent Hackers from Targeting You
For Buyers and Sellers:
- Be very careful when sending any financial information over email. You may think you are just sending the numbers to a trusted friend or colleague, but unfortunately, email servers are not always secure.
- Emails from contacts you do not know may very well be a scam. If you do not know the sender, delete the email and do not open any attachments.
- If you do know the sender, but something doesn’t seem right, call them to confirm the email is legitimate. It’s better to be safe than sorry!
- When you call the sender, actually go into your phone and dial the sender’s number. Do not click on the number in the email signature!
- Have consistent, verbal communication with your REALTOR® so you both know the plan for any deposits.
For REALTORS®:
- Conduct business by using a secure company email platform instead of your own personal email, such as Yahoo or Gmail. This will make it more difficult for the hackers to infiltrate and create an email address if it is on a company-hosted server.
- Be sure to warn your clients about these scams to help them better protect themselves and to decrease their chances of being targeted.
- Change your passwords often and make sure they are secure. Avoid making your passwords easy to guess, such as your pet’s name or the town you grew up in.
- Have consistent, verbal communication with your buyers so you both know the plan for any deposits.
Where to Report Incidents of Cybercrime:
Learn more and explore resources for cybercrime in each of the 6 states Lamacchia Realty serves (MA, NH, CT, RI, ME, & FL).
MASSACHUSETTS
For more information on this scam and the alert from the FBI’s Boston Field Office, click here.
NEW HAMPSHIRE
To submit a Suspicious Activity Report to New Hampshire’s Information and Analysis Center, click here.
CONNECTICUT
For Connecticut’s Cyber Incident Reporting Guide, click here.
RHODE ISLAND
To view information on Rhode Island’s Computer Crimes Unit, click here.
MAINE
To learn about Maine’s Computer Crimes Unit, click here.
FLORIDA
To report cybercrime to the Florida Department of Law Enforcement, click here.