By: Peter Pike, Esq., Pike Law Firm
My neighbors put their house on the market and less than a week later had accepted an all-cash contract with no contingencies. They proceeded to purchase a smaller townhome, all cash, and were planning to re-pay the money that they had taken out of a retirement account to pay for the townhome, from the sale of their house. They only had 90 days to do this, or they would incur penalties for taking out the money.
The buyer was to make a $100,000 down payment within three days of the contract being accepted. When the wire did not arrive in time, they were told that because it was an international incoming wire, it took longer. Two days before closing, they went to the buyer’s chosen settlement agent to sign closing documents. The next day, they were told that no closing was going to take place, as no money had been received by the settlement agent.
It turned out that the buyer was the victim of wire fraud. The wire instructions that he received, turned out not to be from the settlement agent (but were a very good forgery), and he lost his money.
WHAT WENT WRONG?
There are many ways that this type of loss happens. The most common is that a scammer gets access to someone in the transaction’s computer and is then able to obtain the information necessary to convince one of the parties to the transaction to wire money to the wrong account. By the time anyone finds out that the money is missing, it is often too late to do anything.
PROTECT YOUR CLIENTS
What do Realtors® need to do to help their customers avoid this problem? First, learn as much as possible about the various scams that are involved. The script is constantly changing, but the basics remain the same. Someone gets an email message (or a text) that seemed off. Rather than deleting it, they click on a link, and unbeknown to them, malware was loaded onto their device. From that point, it was easy for the scammer to know when wires were expected to be sent, and in what amount. All they had to do was convince the target that their instructions were the correct instructions. This can be avoided by taking some simple steps.
WATCH OUT FOR RED FLAGS:
- Receipt of an unexpected e-mail asking you to click on a link (often appearing to be from a known source such as Amazon).
- An email message from you to your customer that comes from a different email address than the one on your business card.
- Email messages missing usual warnings or signatures.
- Email messages asking for very personal data.
- Hovering over the email sender’s name or hitting the reply button and finding a different e-mail address than the one shown after the person’s name on the received email.
- An email asking you to click on a link to go to a form.
- An email that looks similar to your email, the settlement agent’s email, or the mortgage broker’s email, but is just slightly off (an extra letter or a missing letter – quite easy to do if you are using Gmail or Yahoo for your email account).
Always have your customer verbally verify closing instructions through a known phone number. You should confirm that your preferred settlement agent uses secure email and/or a secure portal to communicate with your customer. Also, do not post anything about pending transactions on social media until AFTER closing. This only gives scammers information that they can use to try to phish, allowing them to take over the transactions. Similarly, avoid using free Wi-Fi connections, other people in the area may be able to intercept your messages and similarly use the information to perpetrate a fraud.
Taking these steps can mean the difference between a happy closing and a customer that loses their money.