New Twist on Wire Fraud

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new twist on wire fraud

A new twist on wire fraud is running rampant! Over the past few years, settlement professionals have become targets for fraud. They are responsible for large sums of money which they are responsible for disbursing in the course of closing real estate transactions. Naturally, these schemes to divert funds continue and losses to the parties involved are often devastating. First, the closing professional receives an email that provides disbursement instructions regarding the seller proceeds or loan payoffs. These emails appear to come from a party in the transaction. They are actually from fraudsters who have hacked into the email traffic connected with the transaction. Most settlement professionals now employ call-back procedures to confirm any instructions received via email. The result? Lost funds are the result when mistakes are made.

The New Wire Fraud Twist

Hence, the latest twist in this theft epidemic occurs after a closing professional has already wired funds to a fraudster’s account having relied upon fake wire instructions. The fraudster initiates contact with the closing professional. First, they pose as the receiving bank for the wired funds, often using a spoofed caller identification. This increases the appearance of legitimacy. Next, the fraudster communicates that the funds were sent to an account flagged as being suspicious. Subsequently, the settlement professional is assured that the funds with be returned within a few days. This tricks the closer into not contacting the true receiving bank to freeze the funds, providing the fraudster sufficient time to move the funds.

For more information on wire fraud check out our previous blog post titled “What do you know about wire fraud?”

As to the New Wire Fraud Twist

Immediate contact initiated by the settlement professionals needs to be to both the wiring and receiving banks upon any indication that funds have been misdirected. Therefore, never rely on an incoming call to provide confirmation of contact.

What Can We Do?

Settlement professionals should absolutely use and strictly follow rules that require verification of all disbursement instructions.

  • Thankfully, most settlement professionals require at the very least outgoing call-back procedures. They utilize a known, safe telephone number to confirm any instruction received via email.
  • Incoming telephone calls are not a substitute, due to the known risk of call spoofing.
  • Closing professionals should also take care to confirm direct contact with the fund’s recipient where possible. Funds have been lost when a closer relies on a call-back made to counsel for a recipient, but the confirming contact between the recipient and his/her counsel was via compromised email.
  • Finally, many settlement professionals now require in person, wet signature disbursement instructions from parties who have given valid identification.

Always be careful when wiring funds. At Landmark Abstract we will never change wiring instructions via email. To learn more about wire fraud and other cyber fraud issues that affect our industry be sure to visit the fraud section of our Document Library.

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