Posted by JanL on May 29, 2018
There’s a relatively new risk sweeping the real estate industry and despite the fact that transactions are becoming quicker and easier, thanks to technology, the opportunities for criminals to take advantage of buyers has also grown. Cyber fraud refers to any type of deliberate deception for unlawful financial gain that occurs online. With some education, preparation, along with building the right team, you can take the steps necessary to help prevent becoming a victim of cybercrime.
So you’ve found your dream home and put in an offer that was accepted, but what happens next might make or break your home buying experience. The fastest growing form of real estate cybercrime takes place when money is wired to complete the transaction. Hackers will access the title company or realtor’s email account, find the home purchases awaiting closing, they then steal the identity of the person handling the transaction and intercept those funds being transferred. The hacker will contact the buyer, posing as the agent whose identity they have assumed and then instruct the buyer to wire the funds needed to complete the transaction. The email will look completely legit, with the same web links, fonts, photos, and logos present. The funds that are deposited into the criminal’s account can easily reach into hundreds of thousands of dollars and often more with nobody involved in the transaction being alerted that they’ve been hacked. The real estate industry has seen a massive growth of these instances occurring in recent years.
According to the FBI, in 2017, nearly $1 billion was attempted to be diverted to criminally controlled accounts. In just one year, the Internet Crime Complaint Center saw a 480 percent increase in the number of complaints filed in the real estate industry. Many times these cases go unsolved, which is what happened to a Denver couple who signed a contract for a $500,000 home. After selling their previous home to free the funds for a down payment on a new one, the couple received instructions via email on how to wire the money. It was completely fake and the money disappeared, never to be recovered. Another prominent real estate phishing scam cost a New York State Supreme Court judge over $1 million dollars. The judge received an email from someone who she thought was her lawyer asking her to send the funds to a bank account. The thief had been in close contact with the lawyer, who was handling the real estate transaction. In another high-profile case, Southern Oregon University lost $1.9 million after thieves posed as a contractor that was doing work on a new student recreation center.
These hackers know what they’re doing. They are very familiar with the process of home buying and know the perfect time to jump in with their fraudulent emails to trick the homebuyer into wiring money into their account. Hackers may also stalk social media accounts looking for information that they can use in their scheme. The increase in cybercrime can be attributed to the diversity of the targets. From first-time homebuyers to multi-millionaires, nobody is off limits because large sums of money and unknowing prey are abundant for the criminals to choose from.
So how can you prevent becoming a victim? If you’ve made it this far, you’re already aware of the dangers that wiring money can pose and that knowledge is power to protect your funds. Finding title and realty companies that have secure systems goes a long way to prevent hacking. Be cautious when reviewing money wiring instructions that are sent via email. Verify by phone that they were sent by the person the email states they were sent by. A couple minutes could save you thousands of dollars and from being victimized. If something does seem off, the FBI encourages people to contact the local field office immediately.
Being one step ahead of the criminals is key in protecting yourself. Make sure that the operating system on your computer is up to date so that malware is kept at bay. Check social media privacy settings and be cautious of the information that is posted into public view. We all get occasional notices to change our account passwords, but this is especially important during the home buying process. While technology makes many aspects of our lives more convenient, avoid sending sensitive information via email whenever possible. Criminals take advantage of confidential files and personal information that may be stored on digital devices so be conscious of where your name, Social Security number, driver’s license number or credit card information might be stored. Email accounts are very convenient when it comes to saving old messages and being able to reference messages and their included data. Hackers also know this, so be careful that you don’t keep any old messages that aren’t needed. Data should be backed up in a separate, secure place. The same advice is applicable to smartphones or tablets. Be wary of text messages from unknown senders - they might include phishing scams. Sellers, mortgage brokers and agents need to have beefed up internal security systems and be on top of their game with the rapidly rising risks of cyber fraud. Another option is to invest in cyber insurance, which will protect against a breach in which personal information is exposed or stolen by a hacker.
Working with a team that is aware of all the risks and how to mitigate them is key because there are multiple links in the chain that could fail. From the client to the realtor to the loan company, there are multiple opportunities for hackers to enter the transaction process. Having experience, knowledge and awareness is the best way to protect yourself throughout the home buying process. Agents know that anyone could be a potential target, but the right agent will explain precautions they will use to protect against theft. An agent should convey to a home buyer that any changes in the transfer of funds will be discussed in-person, rather than through email to ensure the request is valid. Clients should pay close attention to any correspondence they’re receiving and suspicious activity should be reported immediately. Communication is key in ensuring a safe, smooth transaction, so contact a trusted realtor like Jan Leopoldtoday to begin your home shopping journey.