Real estate fraud has been a major pandemic problem


Carly Andreatos was just days away from buying her first home when an email came from her attorney’s paralegal. Inside, she found instructions on how to transfer her deposit and closing costs – a total of $ 22,890.

Not wanting to delay closing, she quickly transferred the money – literally all of her savings – as instructed.

The next morning, however, what Andreatos calls “a nightmare” began. Your lawyer never received the money. This e-mail? It was a fake – sent by a scammer in an all-too-common scam program targeting home buyers.

“That was the worst experience of my life,” says Andreatos, a 25-year-old veterinary technician from West Palm Beach, Florida. “It was all I ever saved.”

Now Andreatos’ purchase of the house is on the bill and she is not sure if she will get her money back. Since the apartment is the one she is currently renting, her entire life situation is at stake. “I’m sitting here thinking I’m going to be homeless,” she says.

Stories like that of Andreatos are unfortunately not uncommon. Real estate fraud has been a problem for years and has only gotten worse during the pandemic.

A survey of real estate agents – those charged with transferring a title of ownership and managing the closing and escrow process – shows that a third of all real estate transactions in 2020 involved some type of wire fraud attempt. 76% of agents say that fraud attempts have either increased or remained constant compared to the previous year.

Here’s how the scam works: A scammer gains access to an email account involved in the home sale – a real estate agent, lender, title agent, or even the buyer – usually through a phishing attempt. They then monitor emails, watch transaction progress, and fit in at exactly the right time. Then they ask the buyer – with a very legitimate looking email – to transfer money to an alternate bank account.

“These fake emails are not your typical fraudulent misspelled and typo email,” said Andy White, CEO of ClosingLock, the title company helping defend against wire fraud. “These are targeted, well-designed fake emails that look like they came from the title or trust company or law firm. With hundreds of thousands or millions of dollars at stake, you can bet that it will take the scammers some time to make these emails look real. “

COVID has opened more doors for scammers

The FBI calls this scheme “Business Email Compromise” – an operation so common that it caused a whopping $ 1.8 trillion in losses in 2020. The average victim lost nearly $ 100,000 last year.

The problem is probably worse than it looks, too. According to the FBI, only about 12 to 15 percent of all cases are reported. Diane Tomb, CEO of the American Land and Title Association, said, “The problem is actually much bigger. It’s a national epidemic. “

The COVID-19 pandemic – not to mention the real estate boom it triggered – created the best conditions for the spread of scams last year. For one thing, there were simply more transactions to be targeted. The National Association of Realtors reveals a staggering 5.64 million existing homes were sold in 2020 – most since 2006.

In addition, many of these transactions were completed online due to pandemic security measures. This made it easier for scammers to fit in and, in many cases, caused buyers to become somewhat less vigilant.

“In the past 20 months, the technology has grown enormously,” said Tom Cronkright, CEO of CertifID, a real estate fraud prevention company. “So a buyer thinks, ‘The fact that I’m being asked to send money via email – I think that’s just part of the deal now.'”

Rising home prices as well as an increase in cash purchases have also increased the temptation for scammers. White explains, “High dollar transactions are inherently more risky. Scammers are lazy in the sense that they are looking for the easiest and greatest paydays. “

Stephen Dougherty, a Secret Service financial fraud investigator and analyst, investigates daily business email compromise cases and works with Cronkright’s team to help Andreatos get their money back. He says the surge in fraud programs over the past year – particularly in real estate transactions – has been remarkable.

“US intelligence has seen an exponential increase in property-related business email compromises,” says Dougherty, referring to the threat posed by these scams as “greatly increased.”

You can catch wire fraud before it happens – I have!

Wire fraud may be alarming these days, but there are ways to protect yourself – and I am the proof.

An email came two days before my current home was closed, apparently from my title agent. It states: “You must have the cash-to-closing amount of USD 48,754.39 transferred to our account today to avoid delays in closing.”

The number was correct. The names and addresses were correct. In fact, the email signature was spot on. Fortunately, I’d heard stories of wire transfer fraud, so I checked the sender’s email carefully. It was a sign next to it and had a different host domain – instant red flags.

When I called my title company (from the number listed on their public website – not the one in the email), my suspicions were confirmed: it was fake. Ultimately, my careful eye saved me from losing nearly $ 50,000 – let alone my house.

Nick Ingalls, editor at Verywell Mind, had a similar story.

“I wonder if I happened to be an editor and general grammar advocate – if I might have missed it and just wired our house,” says Ingalls, who suspected fraud because of a wrong phone number.

However, incorrect information is only one way of detecting the fraud. According to Cronkright, successful fraudulent emails often have four things in common: a call for action, some type of new or updated information, a request for confirmation (so the scammers can reroute funds quickly), and the word “friendly”.

Scammers are also increasingly using COVID-related excuses, he says.

“You’re going to say something like, ‘We’re short of staff because of COVID, and you have to send this to me today,'” says Cronkright. You could also mention vaccinations, office outbreaks, local lockdowns, and other timely pandemic issues to make the message seem more urgent.

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This is how you protect yourself against transfer fraud

As you prepare to buy a home, setting up strong passwords and multi-factor authentication – for both your email and social media accounts – can help deter fraud long before it hits yours Inbox lands. It can also be helpful to be careful about links or attachments in emails.

“Criminals begin the wire transfer fraud process long before the attempted theft takes place,” says Tomb. “Most of the time, they start with a common social engineering technique called phishing. This can take the form of fake emails, phone numbers, or websites to fraudulently obtain private information. Criminals trick users into entering their information or clicking a link that allows hackers to steal login and password information. “

You should also talk to your lender and title company about what you owe, when you owe it, and how you will be asked to pay – so you know when to get suspicious. The question of digital security measures in companies is also wise.

Finally, whenever you receive wire transfer instructions in an email, always check the voice before sending any funds.

“Buyers should never trust wire instructions or phone numbers in an email,” says White. “Instead, they can google the company they work with and call the main office number to confirm the directions for the management. Once the funds have been transferred, buyers should confirm that the processing company has received them. Use a trustworthy telephone number here too. “

And don’t forget: you can always pay by cashier’s check instead of transferring your money. While this will require you to actually go to the office, it will ensure that the money gets into the right hands.

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If you are a victim of wire transfer fraud, act quickly

Regardless of the precautions you take, there is still a chance you could fall victim to wire transfer fraud. In this case, you need to act quickly.

“If you discover within 24 hours that you have sent money to the wrong account, this is your best chance to get your money back,” says Tomb. “Victims are often ashamed of having been betrayed and do not report the theft. But if the victims act quickly, there is a chance the money will be reclaimed. “

Andreatos says her situation is “the most embarrassing situation that has ever happened,” but still she reported the scam – within 12 hours. While their funds are yet to be returned (they are currently on hold while banks are investigating the issue), they have not been passed on to the scammer either.

Be warned though: the case of Andreatos is not the norm. Only 29% of the victims see their money recovered in full. In 40% of the cases, 10% or less is recovered.

If you think you may have been a victim, call your bank and have them call back the transfer immediately. Then report the crime to the FBI’s Internet Crime Complaint Center at You should also call your regional FBI office and local police department as they may also be able to help.

“Buying a home is exciting, but it can also be a stressful process,” says Tomb. “When dealing with multiple stressors at the same time, it’s easy to lose vigilance. These criminals rely on your trust. They know you trust the professionals in the real estate transaction and they use that trust to steal you. If you are not vigilant when buying a house, you can quickly become a victim. “

More from money:

How to spot a phishing email (and what to do after you’ve taken the bait)

Buying a home for cash can save you thousands and you don’t have to be rich to get it

What’s the deal with all those seedy “We’re Buying Houses” signs?

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