Real estate wire fraud is a cyber crime that has been increasingly more common in the last two years. It typically occurs during the closing process of a real estate transaction, where the criminals can target an unsuspecting buyer and divert their funds before they even realize what has happened to them. According to FBI data, $969 million was “diverted or attempted to be diverted” from real estate transactions and subsequently wired to “criminally controlled” accounts. This is a huge increase from 2016, when the FBI reported $19 million in real estate wire transfer fraud.
How Does Real Estate Wire Fraud Occur?
Real estate wire fraud is remarkably simple, but sometimes requires a longer time commitment on the part of the criminal compared to other cyber crimes. The crime begins when a real estate agent’s email account is broken into. The criminal searches through email messages for information on any upcoming real estate transactions. Then, they create a convincing email that appears to be from the realtor or mortgage company, and give the buyer instructions on where to wire their money. The buyer then sends their payment, thinking they are one step closer to their new home. Often, no one realizes what has happened until it’s too late. Once the money has been sent, it becomes nearly impossible to recover - an absolute nightmare for a home buyer.
How Can Real Estate Agents Protect Themselves?
Education and prevention are the best tactics to fighting this type of fraud. Many home buyers aren’t aware that this is even a possibility until it happens to them. As part of the selling process, agents can talk to their clients about real estate wire fraud, and let them know that they have safeguards in place to help prevent it from happening to them. Not only does this help protect the agent and client, it builds a trusting relationship between the buyer and the realtor.
Wire Fraud Prevention Tips
To keep yourself, your agency and your clients safe, here are a few wire fraud prevention tips:
- Make sure email passwords are strong, and change them often, at least every few months. Some email providers can monitor email logins and alert you of suspicious activity, giving you added protection.
- Have a communication plan in place for monetary transactions. Let clients know exactly who will reach out to them and how they will be contacted when it comes time to make their down payment. It’s a good idea to have them call you before they make a wire transaction, to confirm it is being sent to the right place.
- Consider adding information in the signature portion of your emails that reminds clients about wire fraud and showing your commitment to prevention.
- Ensure you have sufficient cyber liability insurance to protect your assets in the event that a cyber criminal targets your agency.
About Axis Insurance Services
At Axis Insurance Services, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn more about our solutions, contact us at (201) 847-9175 to speak with one of our professionals.