What is a wire transfer?
Sending money via electronic transfer from one person to another. In the case of real estate, it's usually from a buyer/seller's financial institution to a third party, like a closing attorney, or visa/versa.
Example: Seller receives proceeds from the sale of a property, buyer sending earnest money, downpayment money, closing costs money
So what’s the problem?
Hackers/Scammers reroute the money.
Usually by gaining access to someone’s email account or phone number.
Mimic Email -
Email isn’t hard to hack. Especially if you have an easy to mimic email address.
For example, if your agent is using Sally@sellsseashore.com you may not notice that the email you got from Sally@selsseashore.com telling you where to wire your earnest money isn’t quite the same. Usually there is a sense of urgency too, like “we have to get this money into the system by end of day or we lose the deal” so people get into “get it done” mode and stop questioning. After all, Sally knows what she’s doing, you trust her so you do it. Later Sally says she never sent that email and you find out that it was YOUR account that was hacked. Scammers will set up auto forwards of your emails. So they know what you’ve been doing and how to get to you.
Will usually look something like "hey, take a look at this closing disclosure, (loan estimate, contract). Usually you're been asked to log into a website and create an account and choose a password. You've just given the hacker on the other side, your likely log in ID's since most people use only 1 or two log ins, and you've given them 2 or three passwords. Ever try to sign into a site and it seems the password requirements keep changing? That's how they find your different passwords.
Think your phone is safe? Ever get a call from someone selling you a car warranty, or insurance, or something. The caller ID is in all caps, and the name doesn't match what they say. Not even close. If you try to call them back, the person on the other end of the line says they didn't call you, has no idea who you are and doesn't sound the same? Those are scammers using spoofed phone numbers. Auto Dialers. They're a thing, and people all over use them for legit purposes and non legit. The only safe guard is the honor system.
Cautionary True Tale:
Buyer and Seller are at the table to close the deal. Jane, the seller gives Susan, the attorney the account info needed to wire her funds. Everyone signs and shakes hands and walks away. The sellers go out to lunch to celebrate. The phone rings.
Jane: “Hi Susan, what’s up?”
Susan: "I’m sorry, I know you’re at lunch and I hate to bother you, but I want to verify this new wire info before I hit the send button. I couldn’t hear you well when you called "
Jane: "What do you mean? I gave you instructions at the office, in person."
Susan: "I know you did, but you just called me 2 min ago and told me your lender wants the money sent straight to them for your purchase this afternoon and gave me a new account number….. Right? Wait. Yes, I have your number on the caller ID as the last call in...."
Jane: "No. I did not just call you. Do not hit send. Don’t do anything until you see me in person."
Think that is far fetched or unlikely? That could have been so much worse. It happens. It’s not hard to spoof a phone number. Scammers are getting more sophisticated and are starting much earlier in the process.
How do they know?
Think back to last week, a few months ago, a year ago. When you first started clicking on ads in Facebook, Zillow, the margins on your web browser, did you know what those links went to? How many people bought your data? Your email may have been compromised then, WAY before you really got serious about moving. Before you put your guard up, and before your agent tried to alert you.
1. Check your email settings. Confirm that you have no "auto forwards" in place.
2. Run malware sweeps quarterly, and/or maintain anti malware software on your PC
3. Add two-factory security to email, Facebook, all of your social media accounts. You should really have that anyway. How many people have to tell you "don't accept friend requests from me, I've been hacked" before you do it.
4. Change passwords on a regular basis, or get an encryption key
5. Don't open attachments you aren't expecting or log into websites that you don't know about.
You can protect yourself from wire fraud. The biggest step is to be aware of it and make sure people you know who are thinking about buying or selling are aware of it too. Pick an agent and work with them, their lender and their title company. They use trusted providers for a reason. They're trusted. Stay calm and allow enough time to read everything you sign. Don't wait for the last moment to transfer funds, that's when you're most vulnerable. Ask questions. Ask questions. Ask questions.