By Barbara Pronin
When the National Association of Realtors (NAR) General Counsel Katie Johnson asked a group of real estate professionals recently whether they or someone they know had clients that were victims of wire fraud, more than one-third of the audience at the Idea Exchange Council for Brokers raised their hands. Moreover, the Federal Bureau of Investigation (FBI) reported last year that U.S. citizens suffered losses of nearly $180 million dollars as a result of business email wire fraud.
In the real estate industry, wire fraud losses are in large measure caused by hackers who fraudulently gain access to email accounts and send legitimately-intended recipients of funds fake emails that appear to be from one of the parties in the transaction, their agent/attorney, or an escrow/title representative.
These fraudulent emails mislead the recipient to believe that there are ‘new’ wiring directions, and instruct the unwitting buyer, agent or company to wire their closing funds or sale proceeds to a different account – invariably the hacker’s account – where the funds may be lost forever.
What can you do to caution your clients about wire fraud scams and how to avoid them?
- Inform clients early on about your email and communication practices, and alert them to the possibility of fraudulent activity. Make sure they understand what you will, and will not, send or request via e-mail.
- Reaffirm with a written warning built into your email signature and/or a disclaimer at the bottom of your emails stating that you will never discuss personal financial information via email.
- If you must engage in a wire transfer, call the intended recipient immediately prior to the transfer of funds to verify that the funds are going to the proper account.
- Ask buyers and sellers to be alert to suspect emails and telephone you for verification if they receive a questionable communication.
- Avoid, and ask your clients to avoid, free Wi-Fi with no firewall to protect against hackers looking for passwords or other sensitive information.
- Use strong passwords and change them regularly, and advise your clients to do the same. It might be a good idea for them to change their password just before wire instructions are sent.
- Be sure to follow protocol with every transaction. You can build in safeguards, but if you don’t follow protocol, it’s like leaving the barn door open.
Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.