Cash Buyers New Target in Wire Fraud, CertfiID Warns

May 4, 2021

As buyers face one of the most competitive home buying markets in a generation, they are turning to cash offers in hopes of beating out other competing buyers. With the median price of a home in the U.S. now exceeding $329,000, according to the National Association of Realtors, cash buyers are wiring large sums of money to title and escrow companies for closing. Cyber perpetrators are aware of these market dynamics and are deploying scams to trick home buyers into wiring closing funds to fraudulent accounts.

“We are seeing a sharp increase in the number of home buyers being targeted for wire fraud scams and the per-victim loss amount continues to climb,” said Stephen Dougherty, with the Global Investigative Operations Center (GIOC) of the U.S. Secret Service. “Cyber criminals are getting smarter and are focused on larger amounts to divert to fraudulent accounts. Home buyers paying cash for properties may have a higher risk of being tricked into sending funds to fraudulent accounts. Often the buyer shows up to the closing table only to learn that the funds they wired days before were not sent to the title company but instead to a fraudster masquerading as the title company in an email.”

According to the most recent Internet Crime Report published by the FBI’s Internet Crime Complaint Center, cybercrime complaints increased 69 percent between 2019 and 2020.  In that same period, business email compromise (BEC) scams were the costliest form of reported cybercrime topping $1.8 billion in losses. The real estate sector, like many other industrial sectors, is feeling the pain. 

“We’ve assisted dozens of victims with the recovery of stolen funds and home buyers continue to be the top victim profile for these crimes,” said Tom Cronkright, CEO of CertifID and former wire fraud victim. “Cyber criminals are stealing the life savings of Americans in a single funds transfer—the impact is simply devastating on families.” 

So how can real estate professionals help protect buyers from this type of scam? Cronkright highlights tips to keep wire transfers out of the hands of cyber criminals:

  • Educate buyers about the risk of wire fraud at the start of the transaction
  • Clearly communicate expectations around how and when the buyer will transfer closing proceeds (i.e., certified check or wire transfer)
  • Securely send wiring instructions to the buyer prior to sharing the final Closing Disclosure or settlement statement and obtain written proof of receipt and agreement to follow such instructions
  • Notify the buyer that wiring instructions will never change
  • Continually alert the buyer of the risk of wire fraud throughout the transaction
  • Request that the buyer provide notice of the transfer of funds through an independently verified phone number

Webinar

ALTA will host a webinar from 11:00 a.m. to 12 p.m. ET on June 15 to discuss the latest cyberattack trends. Participating in the discussion with be officials from the FBI and U.S. Secret Service. Click here to register.

Resources

ALTA provides several resources to help title and settlement companies protect against wire fraud and to raise awareness about the threat with customers.


Contact ALTA at 202-296-3671 or [email protected].