It seems you can’t turn on the TV or radio without hearing about some advertisement for identify theft scams. Well, now you can add one more scam to the list: wire fraud scam. And this is something that is popping up in real estate transactions involving large sums of money.
While your deposit for a home may be a check, the rest of the money sent for balance of down payment, bank loans and seller proceeds are mainly handled by wire transfer. Certified checks are also used, but wires are faster and the funds are immediately available.
According to Katie Bergren, branch manager of North American Title of Half Moon Bay and San Mateo, she started to see signs of this around two years ago. Somehow, emails have been hacked and viruses planted or crooks searched social media forums like Facebook to learn of people buying and selling homes. Then they send what looks like real instructions from a title company asking you to wire money to a different bank instead of what the title company told you before. Most people may not give this much thought; after all, who really pays much attention to banks or routing numbers.
For a buyer, this can be a disaster in that you’ve sent your money to someone else and the prospects of recovering it are slim. For a seller, it’s as bad, in that the title company is insured, so your money is protected — although it may take some time to sort out.
The big question is how do you know if you get a fraudulent email from someone pretending to be a title company? Some signs are the email address may be a little different, like ending in .net instead of .com. Grammar might be bad. And, more importantly, it may not come in a secured manner. The real problem is that it’s very hard for someone to really know, since you don’t usually have a long-term relationship with the title companies like you do with your Realtor. They, of course, have long-term relationships with the title company and most likely suggested them.
So, North American Title has been taking steps to reduce the likelihood of wire fraud scams such as personally handing you written wiring instructions. All or most communications are done over secure encrypted emails. Bergren’s company makes a point of telling clients that they are not changing banks for wiring money, so, if you get something different from what she tells you, immediately ask for corroboration. They also double check things with personal phone calls too. In some cases, things are even done the old-fashioned way — hand delivery!
Title companies handle a lot of your personal information as well. To get a loan payoff from your lender, they will need your Social Security number and loan number to get the information from your lender. They don’t use email any more for this but call you on the phone to minimize the chances of having your sensitive information get into the wrong hands. When title companies communicate with other financial institutions, they always use encrypted emails for an extra level of security.
Keep in mind that the way title and escrows are handled not only vary throughout our state but are most likely quite different from how things are done in other states. Most of these regulations are set up by individual state insurance commissioners. Don’t assume that it will be what you knew from a previous transaction elsewhere.
It’s alarming that these hacks are becoming so prevalent and more creative, forcing people to question almost everything. Wiring funds has become so commonplace, not to mention easy to do, that most people are comfortable with this as the preferred method of moving money. Additional benefits are both the speed and immediate availability of funds.