Wire fraud schemes targeting US homebuyers

Losses from these scams are typically not covered or reimbursed by the bank. Since the wires go overseas, it’s nearly impossible for victims to recover their money. Victims have lost six-figure sums and had to cancel transactions on their dream homes due to this fraud.

Usually a person involved in a real estate transaction, such as a real estate attorney or realtor, has his or her email account compromised by malware, sent by a criminal over email. This security flaw allows the fraudster to monitor the realtor’s emails to look for upcoming transactions.

As a closing date is coming near, the scammer uses the compromised email account to send a legitimate-looking message to the buyer – which, coming directly from the realtor or attorney’s account, appears real. The note tells the buyer that theres been a change of plans, and he or she needs to wire the down payment just before the closing date, supposedly to a bank account belonging to the seller.

In some cases, criminals even follow up with phone calls to the victim buyers, purporting to be from a representative for the title company or sellers law office, and reassuring them the wire transfer request is real.

But the account actually belongs to the criminal, and is typically overseas, out of the reach of US law enforcement. The trouble with this type of fraud is that because banks typically reimburse customers for fraud that occurs on their account due to stolen or compromised checking, savings or credit card numbers.

As such, these institutions are rarely responsible for a wire authorized by the customer, even if the customer was tricked into sending it. And if the funds are overseas, there’s little US law enforcement can do to recover it

To prevent from this type of fraud to happen, homebuyers are advised to be vigilant, to add voice verification to wire transfers approval, don’t react immediately to emails, as some of them can be scams.