Avoid Third-Party Wire and Mortgage Wire Fraud

Avoid Third-Party Wire and Mortgage Wire Fraud

March 29, 2024

Scammers take advantage of the hectic nature of real estate and business closings in an attempt to trick a customer into changing wire instructions for a legitimate transaction in order to divert funds to a false location. According to the FBI, the increasing level of wire fraud schemes that compromise business email related to such third-party transactions has resulted in losses to customers in excess of $1 billion annually.

It’s important for you  to be on guard when closing on a real estate transaction or sending third-party wires related to business transactions, and to be aware of the risks of possibly sending funds to fraudulent instructions.

Scammers may accomplish this through phishing attacks and by compromising the email address of the business, title company, or closing officer the customer is working with. The fraudster may monitor the interactions between the business and the end client in order to spoof emails from the title company, then send the customer an email claiming an urgent need to change the wiring instructions to a different area and possibly rush the customer into making an initial wire to these new instructions.

Fraudsters have the ability to create email addresses that are similar to legitimate addresses for the businesses the client is working with, or spoof phone numbers to trick a customer into thinking a phone call they receive is from the legitimate business.
Given this growing and complex risk, it’s important to consider discussing these tips from consumerfinance.gov to protect yourself:

1. Identify two trusted individuals to confirm the closing process and payment instructions. Ahead of your mortgage closing, discuss in person or by phone the closing process and money transfer protocols with these trusted individuals (realtor, settlement agent, etc.). Be cautious about exchanging any details about your closing over email. You may want to use this opportunity to also create a code phrase, known only by these trusted parties, if you need a secure way to confirm their identities in the future.

2. Write down their names and contact information. Use the Consumer Financial Protection Bureau’s Mortgage Closing Checklist to list these individuals and their primary phone numbers. Before wiring money, always verbally confirm instructions with your trusted representatives. Neverfollow instructions contained in an email. Verify the closing instructions, including the account name and number, with your trusted representatives, either in person or by using the phone number you previously agreed to.
Avoid using phone numbers or links in an email. Again, scammers can closely replicate the email address, phone number, and format of an exchange from your agents. Avoid clicking on any links or downloading attachments without first confirming verbally with your trusted representatives.

3. Never email financial information. Email is never a secure way to send financial information.

4. Be mindful of phone conversations. It may be difficult to identify whether a phone call is fraudulent or legitimate. Scammers may call and ask you to verify your personal or financial information. When in doubt, always refer back to your trusted professionals at a previously agreed-upon phone number or in person to confirm whether it’s legitimate.

Remember, we are always here if you have any questions. Please share this article with your family and friends!