How can you prevent wire fraud?
September 04 2018
Wire fraud has become a serious threat to real estate transactions in recent years. The number of wire fraud cases reported to the FBI by title companies increased by 480 percent in 2016, and nearly $1 billion in attempted or completed diversions from real estate transactions were tracked in 2017.
How Wire Fraud Works
Hackers typically target email exchanges between real estate agents, title companies, mortgage lenders and homebuyers. As the closing date approaches, hackers will impersonate one of these entities and email the buyer with fraudulent wiring instructions. Since the email is coming at a time when buyers are eagerly anticipating a transaction, it's less likely to raise a red flag.
The Role of Cybersecurity
Any online device -- computers, smartphones, tablets, routers -- involved in your business transactions should be updated with the latest operating software, virus protection and security patches. Secure data backup is essential, as is protecting your online presence with complex passwords. Eighty percent of hacking-related breaches in 2017 relied on passwords that were stolen or easily guessed.
Educating Your Clients
Here's what your clients need to know about wire fraud:
- Closings are a standard process and last-minute changes to payment methods are extremely rare.
- Requests for wire transfers or other personal information should never come via email.
- If an email request appears suspicious, it should always be verified by phone using a known and trusted contact number.
- If wire fraud should occur, time is of the essence. Clients should immediately contact their bank to attempt a stop payment, file a local police report and alert the FBI Internet Crime Complaint Center.
By educating clients, instituting strong security measures and creating multiple checkpoints with title companies and lenders, you can significantly reduce the likelihood of wire fraud in your real estate transactions.
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