Consumers should beware of real estate wire transfer scams. the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) play significant roles in educating the public about fraud prevention, issuing guidance, and enforcing consumer protection laws related to financial fraud.

The following is an example of wire fraud. Homebuyers John and Jane were eagerly awaiting closing on the purchase of their dream home. They believed they were one step closer to making their dream a reality when they received an email from their title company instructing them to immediately wire $400,000—the balance of their purchase price—to the title company’s account number. When John and Jane arrived at the offices of the title company for their scheduled closing five days later, title company told them that the funds they thought they had wired to the title company’s account were never received. Sadly, John and Jane soon discovered that their $400,000 wire transfer ended up in a hacker’s U.S. bank account. The hacker immediately wired the funds from his account to an offshore bank, never to be recovered.

Unfortunately, this scenario has become all too common as title companies and real estate professionals increasingly rely on electronic mail to provide real estate purchasers and sellers with wire transfer instructions in advance of their closings. The real estate wire transfer scam is carried out by sophisticated hackers who send phishing emails containing malware to employees of title companies and real estate professionals. When the employees click on the links provided in those emails, it gives the hacker access to email accounts. Once inside the compromised system, the hacker obtains information about upcoming real estate transactions. After determining the closing dates, the hacker poses as the real estate professional or the title company representative and sends an email to the purchaser. The phony email advises that there has been a last-minute change to the wiring instructions and directs the buyer to wire the balance of the closing costs to a different account (i.e., the hacker’s account).

But home sellers can be victims very easily.

Imagine you’re in the final stages of selling your home. You’ve been communicating with your title company, and everything is set to close. Then, you receive an email that appears to be from the title company, instructing you to wire the proceeds to a different account than expected. The email looks legitimate, with matching logos and language, so you proceed with the transfer. Unfortunately, you later learn that the email was fake, sent by a fraudster who intercepted your communication. The funds are gone, and recovering them can be extremely difficult.

Key Takeaways:

• Verify any transfer instructions by calling the known, direct contact at your title company or real estate attorney.
• Avoid emailing sensitive financial information; use secure communication whenever possible.
• Be cautious with last-minute changes to payment instructions. Scammers often create urgency to pressure victims.