Everything You Need to Know
The Coronavirus has effectively shifted most of our lives online. Unfortunately, this uptick in digital activity puts us even more at risk than we were before the pandemic. What’s more, as businesses further digitize, electronic threats grow. Scammers can defraud, illegally gain access to your money or steal your identity without stepping foot outside their doors. So, what can you do short of locking yourself in a room and shutting off the electricity? In life as in sports, the best defense is a good offense. And the first step in aggressive cyber security is to understand the risks.
When it comes to wire fraud, which is one of the most common digital scams related to the escrow industry, there are two common tactics: spoofing and phishing.
In this case, hackers identify the email addresses of real estate agents and brokers. They hack directly into those accounts and identify emails referencing pending real estate transactions. Through these email chains, hackers obtain specific facts regarding the deal – such as the parties’ names, the title company, the escrow officer in charge, and other pertinent details about the transaction.
Next, they send a fraudulent email directly to the buyer or lender, posing as the real estate agent, mortgage broker, or escrow agent. These emails usually instruct the buyer and/or lender to wire necessary funds to close escrow to a different bank account than the one provided in the preliminary report or in escrow instructions. If the buyer fails to recognize the fraud and follows the email instructions despite the changes in the named financial institution, the hacker (who has control of the new bank account without the involvement of the title company or the escrow holder’s knowledge) can fraudulently take possession of the wired funds. When this occurs, the wired funds are almost always irretrievable.
The “phishing” email is more commonly used than spoofing, because it requires less computer savvy. In such a scenario, the hacker sends an email that appears to originate from a lender, real estate agent, or someone waiting to open an escrow account. The email contains a link purporting to provide loan documents, real estate contract or other information. Once the unsuspecting victim opens the link, malware infects the escrow agent’s email system. This enables the hacker to read every incoming and outgoing email and alter content, such as dates funds will be sent. The hacker also gains access to forms, instructions, signatures, etc., sent by email.
Hackers have been known to duplicate individual financial institution’s wire receipt confirmation, instructing the escrow agent that incoming funds are in their account when they never arrived.
How to Avoid Wire Fraud
WITH SO MUCH AT RISK, HOW CAN YOU AVOID FALLING PREY TO THESE SCAMS?
Prior to wiring any sums of funds to escrow, call to verbally verify information.
- Call your settlement agent or title company to verify wire instructions. Know the name of your point of contact at the title company or escrow agency. Make sure you dial the right number.
- Review the wire instructions. Check for typos, grammatical errors, suspicious names of banks or anything else out of the ordinary. For example, if you are closing on a home in California, the wire instructions should be tied to a local bank or a bank with a local branch. If the wire instructions relate to a foreign bank, do not wire the money. If the wire instructions contain typos or grammatical errors, do not use those instructions. These errors are common in wire fraud scams.
- If you are the one providing wire instructions for your sale, confirm that the account information for your bank is accurate on those instructions. You can’t be too careful when it comes to wiring funds for a home purchase or receiving wired funds from the sale of your home.
- Work with only reputable escrow companies, such as Eastland Escrows. We carefully guard our client’s sensitive information, encrypt private information in emails and double and triple-check everything, to guard our clients’ best interests. What’s more, we work hard to build a strong relationship with our clients.
ABOUT EASTLAND ESCROWS IN COVINA, CALIFORNIA
Eastland Escrows, Inc. is an independent escrow company based in Covina, CA serving all of Southern California since 1973. With over a 100 years of combined experience, we pride ourselves in working like a dog on behalf of all our clients! We have closed thousands of escrow transactions from real estate sales and refinances to business sales.