Avoiding Wire Fraud

Author: Susan Isaacs | The Isaacs Team

Wire fraud is surging in the U.S.  These attacks, in the form of email hacks and phishing schemes, have increased dramatically, with an unprecedented number of attempts globally. Wire transfers are common in real estate transactions, so it’s important to know how to protect yourself against them.

How Does Wire Fraud Occur In Real Estate?

According to the FBI’s advisory, Business Email Compromise (BEC), a form of wire fraud, is a sophisticated scam targeting businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments. In real estate transactions, this would include mortgage lending institutions and title companies.

Steps To Protect Yourself From Wire Fraud In Real Estate

According to the FBI,  “Businesses with an increased awareness and understanding of the BEC/EACscam are more likely to recognize when they have been targeted by BEC/EAC fraudsters, and are therefore more likely to avoid falling victim and sending fraudulent payments.”

“Businesses that deploy robust internal prevention techniques at all levels (especially for front line employees who may be the recipients of initial phishing attempts) have proven highly successful in recognizing and deflecting BEC/EAC attempts. Some financial institutions reported holding their customer requests for international wire transfers for an additional period of time to verify the legitimacy of the request.”

Small business and individuals may not have the same protections in place as larger institutions such as banks. So how can you, as a consumer, protect yourself?

In the District, wire fraud attempts have escalated. The email comes from an email address almost identical to the actual email address of  your real estate agent, title company or lender, but with a slight difference- usually a period between names or a hyphen in the business name.

  • Don’t engage with emails relating to wire transfers. Instead, initiate a phone call with your title company, using the number you wrote down at the start of your transaction, and speaking with the processor you were assigned (and no one else). Only your title company facilitates wire transfers in a real estate transaction.
  • Don’t cc anyone else on email communications with your title company regarding wire transfers.
  • Don’t use email links for the title company phone numbers. Web-based email accounts such as Gmail do not offer the same protections that corporate email accounts feature. Realtors reoutinely utilize web-based email accounts.

The best protection for a real estate consumer is to avoid interacting with real estate agents and mortgage lenders regarding details of wire transfers altogether.

Take Note

  • Record your closing processor’s contact information
  • Doubt last-minute changes to the closing process
  • Beware of changes in wiring instructions
  • Call the person you know at the number you know
  • Never email financial information.
  • Initiate phone conversations

Adriana Says

“After a bad experience with another agent left us in a very tough position, Susan turned everything around. She did a thorough evaluation of the property, offered expert advice and helped to prepare the condo for sale. Despite the tough August market, we sold in less than 2 weeks.”

Additional Steps

Other steps you can take:

  • Immediately report and delete unsolicited e-mail (spam) from unknown parties
  • DO NOT open spam e-mail, click on links in the e-mail, or open attachments. These often contain malware that will give subjects access to your computer system
  • Do not use the “Reply” option to respond to any business e-mails. Instead, use the “Forward” option and either type in the correct e-mail address or select it from the e-mail address book to ensure the intended recipient’s correct e-mail address is used
  • Beware of sudden changes in business practices. For example, if a current business contact suddenly asks to be contacted via their personal e-mail address when all previous official correspondence has been through company email, the request could be fraudulent. Always verify via other channels that you are still communicating with your legitimate business partner
  • Confirm requests for transfers of funds. When using phone verification as part of two-factor authentication, use previously known numbers, not the numbers provided in an email request
  • Carefully scrutinize all e-mail requests for transfers of funds to determine if the requests are out of the ordinary.

A complete list of self-protection strategies is available on the United States Department of Justice website www.justice.gov in the publication titled “Best Practices for Victim Response and Reporting of Cyber Incidents.

How We Protect You From Wire Fraud

The Isaacs Team LLC utilizes Compass Gmail accounts for transaction correspondence and records. We specifically request that we *not* be included in communications regarding wire transfers or requests from title companies and lenders for hyper-personal information such as social security numbers and W9 forms.

The best way to prevent wire fraud in your transaction is to follow recommendations from the FBI. Make sure you take wire instructions by phone only, from the wire sender or recipient directly, and only via a call you initiate with a person of authority using a phone number you research as valid (not one provided in an email, for instance). Be sure to recite the instructions back to the giver so no errors are made. Do not CC others in emails or request emailed wire instructions. If you receive a communication stating that wire instructions have changed, phone your banking institution and title company immediately for clarification and validation of the wiring instructions.

Scam Examples

The Email Account Compromise (EAC) component of BEC targets individuals that perform wire transfer payments. Because the techniques used in these scams have become increasingly similar, the IC3 to begin tracking them as a single crime type in 2017. Here’s how the scam works:

  • A perpetrator commits wire fraud by compromising legitimate business email accounts through social engineering or computer intrusion techniques to conduct unauthorized transfers of funds;
  • Most victims report using wire transfers as a common method of transferring funds for business purposes;
  • Some victims report using checks as a common method of payment. The scammers will use the method most commonly associated with their victim’s normal business practices;
  • The scam has evolved to include the compromising of legitimate business email accounts and requesting Personally Identifiable Information (PII) or Wage and Tax Statement (W-2) forms for employees, and may not always be associated with a request for transfer of funds.

The victims of the BEC/EAC scam range from small businesses to large corporations. It is largely unknown how victims are selected; however, perpetrators monitor and study their selected victims using social engineering techniques prior to initiating the BEC scam. They are able to accurately identify the individuals and protocols necessary to perform wire transfers within a specific business environment.

Victims may first receive “phishing” e-mails requesting additional details regarding the business or individual being targeted (name, travel dates, etc.).

  • Some individuals reported being a victim of various “scareware” or “ransomware” cyber intrusions immediately preceding a BEC incident. These intrusions can initially be facilitated through a phishing scam in which a victim receives an e-mail from a seemingly legitimate source that contains a malicious link. The victim clicks on the link, and it downloads malware, allowing the subject(s) unfettered access to the victim’s data, including passwords or financial account information;
  • The BEC/EAC scam is linked to other forms of fraud, including: romance, lottery, employment, and rental property scams. These victims are usually U.S. based and may be recruited as unwitting money mules. The mules receive the fraudulent funds in their personal accounts and are then directed by the subject to quickly transfer the funds to another bank account, usually outside the U.S., upon direction, mules may open bank accounts and/or shell corporations to further the fraud scheme.

There are a number of scenarios scammers use to separate you from your money. Here are the most common, according to the FBI:

  1. Business Working with a Foreign Supplier A business that typically has a longstanding relationship with a supplier is requested to wire funds for an invoice payment to an alternate, fraudulent account. The request may be made via telephone, facsimile, or e-mail. If an e-mail is received, the subject will spoof the e-mail request so it appears similar to a legitimate request. Likewise, requests made via facsimile or telephone call will closely mimic a legitimate request. This particular scenario has also been referred to as the “Bogus Invoice Scheme,” “Supplier Swindle,” and “Invoice Modification Scheme”;
  2. Business Executive Receiving or Initiating a Request for a Wire Transfer The e-mail accounts of high-level business executives (Chief Financial Officer, Chief Technology Officer, etc.) are compromised. The account may be spoofed or hacked. A request for a wire transfer from the compromised account is made to a second employee within the company who is typically responsible for processing these requests. In some instances, a request for a wire transfer from the compromised account is sent directly to the financial institution with instructions to urgently send funds to bank “X” for reason “Y.” This particular scenario has been referred to as “CEO Fraud,” “Business Executive Scam,” “Masquerading,” and “Financial Industry Wire Frauds”;
  3. Business Contacts Receiving Fraudulent Correspondence through Compromised E-mail An employee of a business has his or her personal e-mail hacked. This personal e-mail may be used for both personal and business communications. Requests for invoice payments to fraudster-controlled bank accounts are sent from this employee’s personal e-mail to multiple vendors identified from this employee’s contact list. The business may not become aware of the fraudulent requests until that business is contacted by a vendor to follow up on the status of an invoice payment;
  4. Business Executive and Attorney Impersonation Victims report being contacted by fraudsters who typically identify themselves as lawyers or representatives of law firms and claim to be handling confidential or time-sensitive matters. This contact may be made via either phone or e-mail. Victims may be pressured by the fraudster to act quickly or secretly in handling the transfer of funds. This type of BEC scam may occur at the end of the business day or work week and be timed to coincide with the close of business of international financial institutions;
  5. Data Theft Fraudulent requests are sent utilizing a business executive’s compromised e-mail. The entities in the business organization responsible for W-2s or maintaining PII, such as the human resources department, bookkeeping, or auditing section, have frequently been identified as the targeted recipients of the fraudulent request for W-2 and/or PII. Some of these incidents are isolated and some occur prior to a fraudulent wire transfer request. Victims report they have fallen for this new BEC scenario even if they were able to successfully identify and avoid the traditional BEC scam. This data theft scenario of the BEC scam first appeared just prior to the 2016 tax season.

If You're A Victim Of Wire Fraud

If your funds are transferred to a fraudulent account, it is important to act quickly:

  • Contact your financial institution immediately upon discovering the fraudulent transfer.
  • Request that your financial institution contact the corresponding financial institution where the fraudulent transfer was sent.
  • Contact your local FBI office if the wire is recent. They and the U.S. Dept of Treasury Financial Crimes Enforcement Network might be able to help return or freeze the funds.
  • File a complaint, regardless of dollar loss, with www.ic3.gov or, for BEC/EAC victims, bec.ic3.gov

When contacting law enforcement or filing a complaint with IC3, identify your incident as “BEC/EAC”; also consider providing the following information:

  • Originating business name
  • Originating financial institution name and address
  • Originating account number
  • Beneficiary name
  • Beneficiary financial institution name and address
  • Beneficiary account number
  • Correspondent bank if known or applicable
  • Dates and amounts transferred IP and/or e-mail address of fraudulent e-mail

Detailed descriptions of BEC/EAC incidents should include:

  • Date and time of incidents
  • Incorrectly formatted invoices or letterheads
  • Requests for secrecy or immediate action
  • Unusual timing, requests, or wording of the fraudulent phone calls or e-mails
  • Phone numbers of the fraudulent phone calls
  • Description of any phone contact, including frequency and timing of calls
  • Foreign accents of the callers
  • Poorly worded or grammatically incorrect e-mails
  • Reports of any previous e-mail phishing activity.

GET IN TOUCH

THE ISAACS TEAM

Compass
1313 14th St
NW DC 20005

error: This content is copyrighted and protected