In the technologically advanced society we live in, Realtors®, real estate brokers, settlement agents, buyers, sellers and lenders are targets for cyber-fraud, more specifically wire fraud. Many have lost hundreds of thousands of dollars, which could have been avoided, because they simply relied on the wire instructions received via email, without any type of further verification. Realtors® are in a unique position to help their clients protect their funds, while at the same time protecting themselves from being brought into an action where a client may fall victim to cyber-fraud.
Unfortunately, it seems that fraudsters commonly purport to be the Realtor®. A fraudster may hack into a Realtor’s® email account to obtain information about upcoming real estate transactions. After monitoring the account to determine the likely timing of a closing, the fraudster will send an email to a party to the transaction purporting to be the Realtor®. The fraudster will change wire instructions previously provided so that funds are directed to an account which they control. In many instances the Realtor® wants to handle all communication with their client, which is understandable, so the danger arises in that the Realtor® or real estate agent was likely the one that provided the wire instructions initially which leads their client to believe that this change in wiring instructions is just part of the regular closing process. If the client doesn’t verify the new wire instructions, the funds will be sent to an account controlled by the fraudster and possibly lost forever.
All parties to a real estate transaction and their representatives should understand that it is not common for a settlement agent to change their wiring instructions. If wiring instructions are changed while a transaction is pending, that change should be viewed as suspicious.
Tips Realtors® can share with their clients to help them keep their funds safe:
In addition to these tips which Realtors® can share with their clients to help them protect themselves, Realtors® should also consider advising their clients at the beginning of the closing process that they will never receive wire instructions from them by email without them also receiving a phone call.
For more information on wire‐fraud scams or to report an incident, please refer to the following links:
Federal Bureau of Investigation: https://www.fbi.gov/
Internet Crime Complaint Center: http://www.ic3.gov
By Wesley Lasseigne of Lenders Title Company. Wesley is Senior Vice President and General Counsel of Lenders Title Company, where he has been employed since 2004. Wesley is a Former President (2011-1012) of the Arkansas Land Title Association and currently serves as the Chair of its Legislative and Judiciary Committee. Wesley is an active member of a Joint Subcommittee of The Real Estate Law and Natural Resources Law Sections of the Arkansas Bar Association which publishes ‘Standards for Examination of Real Estate Titles in Arkansas.’ Lenders Title Company is one of the largest independent title insurance and settlement agents in Arkansas. With a network of offices across the state, Lenders Title Company can provide coverage in any county in which you need services.