Four Steps To Avoid Wire Fraud Scam During Closing

Buying a home is such an exciting time.  But, scammers can quickly make your transaction become a nightmare.  Just as you are about to finalize your transaction, you realize a scammer has tricked you into wiring your closing funds into an offshore account.  There is usually no way to get your funds back.

This is a rapidly growing scam as scammers have gotten very sophisticated at hacking into personal and business email accounts.  They use malicious software so they can monitor when a real estate transaction is getting ready to close.  They send legitimate looking emails to the buyer.  Unfortunately, if you follow the directions in the bogus email, your closing funds will get sent to the scammers account.

This scam is so sophisticated that the scammers will publish a phone number that you can call if you have questions.  The scammer will answer the phone call to reassure you that everything is OK.  The graphics in their email mimic a genuine email.  The email can appear to come from a known email address for your lender, escrow company, or real estate agent.  Worst of all, if the funds go to an offshore account, this crime is outside the jurisdiction of US law enforcement.  (Usually a lender will reimburse a customer if the bank made a mistake or had their system hacked.  But, this scam tricks the buyer into sending funds into a bogus account.  The bank is not responsible for this.)

Here are four steps you can take to combat this horrible scam:

• Talk to your bank: Use a phone number you know is valid to contact your bank and verify the email content. Do not rely on the phone number provided in the email.
• Make sure your anti-virus software is up to date.
• Accomplish in person: Electronic signing and using a website to process a transaction are very convenient. But, there is nothing wrong with doing things the old fashioned way and processing your transaction in person.
• Be vigilant: If something sounds funny, verify before proceeding. Scammers often word the email to make it sound like you have to expedite a task to avoid a closing delay.  This is just a trick to push you into their trap.

Sadly, this is the reality of the electronic world we live in.  Be careful out there.  When I sold my home last summer, I insisted the escrow company draft a good old fashioned paper check to receive my final closing funds.  This old school approach totally avoided this modern wire fraud issue.