Email Scams & Wire Fraud
Please Educate Yourself & Your Clients
Please Share This Warning With All Your Clients
Wire Fraud – What You Need To Know
Kansas federal court upholds jury verdict that determined that a real estate licensee was 85% responsible for the buyer’s losses, which occurred when the buyer transferred purchase money to fake account after licensee allegedly forwarded email containing fake wiring instructions to the buyer.
A real estate buyer (“Buyer”) purportedly received an email from the listing broker (“Broker”) that provided new wiring instructions for the upcoming closing on a property. The Buyer used the false instructions to wire the purchase money to the fraudulent account and lost $196,622. The criminal had infiltrated the email exchanges between the parties to the transaction and created fake email accounts that were very similar to the email accounts used by the parties. The criminal had used these accounts to transmit the false wire instructions that were eventually sent to the Buyer.
The Buyer brought a lawsuit against a number of parties, including the Broker. The Broker claimed that she had never sent the email with the false wiring instructions. She had initially forwarded an email with the false wire instructions but she had sent it to one of the fake accounts set up by the criminal. She claimed that she had not sent the later email that the Buyer did receive and used to send the purchase money to the fraudulent account.
The case went to trial, and the jury found that the Broker was 85% responsible for the loss and the court entered judgment against the Broker for $167,129. The Broker filed a post-trial motion seeking a determination in her favor.
The United States District Court for the District of Kansas affirmed the jury verdict. The court rejected the Broker’s argument that she did not send the email to the Buyer that was used to send the wire, finding this was an issue of fact for the jury to resolve as there was some evidence that the Broker had sent the later email. The jury determined that the Broker had sent the email, and so the court affirmed the jury verdict in favor of the Buyer.
For all the details, please watch the 3 videos below….
The Federal Trade Commission (FTC) and the National Association of REALTORS® have announced concerns over closing cost scams.
Here’s how the scam works: Hackers break into a consumer’s or real estate professional’s email account to search for upcoming real estate transactions and closing dates. Then, hackers pose as the agent or title officer and email the homebuyer with a last-minute change to the wiring instructions. Should buyers wire money to the account, they will lose the money and likely lose the home they’ve been waiting for due to a lack of funds.
Here are a few things you can do to make sure your clients don’t fall victim to this scam:
Ensure you have a united effort between agents, loan officers, closing attorneys and title officers to remind buyers of the dangers of this scam. Verify that changes to wiring instructions will not be requested by email.
Remind buyers to be alert. They should not follow instructions regarding closing funds solely from an email but when instructed to do so in person or by phone.
Add a brief warning to your email signature that reminds clients to remain cautious about suspicious messages during their transaction, especially near closing.
Do not conduct business over public Wi-Fi and be cautious about links that you click on. As an agent, transaction information is a highly valuable target for scammers and hackers.
Use secure document technology such as DocuSign or zipLogix for sharing and signing any sensitive documents.
Remember, email is almost never a secure communication platform, so take precautions to protect your clients.
Sources: REALTOR® Magazine, FTC