Buying real estate is one of the biggest – and most complicated – financial commitments a person can make. There are numerous steps to go through and several agencies to work with before a homebuyer is handed the keys to their new property. Between the realtors, the buyer and seller’s attorneys, the mortgage provider, and the escrow company, a lot of phone calls and emails from strangers happen during the process.
That’s why a recently reported wire transfer scam targeting prospective homebuyers is particularly alarming and easy to fall for. According to Forbes, these “business email compromise” (BEC) schemes, as the Federal Bureau of Investigation calls them, are making a $5.3 million monthly dent in the U.S. real estate market.
How Does It Work?
The scam is surprisingly simple: Fraudsters hack into the customer databases of escrow companies, which are responsible for holding funds on behalf of property buyers and sellers during the sale process, as well as mortgage companies for tax and insurance payments.
They then lift customer email addresses and send extremely convincing messages requesting immediate wire transfers. The customer sends the money, falsely believing it will be safely held in the escrow account.
Most of these BEC fraudsters are located overseas, so they pull a common catfishing scheme to gain access to a U.S. bank account for the transfer. They’ll use an online dating site to trick an unsuspecting single into falling in love with them. Once the scammer has their American “lover” on the hook, they’ll ask if that person would accept an incoming wire transfer on their behalf.
When the money from the escrow customer hits, they’ll hack into the love interest’s account and make off with the money, never to be heard from again. The two separate victims of this nefarious scam are then left with an empty bank account and a broken heart, respectively.
How To Protect Yourself Against This Scam
Forbes notes that prospective homebuyers or anyone who’s in escrow should look for the following warning signs if they receive an email claiming to be from their escrow company:
1. The logo sender email address looks off. Compare this email to a verified communication with your escrow company, or at least to their website. Make sure the logo is an exact match (fraudulent emails often use low-quality rip-off logos), and that the sender email address is actually from the escrow company’s domain. It might look correct at first glance, but it could have a character or two that are incorrect.
2. There are typos in the body of the email. Phishing scammers are notorious for misspellings and poor grammar, usually because English is not their native language.
3. The email requests money “today." Scammers will make an urgent request to get you to pay up immediately. A real escrow company will give you advanced notice before a payment is due.
It’s easy for homebuyers to get caught up in the excitement of their new property, and even easier to blindly comply with any requests that will move the process along. Use extra caution when you see a suspicious email – especially one you weren’t expecting – asking you for money. If you’re unsure, call the escrow company and your realtor to make sure the request is legitimate.