Wire Fraud - Preventing Theft Client Funds
Wire fraud is on the rise in the real estate industry. Technology hackers monitor email accounts of Title & Settlement Agents, Realtors, Bankers, Buyers, and Sellers of real estate. When it is time to wire funds, the scammer replaces authentic wire instructions with their own bank account information and diverts funds through a series of accounts,
then moves the money off-shore where recovery is impossible.
Who Is At Risk?
Anyone that wires funds! Fraudsters routinely target the following parties:
• Home Buyers that wire their down-payments—funds they may have been saving for years
• Sellers expecting to receive the “equity”, or proceeds, from their real estate sale
What can Title Attorneys, Real Estate Agents and Bankers do to prevent theft of funds?
1. Secure your devices! All desktop computers, laptops, mobile devices, tablets, iPads, and mobile phones should be secured and should never be accessible without multi-factor authentication. Even when your device is secure, sensitive information should be transmitted through encrypted channels such as secure email that requires the receiver to enter a unique password. Passwords should be frequently changed and should be in
the form of a “pass-phrase” that contains special characters.
2. Verify and re-verify wire instructions. When wire instructions are transmitted electronically, even if secure and encrypted channels are used, it is essential to require either in-person or telephone verification, combined with the requirement of security questions, before a wire is initiated.
3. Getting to know the transaction and identifying RED FLAGS. When a real estate professional speaks with a seller of real estate and learns they are an elderly couple selling their home in New Hampshire to move near family in Connecticut, a last-minute request to wire sale proceeds to Beachwear Clothing LLC based in California is a RED
FLAG! Zoning-in on wire instructions in isolation without considering the circumstances of the transaction is dangerous. Always get to know your client and think about their goal. Scrutinize requests that don’t fit into the circumstances of the transaction.
4. More RED FLAGS: Last minute changes! When you’ve been dealing with a seller of real estate for many weeks and they’ve communicated their desire to obtain a check at the closing table, but on the morning of closing you receive notice that this well-established plan has been changed, your radar should be sharp and you should investigate. Don’t be afraid to question the new plan when your primary responsibility in a transaction
is to safeguard funds. The extra due diligence and verification is always appreciated by parties when the mission is to protect their assets.
5. Educate your Buyers and share this information! Home-buyers are bombarded with responsibilities and unfamiliar information when they embark on a real estate purchase. Even if buyer is experienced, the risks are always changing and it is critical to remain refreshed on the most current safety standards. Title professionals, Bankers, and Realtors should join-together to educate Buyers and Sellers to never initiate a wire unless they make an in-person or telephonic verification of instructions—even if an email appears as if it was generated by a closing agent or a party to the transaction.
Hudkins Law PLLC was founded in 2006 by Jacqueline M. Hudkins. The firm provides title and settlement services for residential and commercial real estate transactions. Each real estate transaction is managed by a team of Attorneys and Paralegals to guarantee continuous coverage throughout the entire closing process and combines the expertise of Real Estate, Title, Trust, Estate Planning and Corporate Attorneys to offer competitive flat fee pricing. The firm employs ten Attorneys and a team of paralegals and maintains offices in Bedford NH, Concord NH, Claremont NH, Windham NH, New London NH, Hampton NH, Keene, NH, Norwich VT, & Andover, MA.