According to the FBI, the Internet Crime Complaint Center saw a 480 percent increase in the number of complaints filed last year by those in the real estate industry. Most of these complaints were related to wire fraud, a scam becoming more common in the real estate industry. This past June, news broke that a real estate phishing scam cost a New York State Supreme Court judge over $1 million.
ERA Real Estate CEO Sue Yannaconne sat down with Inside Counsel to discuss why wire fraud is a growing trend in the real estate industry. She said it’s hard to predict exactly why wire fraud is growing, but, aside from the profit related to the crime, one reason might be that more people are reporting the hacks.
“Over the last several years, we’ve heard much more about cybercrime in the media and our awareness has heightened, meaning victims could be more likely to report than they were in the past. What we know for sure is that wire fraud in real estate is on the rise–by a whole lot,” she explained.
In fact, earlier this month, the FBI told the Washington Post that in 2017, cyber criminals stole or attempted to steal almost $1 billion from real estate purchase transactions. That figure is up from $19 million in 2016, which makes wire fraud the fastest growing real estate cybercrime in the U.S.
“As with any other target for cyber criminals, if there is an opportunity to profit, the criminals will come. That said, there are likely three reasons real estate is attractive to cyber criminals,” Yannaconne said. “One, because of the diversity of targets. Second, because they prey on unknowing home buyers who don’t know how to spot a scam, and three, because of the amounts involved–it is not uncommon for buyers to wire transfers for hundreds of thousands of dollars.”
So how can this be prevented from happening to homeowners, sellers, mortgage brokers and lawyers? Mortgage brokers, lawyers and agents need to consider beefing up their internal security systems and may want to consider cyber insurance, although they’d need to do their due diligence since this form of insurance is relatively new.
According to Yannaconne, homeowners looking to buy can do several things to protect themselves including: Know when you could be targeted and be suspicious and alert as the most vulnerable time is right before a transaction closes and homebuyers prepare to send a wire transfer; be wary of wire transfer emails that change the instructions at the last minute or ask you to click a link or enter a password; scan the email for typos or other small inconsistencies–including the email address sending the instructions; always verify the wire transfer information you received in the email by phone or in person; consider using a cashier’s check instead of a wire transfer; and change your password regularly and avoid emailing about wiring instructions on an unsecured network, like that at a local coffee shop.
There are two victims in every scam: the entity whose email is hacked and the homebuyer whose money is stolen.
“For the email hack victim, a telltale sign is an email asking the recipient to click on a link,” she explained. “For the homebuyer victim, there are several signs that homebuyers should be wary of–last minute emails changing the wire transfer instructions, emails that have errors in either the body language or the email addresses themselves and emails that ask for recipients to enter a password or click on an external link.” Amanda G. Ciccatelli is a Freelance Journalist for Corporate Counsel and InsideCounsel, where she covers intellectual property, legal technology, patent litigation, cybersecurity, innovation, and more.
Amanda G. Ciccatelli is a Freelance Journalist for Corporate Counsel and InsideCounsel, where she covers intellectual property, legal technology, patent litigation, cybersecurity, innovation, and more.