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One of the most common cybercrimes in the U.S. is wire fraud in real estate. More than 13,000 people were victims of wire fraud in the real estate and rental sector in 2020, with losses of more than $213 million—an increase of 380% since 2017, according to FBI data.
Wire Fraud: The Basics
What Is a Wire Transfer? (The Balance, Feb. 23, 2022)
A wire transfer is a method of moving funds electronically. It can go between both banks and credit unions. It can also be sent either domestically or internationally.
Wire Fraud (Investopedia, Mar. 8, 2021)
“Wire fraud is a type of fraud that involves the use of some form of telecommunications or the internet.
This type of crime can make use of any and all forms of electronic media including telephone or fax machine, email or social media, or SMS and text messaging. Wire fraud often involves communications made between state or national borders, and is punishable by both hefty fines and jail sentences.”
Wire Transfer Scams
(Washington State Office of the Attorney General
Common wire transfer scams are outlined.
Wire Fraud in Real Estate
Real Estate Wire Fraud Scams Cost Victims Tens of Thousands in House Down Payment Money (ABC7, Mar. 22, 2022)
"Real estate fraud is one of the fastest growing cyber scams across the country," said FBI Special Agent Siobhan Johnson. "When you look at 2018 to 2020, we saw approximately a 42% increase in the percentage of real estate crimes that we're seeing."
How To Defend Against Real Estate Wire Fraud (Security, Jan. 25, 2022)
“Real estate wire fraud has become so ubiquitous that there’s a coalition of companies and industry groups dedicated to raising awareness about it. But since the Coalition to Stop Real Estate Wire Fraud was established, attacks have only increased — there were 11,300 victims in 2018, but more than 13,600 in 2020.”
Quick Facts — Mortgage Fraud Offenses (United States Sentencing Commission, Jul. 2021)
“In fiscal year 2020, there were 47 mortgage fraud offenders sentenced in the federal system. The number of mortgage fraud offenders has decreased by 86.1% since fiscal year 2016.”
How to Protect Yourself from Wire Fraud
How To Beware of Mortgage Wire Fraud During Closing (ROCKET Mortgage, Apr. 5, 2022)
Know your closing process, write down contact information for all involved parties, beware of last-minute closing changes, call to confirm any wiring instructions, and be wary of phone conversations.
How To Avoid Real Estate Scams (The Washington Post, Mar. 22, 2022)
“Consumers need to take their time with every incoming email, text and phone message to make sure the person they’re communicating with is who they claim to be. Are the domain names in email addresses the same as in previous communications? Add your real estate agent and lender to your contacts to ensure texts and calls from them can’t be spoofed. Any urgent notification about transferring funds or sensitive data should be viewed as suspect.”
Before You Wire Money (Federal Trade Commission, May 2021)
Learn how scammers operate, common scams, what to do if you wired money to a scammer, and how to report fraud.
Hot Topics in Broker Risk Reduction (National Association of REALTORS®, 2021)
A monthly roundup of risk reduction topics by Katie Johnson, NAR General Counsel & Chief Member Experience Officer.
Protect Your Real Estate Business with NAR’s Cyber Liability Insurance Program (PDF) (National Association of REALTORS®, 2020)
CyberPolicy, in partnership with NAR, created a customized and comprehensive cyber liability insurance program designed exclusively for REALTOR®-owned firms.
Wire Fraud Notices (National Association of REALTORS®)
In an effort to educate clients about the risk of wire fraud, a number of REALTOR® associations have developed wire fraud notices for use by their members. These have been aggregated by NAR.
Wire Fraud Email Notice Template (National Association of REALTORS®)
Provides an example of a notice you may wish to consider adding to your email signature line. This notice should not serve as a substitute for educating your clients and other participants in your real estate transactions about email wire fraud.
Wire Transfer Scams (Attorney General of Texas)
Signs of a wire transfer scam to be aware of: you’re unexpectedly asked to wire money, you’re sent a check in exchange for a return payment, you’re asked for a confirmation code before withdrawing funds, or you’re asked to wire money to another country.
Reports & Other Resources
Internet Crime Report 2021 (Federal Bureau of Investigation, 2021)
- $6.9 Billion victim losses in 2021
- 2,300+ average complaints received daily
- 552,000+ average complaints received per year (last 5 years)
- Over 6.5 Million complaints reported since inception
Legal Pulse Publication - Technology: 2018 Yearly Update (National Association of REALTORS®, Dec. 19, 2018)
Bain v. Platinum Realty, LLC, No. 16-2326-JWL, 2018 WL 3105376 (D. Kan. Jun. 25, 2018)
Purchasers wired money to a bank account controlled by an unknown party based on an email received from the real estate representative containing the wiring instructions. Purchasers asserted claims against the real estate representative for breach of fiduciary duty, negligence, and negligent misrepresentation, and sought to recover damages in the amount of $196,622.67, the amount wired to the wrong account.
Legal Case Summary: Licensee Liable for Wire Fraud Losses (National Association of REALTORS®, July, 25, 2018)
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.
Hot Topics in Risk Management (National Association of REALTORS®, Feb. 4, 2019)
Buyers and sellers across the nation have been targeted, so please take note and take action. Begin by alerting all clients about the potential for them to encounter this fraud. Don’t send wire instructions via email. Use secure, dual-authenticated email and transaction management systems when sharing sensitive information.
The Voice for Real Estate 93: Fraud, Rural Win, Water Rule, CARE (National Association of REALTORS®, Dec. 18, 2018)
Real estate transactions are one of the biggest targets of wire fraud. That's because the big money involved in the transactions make them tempting targets. The FBI reports that almost 10,000 people lost more than $50 million [in 2017] in real estate-related wire fraud.
Window to the Law: How to Avoid Wire Fraud in Transactions (National Association of REALTORS®, Dec. 4, 2018)
Risk management tips from NAR legal counsel.
Wire Fraud - 2017 AE Institute (National Association of REALTORS®, March 21, 2017)
Katie Johnson, NAR General Counsel & Chief Member Experience Officer presents best practices for wire fraud risk management.
Wire Fraud Alert for Buyers (National Association of REALTORS®, April 22, 2016)
NAR General Counsel Katie Johnson warns buyers about how to avoid being caught up in a wire fraud scam during the purchase of their home.
Coalition to Stop Real Estate Wire Fraud
The Coalition to Stop Real Estate Wire Fraud aims to raise awareness of wire transfer fraud and educate homebuyers, real estate and mortgage professionals, and policy makers about the urgency of the problem; provide concrete steps that people can take to prevent the risk of fraud; and identify and empower those who have been victimized to tell their story and advocate for solutions.
Fraud and Scams (Consumer Financial Protection Bureau)
The Consumer Financial Protection Bureau (CFPB) is a U.S. government agency that makes sure banks, lenders, and other financial companies treat consumers fairly. Our resources can help you prevent, recognize, and report scams and fraud.
Fraud Prevention for Commercial Real Estate Valuation (eBook)
Cyber Smart: Five Habits to Protect Your Family, Money, and Identity from Cyber Criminals (eBook)
Have an idea for a real estate topic? Send us your suggestions.
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