In 2018, there were at least 11,300 victims of real estate wire fraud who lost a total of nearly $150 million. According to the FBI, this number is even higher because only a small percentage of all wire fraud incidents is reported.
While the title industry continues to layer safeguards into the into the escrow and closing process, security gaps among other parties involved in the transaction continue to leave money vulnerable. According to a report, one in five consumers clicks links in phishing emails, while half of consumers click on links in personalized spear phishing emails. These social engineering schemes often lead to wire fraud. Despite efforts over the past few years by various groups—including ALTA—half of surveyed consumers are not concerned about wire fraud even though 75 percent of the same people were warned by their real estate agent, title company or bank during the transaction. In addition, 76 percent have never seen coverage of the issue on the news and are likely only hearing about it at the closing.
To help raise awareness and educate homebuyers, and real estate and mortgage professionals about the risk and urgency of the problem, ALTA on June 28 launched the national Coalition to Stop Real Estate Wire Fraud. Initial coalition partners include the Community Mortgage Lenders of America, the Real Estate Services Providers Council and the American Escrow Association.
“ALTA has worked for years to push awareness among members, shared best practices and recommended changes in policy to protect consumers against wire fraud,” said Cynthia Durham Blair NTP, ALTA’s president. “Without seeing, hearing and reading about the local impact and real-life stories of fraud victims, regulators and Congress are unlikely to act. A coalition will help transform this from an issue only known to industry to one that is widely covered in local and national press.”
The coalition will deploy an integrated and coordinated communications strategy to break through to the targeted audience. A multi-channel approach will include earned and paid media efforts to raise awareness with consumers and key audiences in the real estate community. While it’s important to educate all consumers about the threat of wire transfer fraud, first-time homebuyers are especially vulnerable to this crime. As a result, the coalition launched a consumer-facing digital advertising campaign in Birmingham, Ala.; Pittsburgh; and Virginia Beach, Va.—markets where the share of millennial homeownership increased the most from 2016 to 2017 and are favorable to first-time homebuyers.
“For many individuals, buying a home can be stressful, confusing, and filled with a lot of paperwork to send and sign,” Blair said. “In recent years, we’ve seen the rise of a sophisticated type of fraud by a sophisticated type of cybercriminal who preys on these facts. The new Coalition to Stop Real Estate Wire Fraud will raise awareness and educate consumers, especially first-time homebuyers, about how they protect themselves. We want to identify and empower those who have been victimized to tell their story and advocate for solutions.”
U.S. Senator Doug Jones (D-Ala), a former U.S. attorney, participated on the press call. He said that homebuying is such a critical time for so many different people. He shared to two examples of consumers in his state losing $250,000 and $12,000, respectively, due to wire fraud.
“Criminals are successful, because they are able to take advantage of these vulnerabilities,” Jones said. For these homebuyers, each and every dollar is so important. This is why we need to educate the homebuyer on the very real danger of wire fraud. Americans can only be protected if they are educated, which is why this coalition is so important.”
Also during the call, Rich Hopen, a real estate professional and victim of real estate wire fraud shared his own personal experience:
“After our $239,000 mortgage payoff was stolen, my wife and I were distraught and afraid that we would be ruined financially,” he said. “If this can happen to me, as a real estate professional, it’s clear it can happen to anyone. The new coalition is a big step forward toward ensuring that all parties involved in the home buying process—especially the consumer—know how to protect themselves from a version of what unfortunately happened to me.”
Tom Linehan, executive vice president at BankUnited, rounded out the wire fraud experts on the press. He said that in this digital age, consumers expect to communicate by email and text message.
“But if you are ready to buy your home and send your money, you should be extra vigilant and suspicious and plan on confirming and verifying everything,” he said. “We want to make sure consumers know the risk and urgency of the problem and the concrete steps they can take to stay protected.”
The coalition’s website outlines easy steps that consumers and professionals can follow to combat real estate wire fraud.
- Be Vigilant. Call don’t email: Confirm your wiring instructions by phone using a known number before transferring funds. Don’t use phone numbers or links from an email.
- Be suspicious: It’s uncommon for title companies to change wiring instructions and payment info by email.
- Forward, don’t reply: When responding to an email, hit forward instead of reply and then start typing in the person’s email address.
- Confirm everything. Ask your bank to confirm the name on the account before sending a wire.
- Verify immediately: Call the title company or real estate agent to validate that the funds were received. The sooner it is detected that money has been sent to a wrong account, the better chance you have of recovering the money.
- Warn Early and Often: Make sure your clients know about the growing and looming threat of real estate wire transfer fraud.
- Educate: Remind your client that you will not send changes to wiring instructions or payment information
- Call: Tell your client to call you to confirm all wiring instructions, and soon after they make any wire transfers.
- Create: Within your company, establish a rapid response plan for wire fraud incidents.
To learn more about the Coalition to Stop Real Estate Wire Fraud, visit stopwirefraud.org.
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