Transactions
As a trusted real estate professional, you play a pivotal role in ensuring the safety and security of your clients’ transactions. One of the most significant threats facing our industry today is wire fraud, particularly in high-value markets like San Diego. I want to take this opportunity to highlight the importance of safeguarding wire information and provide practical tips to help you protect your clients.
Understanding Wire Fraud in Real Estate
Wire fraud occurs when cybercriminals intercept or manipulate the transfer of funds during a real estate transaction. These fraudsters often use sophisticated phishing techniques to deceive buyers and sellers into wiring money to fraudulent accounts. The consequences can be devastating, leading to substantial financial losses that are often irrecoverable.
Real Estate Wire Fraud Cases
To illustrate the severity of this issue, consider the following cases:
1. The Garcia Family Case: In 2021, the Garcia family, while purchasing a home in Los Angeles, received an email from what appeared to be their escrow officer with updated wire transfer instructions. They unwittingly transferred $250,000 to a fraudulent account, and the funds were never recovered.
2. The McConnell Incident: In San Francisco, the McConnell family fell victim to a similar scam. They received an email with new wire instructions from what seemed to be their realtor’s account. They transferred $300,000, only to discover it was a hacker’s ploy. Despite immediate reporting, the funds were siphoned through multiple accounts, making recovery nearly impossible.
Tips to Protect Your Clients
To prevent such devastating losses, here are some crucial steps you can take:
1. Verify Instructions Independently: Advise your clients to always verify wire instructions by calling a known, trusted number for their escrow officer. They should never use contact information provided in an email for verification.
2. Be Skeptical of Changes: Any change in wire transfer instructions should be treated with suspicion. Oakwood Escrow will never change its wire instructions during a transaction. If using a different escrow company and a change does occur, then your clients should be encouraged to confirm any changes directly with you or the escrow officer through a trusted communication method.
3. Use Secure Communication: Avoid using email to send sensitive information. Instead, use secure, encrypted communication channels whenever possible. but even encrypted emails can be subject to attack so Oakwood Escrow has a strict policy of never emailing wire instructions. If a client of Oakwood receives wire instructions via email, then it fraudulent.
4. Educate Your Clients: Inform your clients about the risks of wire fraud and the importance of verifying wire instructions. Regularly update them on the latest scams and prevention techniques. Oakwood Escrow will also do this when the escrow is opened but the more times your clients hear this message the better.
5. Implement Two-Factor Authentication: Protect your email accounts with two-factor authentication to reduce the risk of unauthorized access. Encourage your clients to do the same.
6. Confirm Fund Transfer directly prior to sending and immediately after being sent. Before transferring funds call the escrow company and confirm that you have the correct account number, bank name and routing number and immediately after sending the wire call your escrow officer to confirm that the funds were received in the correct account.
Conclusion
Wire fraud is a serious threat to real estate transactions, but with vigilance and proactive measures, we can protect our clients from falling victim to these scams. Your role as a real estate agent is crucial in this effort, and by following these best practices, you can help ensure that your clients’ transactions are safe and secure.
Thank you for your attention to this critical issue. Together, we can help safeguard the integrity of our real estate industry.
Sincerely,
Jason Scally
President
Oakwood Escrow
