24 May 2017
Category: Fraud
24 May 2017,
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The Colorado Division of Real Estate at the Department of Regulatory Agencies (DORA) issued a warning to consumers about email and money wiring scams.

DORA reported that it continues to receive information about the scam in which cybercriminals hack the email accounts of real estate brokers, title companies and consumers who are in the process of buying or selling a home. In other instances, they create alternative email accounts with just minor changes to the name of the email account, which typically goes unnoticed by the recipient of the email.

The Federal Trade Commission and Financial Crimes Enforcement Network (FinCEN) issued similar warnings to guard against the growing number of email fraud schemes involving wire transfers.

How do the scams work? Often the hackers monitor email exchanges between the parties of a real estate transaction and gain specific information, such as buyer and seller names, subject property address and file numbers. As the closing date approaches and arrangements are made to wire the money to the closing company (or to wire the proceeds from the sale of the house to the sellers), the scammer will send a last-minute email from a hijacked account or similar-looking email address updating the wiring instructions to request the money be transferred into a fraudulent bank account.  The email looks legitimate and often contains the transaction-specific information the hackers obtained in the body of the email or as an attachment.

“Unfortunately the costs to Colorado consumers can be in the tens to hundreds of thousands of dollars with just one successful scam,” stated Marcia Waters, director of the Division of Real Estate. “Unless you pay very close attention, everything may look right—the email signature, address and the website. But, by the time homebuyers realize something is wrong, the money  is already gone and in an untraceable bank account, leaving them at the closing table with no money and eliminating their ability to purchase the home.”

This past February, a Colorado seller lost over $80,000 from the sale of their property to one of these scams.

Title and settlement companies can protect themselves by increasing staff awareness of potential fraud. According to the FBI, businesses that deploy robust internal prevention techniques at all levels (especially targeting frontline employees who may be the recipients of initial phishing attempts), have proven highly successful in recognizing and deflecting email scam attempts. Some financial institutions reported holding their customer requests for international wire transfers for an additional period of time to verify the legitimacy of the request. ALTA’s Title insurance and Settlement Company Best Practices details policies and procedures title and settlement companies should follow to protect money and non-public personal information.

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This article has been used and reprinted with the permission of The American Land Title Association.  The material is for general information purposes only and is not to be relied upon or used for any particular purpose. Title Industry Assurance Company, RRG and The American Land Title Association shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice.