WIRE FRAUD- Warning, a new scam on investors

[Kelly N.]

Hello BP-

We are currently under contract to buy a house, and I received an e mail Friday that appeared to come from my realtor stating that the Title Company needed me to wire funds that day to make sure the closing went smoothly.  My realtor shouldn't have anything to do with the deposit, and the wording didn't sound like my realtor, so I quickly confirmed that this was a scam.  He had hacked into my realtor's e mail where he was able to get information on our recent sales agreement and who knows what else.  He then created a similar e mail address to my realtor's and used that to contact me- I didn't even realize it wasn't one of his usual addresses until today.  He had reasons for everything- the wire transfer had to be early b/c the title company was undergoing an audit and wouldn't be able to clear a check for closings from April 15-May 1, not to call him since he was attending a closing, and he even gave a plausible answer when I asked him where the closing would be- he happened to pick the only title company we have used in that city, maybe by finding it in the e mails from past dealings or maybe since it is the closest one to my realtor's address.  The amount requested seemed off at first, then I realize it was the 25% down on the property less the earnest money I had dropped off that day at the realtor's office.  

I told him I wired the money Friday (of course, I didn't) and he has been bugging me for a picture of a receipt since then and wanting to know when the funds would be deposited.  I told him that it takes 24 hours, or one full business day, so he is on pins and needles likely stalking his account balance today, and I have so far ignored his requests for a receipt "for his records".

I have talked to the local police (here) who can't do anything since I didn't transfer funds.  I talked to the bank they are using, who may have flagged their account for fraud but of course can't tell me anything.  My realtor reported the security breach to google since it was a gmail account created to appear to be him, along with the service provided for the account that got hacked.  Lastly, I talked to the local county sheriff's department who is going to go talk to the business owner for the address given in the wiring instructions.   If anyone else has any ideas of who else this can be reported to, please let me know!

So, mainly a warning to all that if it doesn't seem right, it probably isn't.  We were just a a closing last week and that title company mentioned that they don't deal with wires anymore due to the vast amount or fraud going on.   

[Jeff S.]

It’s sad that this crap happens, @Kelly N., but it’s not new. Once you realize you’re being pursued by a scammer, it’s best not to communicate with them. Wire fraud, which is often an interstate or international crime, is something that the FBI would be more interested in than your local police or sheriff, who likely have neither the resources nor expertise to investigate.

I am confused about where you were told to wire the funds. No matter, you should never wire to anyplace other than a verified title company. Not to an agent, escrow, attorney, or anyone else. And, on its face, never believe anything you see in an email -- not even a phone number. I think you just figured that out.

We always look the local phone number up online and call title to verbally confirm the written wire instructions. We use escrow companies in CA and I call them for verbal confirmation too. All phone numbers and all wire instructions have to match, among multiple sources. If there are any discrepancies between what I am told verbally and what I read, then I STOP. There’s the occasional confusion, usually spawned by my paranoia, but fortunately we have never had a problem.

When I wire money in person at Wells Fargo, they always ask me if I confirmed the wire instructions. Strangely, they never ask how and have never offered any advice. I wish they would.

It’s interesting that a title company told you they don’t deal with wires anymore. Can’t say I’m surprised, but what are their alternatives? Short of delivering a pile of greenbacks, cashier’s checks can be forged, and it can take days to realize this. Are they holding up closings to wait?

Many title and escrow companies are now using secured email to cut down on this nonsense. Realtors should start doing the same. As someone who regularly wires large sums, one option I have it to simply refuse to do business with anyone who uses bad practices. Unfortunately, this only stays a step ahead of the crooks and there no great solutions that are obvious (to me at least).

Good that you dodged a bullet Kelly.

I’m curious what others are doing here to protect themselves from wire fraud???