Always Verbally Confirm All Wire Instructions

[Jeff S.]

We just had a discussion with a borrower who sold a house in Los Angeles for $2.5 million to a cash buyer!!! Funding was due last week and the buyer received an email from escrow with wire instructions to send the remaining $2.4 million to them, which they did. Then they proudly called escrow to let them know.

Unfortunately, escrow told them they had no idea where this email came from but it wasn’t them. It appears someone hacked into the buyer agent’s email and had been following the transaction all along. With perfect timing, they sent a bogus email with bogus wire instructions to the buyer who bit hook, line, and sinker.

Fortunately, this all occurred within a couple of hours and, though the money made it to the recipient's bank, it hadn’t been credited to the bogus account yet. The account was quickly frozen and the buyer received his $2.4M back. Can you imagine?

Email is incredibly easy to spoof and most assume that since the email looks ok, it’s ok to wire to an account that doesn’t match name of the intended recipient.

Here’s some actionable advice:

1. Always call your intended recipient before you send money to verbally confirm their wire instructions.
2. Don’t directly call the phone number on the wire instructions you received. Obtain this phone number independently and from a few sources to see if it matches. Since websites are spoofed all the time, we prefer to obtain the phone number from someone in the sales chain that we’ve previously had a physical conversation with. It could be one of the agents, escrow, or a broker.
3. To be totally anal, we repeat the first half of the account number and have them repeat the second half. Some, but not all title companies, now do this as a rule.
4. Also, as a rule, we will only send money to a confirmed title company. Never to escrow, an attorney, or anyone else.
5. Make sure the account name you are given matches the intended recipient. That is, if you’re wiring to “Stewart Title,” don’t wire to “Stewart Smith” or to “Stewart’s Scamming Service.” This seem obvious, but somehow if someone believes the email is legit, they have no problem wiring to an account with a different name. We are getting calls because someone is spoofing our company with a fake website. IN EVERY CASE, MONEY WAS LOST WHEN THE VICTIM WIRED MONEY TO A STRANGE ACCOUNT NAME.

Though even sophisticated buyers are falling for this, if you are selling property, I hope you are warning all of your buyers. Some only buy a property or two in their lifetimes and have no idea this is going on.