Real estate money transfer scams are on the rise; how homebuyers can protect their down payments

With homebuyers facing historically low inventory, many are eager to close a deal as soon as possible, leaving them vulnerable to fraud.

A burgeoning scheme is taking advantage of these house hunters as scammers pose as brokers and solicit fraudulent down payments.

Becoming a homeowner became a dream turned nightmare for Carly Andreatos, who was days away from buying a new home when a scammer approached her.

“I had received an email that day – around the same time I was on the phone with the title company – and it [listed] instructions on how to send the wire transfer,” she told ABC News.

Andreatos followed the email instructions and made the $24,000 wire transfer, assuming she had paid her deposit.

“The next day I got a call from my company that was closing, and they said they never received the funds,” she said.

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She is one of many consumer victims of the rise in real estate wire transfer fraud cases, said Thomas Cronkright, co-founder and CEO of CertifID, a company specializing in wire transfer fraud prevention solutions.

“Last year was a breakaway year, unfortunately,” he said.

How it works? Experts say that in many cases, scammers send phishing emails to brokers and title companies, allowing them to hack into their email accounts.

Scammers then use this information to trick buyers and sellers into believing that they are being contacted by their real estate agents or title companies.

They do this by creating fake email addresses that look like the official addresses that buyers and sellers have contacted and then sending money transfer instructions.

Stephen Dougherty, a US Secret Service financial investigator, said the scammers use what is called a “display name tactic”.

“In their email settings they may actually show the name of the real estate agent or title agent instead of looking like the actual email address they use,” he said. .

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Sometimes they even copy and paste the electronic signatures of stock brokers into attack emails, Dougherty said.

“These guys are very effective criminal networks… They have cells located all over – here in the United States, Eastern Europe, the Middle East, Africa, Southeast Asia, etc. They are local . They are global,” he said. .

While the Secret Service said it has recovered around $210 million for victims of real estate fraud since 2019, criminals are moving faster than ever.

“We’re seeing funds moving,” Dougherty said. “Before, we had a 72-48 hour window. Now funds are transferred within 24 hours, even faster than that.”

Anyone who falls victim to a real estate scam should report the incident to their bank immediately so that those responsible can attempt to recover the funds.

Homebuyers should follow these tips to protect themselves from these types of schemes:

  • Check the email addresses and URLs used in communications requesting a money transfer. Doing business on cell phones can make fraud detection more difficult, as web addresses can appear differently on desktop and mobile browsers.
  • Verify payment process with closing agents and parties involved. The process for sending money should never change, so emails asking buyers to send money differently before closing should be a red flag.
  • Call the title company before any money transfer to confirm that the funds are going to the right place.

The Secret Service also told ABC News that these types of schemes often happen before the weekend when consumers are busy trying to get things done.

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