Cyber-hackers in real estate transactions are growing more sophisticated with their tactics.
Some recent major schemes involve fraudulent emails and wire transfers that appear to be from a broker or attorney with wire instructions to the hacker’s bank account. And it can happen to the most experienced professionals in the business.
CNBC detailed the experience of a 25-year Silicon Valley tech veteran Rana Robillard who was conned out of $400,000 with one email.
Earlier this year, Robillard won a bidding war on a house in Orinda, a San Francisco suburb. So when she received an email from her mortgage broker with directions to wire a $398,359.58 down payment to a JPMorgan Chase account, she wired the cash immediately.
The email was in a thread to her broker. Afterward, she received a second request for the down payment, and she understood that her initial wire had been sent to a scam.
Even Robillard, who has decades of experience working in cybercrime, was fooled — as fraudsters are becoming increasingly smart about how they hack into the inboxes of brokers, agents, lawyers and other advisors.
Real estate transactions are prime targets for scams due to the large transactions and frequent use of wire transfers. They are also easy targets as they conduct much of their business through email or phone calls. In Robillard’s case, in a chain of more than 20 emails, there was only one email sent by a cybercriminal – and it was indistinguishable from the rest.
The real estate market is targeted so frequently with astounding losses that the FBI issued a comprehensive report just on “Business Email Compromise” (BEC) and real estate wire transfer fraud. It has become a sophisticated scam that targets businesses and individuals who frequently engage in legitimate wire transfers requests.
The losses have been staggering, rising from less than $9 million in 2015 to more than $446 million by 2022, according to FBI data, prompting the FBI to issue a public service announcement.
The FBI saw an increase in incidents where “funds were transferred directly to a cryptocurrency exchange, or to a financial institution holding a custodial account for a cryptocurrency exchange.”
The targets range from small local businesses to larger corporations to personal transactions.
Banks caution that wire transfers are largely irreversible. Once criminals have a victim’s money, they quickly shuffle it to other bank accounts before withdrawing it as cash, converting it into crypto or exploiting mules to launder the funds, CEO of anti-fraud startup SentiLink Naftali Harris told CNBC.
Even if you realize the mistake quickly, it can be too late to do anything about it. Robillard alerted her bank, Charles Schwab, of the fraud on Jan. 30 and within days, an official working in the cyber branch of the San Francisco division of the FBI said, “Funds have been located and are frozen,” according to CNBC.
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After more than five months, Robillard finally got her money back, which only happened with the cooperation of several banks and involvement from CNBC.
One strategy to prevent being a victim of a scam is to verify with the title company that the wire request is authentic. JPMorgan told CNBC that consumers should confirm any last-minute changes to payment instructions and verify wire recipients before effectuating the transaction.
Real estate agents should also explain to clients who the wire instructions will come from and to verify them before sending funds, while mortgage brokers should use a secure portal for document sharing.
— Christina Previte