Wire Fraud Costs Purchaser their $142K Down Payment

The CBS I-Team reported on the $142K loss. Video at http://9nl.org/cbslocal-142kwirefraud

Realtors and buyers must read this important bulletin about wire fraud.

Financial adviser and podcaster Ric Edelman recently discussed a horrendous form of wire fraud that has cost at least one buyer their down payment. We followed the references and have learned that this is a real scam with a couple variations.

The National Association of Realtors estimates millions of dollars of down payments have been lost. The I-Team did a report on this as well.

How Groundwork is Laid for the Wire Fraud

Imagine a realtor working quickly to move their deals forward. They receive dozens of emails and texts a day and one time they click on something that they shouldn’t. The email or text was from someone who looked legitimate, but wasn’t. The link was called a “phishing” link. It takes the realtor to a website, which may or may not look legitimate. The site contains hidden malicious code.

If the realtor has inadequate malware protection or antivirus, the code will search the realtor’s computer for information that would let the hacker deduce the realtor’s email user name and password. The hacker can then read the realtor’s emails, watching and waiting for just the right moment.

Springing the Wire Trap

In the case of the I-Team report above, the hacker monitored a deal, and prior to the closing, posed as the bank to correspond with the buyer, realtor, and others. The hacker used a specially created email account that looked like a real bank email. They were able to learn things that hadn’t yet been said over email, including the closing date and time, financing, and closing amount.

After some back-and-forth, the hacker sent the buyer wire instructions for the down payment. The buyer wired their money and sent an email to his realtor and others saying that he had done so. But no one replied. Presumably, they were trying to figure out what the buyer was talking about. “We didn’t send wire instructions, did so-and-so? Let me ask,” they might have said.

Aftermath

Once someone wires their down payment into a hacker’s account, it may be immediately gone. For domestic wires, there is a 70% chance the FBI can recover the money if notified in three days. For international wires, the cross-jurisdiction logistics reduce any chance of recovery considerably.

In either case, it is very likely that the receiving account will have been opened with a fake ID, cashed out, and closed. An unwary buyer can quickly lose everything.

How to Protect Against Wire Fraud

To protect against wire fraud, advise all clients to take wire instructions only over the phone from a recognized voice, or to use cashier’s checks or other physical means.

To protect against phishing, never click suspicious links. Always run both anti-malware software and a virus scanner in case you do click on something you wish you hadn’t. Use a strong email password that cannot be guessed, and change it if you believe you have clicked something bad.

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