Wire Fraud: Criminals Target Real Estate Down Payments

Jul 11, 2023

"When you have been victimized by this, it’s a very personal and embarrassing thing,” Cronkright says. “You feel violated, you feel exposed . … It transcends monetary loss.”​​

Benjamin says that when he and his wife discovered the fraud, they felt “immediate disbelief and shock” and were “angry and extremely depressed for a long time.”​​

​​The couple had taken out a second mortgage on their home to have enough to pay for the new property in cash — the seller’s requirement — and subsequently spent much of the last six years paying down the debt. “We were both going to retire within a couple of years, but all plans were destroyed,” Benjamin says. He is still working full-time as a school principal, and Joyce stayed on the job until last September. ​​

Meanwhile, Benjamin has spent countless hours researching these scams and the intricacies of his own case. The couple is suing their real estate attorney and agent for not warning them about the threat of wire fraud. The agent “neglected to include her agency’s Wire Transfer Warning Form that needed to be signed and returned along with the contract,” he says, and also compromised the security of their interactions by using both her personal and business email accounts to communicate with the couple. And, the couple asserts, the attorney did not notice the lack of warning. ​​

Benjamin says that the only thing they were told “was that it was to be a cash-only deal and to expect an email with wire-transfer information a couple of days before the actual contracted closing date.”​​

The real estate attorney and the agent have claimed that they had no legal responsibility to warn buyers of the scam, and they unsuccessfully attempted to have the case dismissed. The couple has a court date next month.

​​Benjamin is emphatic that there is an easy way to prevent this crime: “Instead of including the wire-transfer scam warning form buried in a contract, the broker and the attorney should each have a simple form that states: ‘Do not wire-transfer/send any money to anyone at any time, even if you think you know the person requesting the money, without first contacting me personally” at a particular phone number.

He suggests having the client and the broker or attorney sign the form, then “make copies for everyone and place the form directly into the hands of the client.”​​​

​​The good news is that many professionals in the real estate industry now make it part of their practice to be clear about the threat.​

Tricia Messerschmitt, a longtime Washington, D.C., real estate agent, says her company, Compass, protects its agents’ email with two-factor authentication and other security measures. And agents in her region are required to warn home buyers about the threat of wire fraud in two ways, she says. “We tell them verbally,” she says, “and we follow up with them in writing to tell them how this is happening, and what to do to safeguard yourself.”​​

A key point Messerschmitt says she always shares with clients: “Neither Compass nor any of the partners that we have, the settlement companies, will ever email you wiring instructions unsolicited.”​​

The National Association of Realtors advises its members to take similar precautions, suggesting that real estate agents include a note under their email signatures that warns customers about the threat of wire fraud, starting with, “IMPORTANT NOTICE: Never trust wiring instructions sent via email...”​​

​​Discuss financial safety with your agent. When you first connect with a real estate agent, ask how money is going to safely move between parties, Cronkright says. He suggests asking, “What title company are you using? How do I safely get money to them, and how will I know that it’s safe?’ The agent should be able to descriptively and succinctly educate the consumer on how funds will be protected through the process. And if you’re working with an agent that cannot do that, you might want to consider finding a different agent.”​​

Confirm all wiring structures in person or by phone. “Never ever email any financial information because it’s not secure,” Tomb says. And call to confirm that information using your contact’s actual number — don’t use a new number listed in the email. It could lead you to the criminal, who, of course, will confirm those fraudulent wiring instructions.​​

Know that your instructions for sending money should not change. “It’s extremely rare for wiring instructions to change at the last minute, or that the instructions will be provided by email,” the National Association of Realtors notes in its online tips for avoiding mortgage closing scams. ​​

Protect your accounts with two-factor authentication. It adds another layer of security: To access your accounts, you are required not only to type in your password but also to enter an authentication code that you receive by text, phone or email. ​​

​Christina Ianzito covers scams and fraud, and is the books editor for aarp.org and AARP The Magazine. Also a longtime travel writer and editor, she received a 2020 Lowell Thomas Award for travel writing from the Society of American Travel Writers Foundation.​

Find exclusive interviews, smart advice, free novels, full documentaries, fun daily features and much more — all a benefit of your AARP membership — on Members Only Access.

Already a Member? Login

AARP NEWSLETTERS

%{ newsLetterPromoText }%

%{ description }%

Privacy Policy