Carly Andreatos was just days away from buying her first house when an email came from her attorney’s paralegal. In it, she found directions for wiring her down payment and closing costs — a total of $22,890.
Not wanting to delay closing, she quickly wired the money — literally all her life savings — as directed.
The next morning, though, what Andreatos calls “a nightmare” began. Her attorney never received the funds. That email? It was a fake — sent by a scammer in an all-too-common fraud scheme targeting homebuyers.
“This has been the worst experience of my life,” says Andreatos, a 25-year-old veterinary technician from West Palm Beach, Florida. “It was everything I’ve ever saved.”
Now, Andreatos’ home purchase lies in the balance, and she’s unsure if she’ll get her money back. Since the home happens to be the property she’s currently renting, her entire living situation is on the line. “I’m sitting here thinking I’m going to be homeless,” she says.
Sadly, stories like Andreatos’ aren’t uncommon. Real estate wire fraud has been a problem for years, and it has only worsened during the pandemic.
A survey of title agents — those charged with transferring a home’s title and managing the closing and escrow process — shows that a third of all 2020 real estate transactions included some sort of wire fraud attempt. Meanwhile, 76% of agents say fraud attempts either increased or held steady from the year prior.
The scam works like this: A fraudster gains access to an email account involved in the home sale — a real estate agent, a lender, a title agent or even the buyer — usually through some sort of phishing attempt. They then monitor emails, watch the transaction progress, and insert themselves at just the right time. That’s when they ask the buyer — using a very legitimate-looking email — to wire funds to an alternate bank account.
“These spoofed emails are not the typical scam emails with misspellings and typos,” says Andy White, CEO of ClosingLock, which helps title companies ward off wire fraud. “These are targeted, well-crafted spoofed emails that look like they are from the title or escrow company or attorney office. When there are hundreds of thousands or millions of dollars on the line, you can bet the fraudsters will take a little time to make these emails look legit.”
COVID opened more doors for scammers
The FBI dubs this scheme “Business Email Compromise” — an operation so common it racked up a whopping $1.8 trillion in losses across 2020. The average victim lost nearly $100,000 last year.
The problem is likely worse than it looks, too. According to the FBI, only about 12 to 15% of all cases get reported. As Diane Tomb, CEO of the American Land and Title Association, puts it, “The problem is actually much larger. It’s a national epidemic.”
The COVID-19 pandemic — not to mention the real estate boom it spurred — created prime conditions for wire fraud scams to take flight last year. For one, there were simply more transactions to target. The National Association of Realtors shows that a jaw-dropping 5.64 million existing homes were sold in 2020 — the most since 2006.
Moreover, many of these transactions were completed online due to pandemic safety measures. This made it easier for scammers to insert themselves and, in many cases, caused buyers to let their guards down a bit.
“There's been a tremendous adoption of technology over the last 20 months,” says Tom Cronkright, CEO of CertifID, a real estate wire fraud prevention firm. “So, a buyer thinks, ‘The fact that I'm being asked to wire funds through an email — I guess it's just part of the deal now.’”
Rising home prices, as well as a surge in all-cash purchases, has increased the temptation for scammers, too. As White explains, “High-dollar transactions inherently carry more risk. Fraudsters are lazy in the sense that they go after the easiest and biggest paydays.”
Stephen Dougherty, a financial fraud investigator and analyst with the Secret Service, investigates business email compromise cases daily and, along with Cronkright’s team, is helping Andreatos recover her funds. He says the uptick in fraud schemes over the last year — particularly within real estate transactions — has been notable.
“The U.S. Secret Service has observed an exponential rise in real estate-centric Business Email Compromise,” Dougherty says, calling the threat of these scams “highly elevated.”
You can catch wire fraud before it happens — I did
Wire fraud may be alarmingly common these days, but there are ways to protect yourself — and I’m the proof.
Two days before closing on my current house, an email arrived — seemingly from my title agent. It claimed, “You need to have the cash-to-close amount of $48,754.39 wired to our account today in order to avoid closing delay.”
The number was right. The names and addresses were right. The email signature was even spot-on. Thankfully, I’d heard stories of wire fraud, so I looked carefully at the sender’s email. It was one character off and had a different host domain — immediate red flags.
When I called my title company (from the number listed on their public website — not the one in the email), my suspicions were confirmed: It was a fake. Ultimately, my close eye saved me from losing nearly $50,000 — not to mention my house.
Nick Ingalls, an editor for Verywell Mind, had a similar story.
“I wonder — if I didn't happen to be an editor and general grammar stickler — if I might have missed it and just wired our house away,” says Ingalls, who suspected fraud because of a wrong phone number.
Still, incorrect info is only one way to spot the fraud. According to Cronkright, successful fraudulent emails often have four things in common: A call to action, some kind of new or updated information, a request for confirmation (so the scammers can reroute the funds quickly) and the word “kindly.”
Scammers are also increasingly using COVID-related excuses, he says.
“They’ll say something like, ‘Because of COVID, we're short-staffed right now, and you need to send this to me today,’” Cronkright says. They also might mention vaccinations, outbreaks at the office, local lockdowns and other timely, pandemic issues to make the message seem more urgent.
How to protect yourself from wire fraud
If you’re preparing to buy a house, setting up strong passwords and multi-factor authentication — both on your email and social media accounts — may help ward off fraud long before it hits your inbox. Being wary of any links or attachments in emails can help, too.
“Criminals begin the wire fraud process way before the attempted theft occurs,” says Tomb. “Most often, they begin with a common social engineering technique called phishing. This can take the form of fake emails, phone numbers or websites to fraudulently obtain private information. Criminals trick users into inputting their information or clicking a link that allows hackers to steal login and password information.”
You should also talk to your lender and title company about what you’ll owe, when you’ll owe it and how you’ll be asked to pay — so you’ll know when to be suspicious. Asking about corporate digital security measures is smart as well.
Finally, if you do receive wire instructions in an email, always voice-verify before sending any funds.
“Buyers should never trust wire instructions or phone numbers in an email,” White says. “Instead, they can Google the company they are working with and call the main office number to confirm the wire instructions. Once the funds are wired, buyers should confirm the settlement company has received them. Again, use a trusted phone number.”
And don’t forget: You can always ask to pay via cashier’s check instead of wiring your funds. While this will require actually going into the office, it ensures the money gets in the right hands.
Act fast if you fall victim to wire fraud
Regardless of the precautions you take, there’s still a chance you’ll fall victim to wire fraud. If that happens, it’s imperative you act quickly.
“Detecting that you sent money to the wrong account within 24 hours is the best chance of recovering your money,” Tomb says. “Victims are often embarrassed that they were scammed and don’t report the theft. But if victims act fast, there is a chance money can be recovered.”
Andreatos says her situation was “the most embarrassing situation that's ever happened,” but still, she reported the scam — within 12 hours. Though her funds have yet to be returned (they’re currently on hold while the banks review the issue), they weren’t routed to the fraudster either.
Be warned, though: Andreatos’ case isn’t the norm. Only 29% of victims see their funds fully recovered. In 40% of cases, 10% or less is recovered.
If you think you’ve fallen victim, call your bank and have them recall the wire transfer immediately. Then, report the crime to the FBI’s Internet Crime Complaint Center at IC3.gov. You should also call your regional FBI office and your local police department, as they may be able to help as well.
“Buying a home is exciting, but it also can be a stressful process,” Tomb says. “When you’re handling multiple stressors at once, it’s easy to let your guard down. These criminals rely on your trust. They know you trust the professionals in the real estate transaction, and they exploit that trust to steal from you. If you aren’t vigilant during the homebuying process, you can quickly become a victim.”