Unfortunately, the story of a prospective homebuyer being duped out of money through a business email compromise scheme (BEC) isn’t a new one. The FBI says cybercriminals have stolen more than $3.5 billion from consumers in recent years.
Recently, CertifID and a Title Forward executive sprung into action to recover the lifesavings of swindled homebuyer. Here’s what happened:
As a homebuyer near Denver prepared to close, he received an email appearing to come from the title company asking him to wire his closing funds early in the transaction.
“The emails appeared convincing and included my exact amount for closing that had previously been discussed by the title company,” the unidentified wire fraud victim recalled. “I received the wiring instructions and wired just under $80,000 as instructed. Two days later, I was notified that the money did not arrive at the title company and that’s when I realized my life savings had been stolen.”
Usually, that’s where the story ends. By the time victims, title agents or Realtors undercover the theft, the money is long gone and the parties often end up in court looking to assign or deny blame. This story ended differently. The victim’s title company advised him how to immediately notify the financial institutions involved.
“We know that buyers may be approached by fraudsters at any time and when funds are transferred, it’s hard to get them back – time matters,” Title Forward (a Redfin title company) General Counsel Angela Lozano explained. “We worked with the buyer to alert the banks and attempt to freeze the accounts so they could be returned.”
Two days passed and there was no assurance from the banks that the funds were secure. Lozano then contacted CertifID’s CEO Tom Cronkright and he sprung into action, gathering the emails and bank information and deploying CertifID’s Funds Recovery Services to launch a coordinated effort involving the U.S. Secret Service.
“Time was truly of the essence, so we got to work in finding and freezing the account where [the victim’s] funds had landed,” Cronkright said. “Within a few hours, we had confirmation that his funds had been secured and on track to be returned to him – a great result given the timing of everything.”
A week after transferring his money to cyber criminals, the victim’s savings were back in his bank account.
“The entire experience was shocking, and I consider myself lucky to have been surrounded by professionals that selflessly jumped in to help me,” the victim said. “If I can be tricked, anyone can. Home buyers need to not only be aware of this risk in a general sense, but they also need to know what forms it can take; the latter part was what I didn't know. Having better knowledge and surrounding themselves with people who ‘get it’ will help protect them as they send money for closing. I was a lucky one.”
Through BEC scams, fraudsters impersonate title companies and send fraudulent wiring instructions to buyers with a request to send funds immediately or the transaction may be canceled or delayed. Once the funds are stolen, they are hard to recover as cybercriminals use elaborate networks to launder funds to avoid detection and recall.
“We have seen a sharp increase in real estate wire fraud in recent months,” said Stephen Dougherty, Cyber Investigations Division (GIOC), U.S. Secret Service. “Cybercriminals are using information found in compromised email accounts to trick consumers into sending funds to fraudulent accounts. [This victim] had a favorable result because his title company was aware of the risk, most home buyers are not as lucky.”
Cronkright said education, awareness and securely exchanging wiring instructions can help lower this risk.
“Buyers should inquire as to how their real estate agent; title company and lender safeguard their respective email accounts and protect them from wire fraud – the threat of losing their life savings is too great to ignore,” Cronkright said. “With heightened awareness, communication and security standards, all parties in a transaction can be safer from the threat of loss.”