July/August 2022 Issue
Email and other online technologies have made it faster and easier to buy, sell, or rent a home—but they have also opened the door to criminals who use fabricated or stolen information to intercept money intended for a home purchase or rental.
One of the costliest real estate scams, in terms of potential losses, happens when thieves trick a buyer into wiring money for an earnest money deposit, down payment, or entire home purchase into the scammer’s bank account. This is often called real estate or escrow wire fraud.
In one of the most common types of rental fraud, con artists advertise for rent places that they do not own. A prospective tenant views the property online, maybe even talks to the “landlord,” and wires a rent payment and security deposit. When the tenant shows up at the address, the place doesn’t exist or is already occupied, leaving the victim stranded.
In both schemes, the stolen money is usually transferred to an overseas bank account or cryptocurrency wallet, making it hard if not impossible to recoup. That’s why prevention is the best medicine. Here’s how to detect and prevent real estate fraud.
Escrow Wire Fraud
Thieves often learn about pending home sales by hacking into the email account of a buyer or, more often, through a real estate agent or escrow officer at the title company.
For example, a criminal might purchase log-in credentials for real estate agents on the dark web or find other ways to gain access to their email, says Steve Gottheim, general counsel for the American Land Title Association. Gottheim explains that the thief “looks for emails about transaction flow. When they see a ratified purchase contract, because it has the name of the title company used to hold the earnest money deposit, they will find a way to spoof an email from the title company.”
A fake email may come from an address that looks like the title company’s except for one easy-to-miss character. Often you will see a letter with a look-alike numeral (“0” instead of “O” or “1” instead of “l”). It might even substitute one letter with a lookalike from the Cyrillic alphabet to look similar to letters in the Latin alphabet.
The crook might copy the title company’s website—down to the warning about wire fraud—and put it into a website with an almost identical URL, such as ABCTitle.net instead of ABCTitle.com. The only difference is that the fake website has the crook’s phone number, not the title company’s.
Then, the criminal will “generate one of these fake emails and send it to the buyer,” says Gottheim. It might include a link to the fake website. “Oftentimes, the buyer has already gotten instructions” on where to wire money. “The new email might be a full copy of the wire instructions now with the criminal’s account info, or it will have a subject line of “Update Wire Instructions” with a message saying, ‘Sorry, we hit send too soon.’ The buyer will take that spoofed email, log in to their bank, and wire money to the account listed in the fake email.”