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Wire fraud and money transfer scams: What you need to know

What we'll cover

  • How scammers commit wire fraud in real estate

  • Three early warning signs of wire fraud

  • What to do if you have been targeted

Picture this: After months of house hunting spent obsessing over location, bedroom counts, square feet, school districts and all of the other details, you’ve found the one. Your offer has been accepted, the home has passed inspection and you’re in the home stretch. Then you get an urgent text saying you need to send money now or you’re going to lose your dream home. It’s a homebuyer’s nightmare — and probably a scam.

Across the board, money transfer scams (and wire fraud) like this are on the rise. Crafty criminals are leveraging this classic scam in new, but often common, ways — particularly in real estate dealings. Whether you’re a first-time homebuyer or a regular online shopper, we have tips to help you protect yourself and stay one step ahead of scammers.

How wire fraud works

Back in the day, wire fraud often required the scammer to make hundreds of phone calls to snare unaware targets. While the phone is still used, today’s cybercriminals more often leverage the internet to find potential targets.

Fraudsters reproduce sites, profiles and listings to give the appearance of credibility and authenticity. Their fake postings (or websites), pictures, sad stories, get-rich-quick promises or other  social engineering schemes  get their targets to send cash (via money or wire transfer) in exchange for promised goods and/or services that don’t actually exist. Scammers have even taken their schemes to  dating apps and social media websites  with fake profiles.

Unfortunately, no one is immune, from Gen Z to millennials and beyond. Would-be cybercriminals are utilizing timely and opportune scams to defraud unknowing targets more than ever. But knowing what to look for — and when — can help keep you protected.

Wire fraud in real estate

Many millennials are looking to  buy their first homes , and fraudsters are looking to capitalize by creating scams that leverage wire or money transfers.

Across the current housing market, some scammers often replicate legitimate real estate listings with slightly modified ads (like changing the email, phone and contact information) on authentic sites. Others fabricate advertisements for places and things that aren’t for rent or sale. And in some of the most extreme situations, criminals lure victims with listings of residences that don’t actually exist and attract attention by offering below-market value for them.

The fraudsters impersonate mortgage lenders, or even the homeowner or property owner if you respond to these ads. They ask you to wire an application fee or brokerage fees. An unaware buyer may begin the entire process with a person who’s not the seller or lender and, throughout the process, continue to be scammed out of more and more money.

In some cases, fraudsters may go as far as  hacking into a victim’s email account  and searching for keywords like bank, mortgage, real estate or loan to get a list of all parties involved. The fraudster creates a new email address very similar to one of the third parties, like the title company, and sends an email posing as that person — they might ask for personal information, send wire transfer instructions or even divert the real payment when you’re close to closing the transaction.

It’s very difficult to catch or track the criminal, and, once money is wired, it’s even more challenging, if not impossible, to get it back. That’s why it’s especially important to independently confirm wiring instructions in-person or using a known, trusted phone number.

Knowing what to look for — and when — can help keep you protected.

How to avoid wire fraud

When it comes to wire fraud, whether in real estate or other industries, there are typically some early warning signs:

1. An evident lack of organization

When selling a home (or another expensive item), most folks are motivated to sell. If it seems like things are taking longer than they should, or the seller is disorganized, it can hint at a larger problem. Often, the fraudsters have limited access to much-needed transactional info and can only provide excuses.

2. Everything needs to be done now

This one works in lockstep with being unprepared. Fraudsters push a deadline or sense of urgency so that you’re less likely to take a critical eye to the missing pieces or are more likely to make a mistake. You may even wire money without verifying fees, identities, addresses and the property (or good or service) for sale.

3. No identity verification

Validating someone’s identity is important when making any transaction, especially large ones in real estate. Fraudsters often blame lack of proximity and availability on why they can’t verify their identity. They may even pitch working with their own representatives instead of going through official channels. You should feel empowered to insist on following the formal methods, such as working through a known and trusted attorney’s office for a housing transaction.

Wire transfers are a secure way to send funds. But you should always see the product or listing in person before sending any money or signing on the dotted line. If you are going to wire money, confirm the identity of the recipient. Also, confirm with the recipient the bank information where the funds are to be sent. This ensures that both the identity of the recipient and bank information is accurate.

In the case of real estate, before you see a home, do a quick search online of the listing company to see if the contact info matches up and call to double-check. Once you’ve confirmed the legitimacy of who you’re working with, stay prepared with the important information for verification on hand. If you receive a request for a wire transfer out of the blue, or changes to the existing recipient information, it’s likely a scam. Use this checklist to stay a step ahead.

Infographic of real estate fraud-detection checklist with Ally logo and a picture of a house for sale. Scam artists are targeting homebuyers. Protect yourself with these security measures. Keep a list of key contact information of your: Lender, real estate agent, settlement agent, and attorney (if you have one). Before sending any money, confirm your wire instructions by phone with the intended settlement agent (title company or attorney’s office), ask your bank to confirm the recipient information for the wire transfer, verify the completed transfer with the settlement agent immediately, and be cautious: Call your lender to authenticate any last-minute or urgent changes. Security tip: Never email your financial information to anyone.

What should you do if you’ve been targeted by wire fraud?

If you believe you’ve been a victim of wire fraud or  any cybercrime , immediately report the incident to your financial institution and your local FBI office, as they may be able to recover your stolen money. You should also file a complaint with the  FBI’s Internet Crime Complaint Center (IC3) . They may be able to assist in further recovery efforts.

Always be vigilant

Remember: The best defense is a good offense. Follow these tips and stay alert to remain proactive with your financial and cyber security. Our comprehensive roundup of the best tips to help protect you from cybercriminals will also help keep you on your toes when it comes to wire fraud and other cyber scams.

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