10 Tips for Countering Wire Fraud in Commercial Real Estate

Posted by Amrock

10 tips for countering wire fraud in commercial real estate blog post header image

Written by: Joanie L. Zimmer, Esq.

There’s no question that technology has streamlined the commercial real estate process. Information or documents that used to take days to distribute via courier can now be transmitted to your computer – or even your mobile device – in a matter of moments.

While technology brings with it all-new levels of convenience, it can open the door to something far less desirable: the opportunity for wire fraud. In the world of real estate, wire fraud often involves hackers breaking into an email account to obtain details about future transactions. The email account could belong to a real estate agent, attorney, underwriter – anyone involved in the transaction could be a target. Once they obtain the information, the hackers contact the buyer (usually by email), posing as an agent or title company representative. The email typically states that there has been a change in the closing instructions, and that the buyer needs to follow the instructions contained in the new email. These instructions usually provide a new destination where the funds should be wired, and if the buyer follows those instructions, they could bid farewell to a sizeable sum of money.

Wire fraud in all areas of real estate, including commercial, is on the rise. As noted in a 2018 Housingwire.com blog, there was a 480 percent year-over-year increase in wire fraud scams reported by title companies to the Internet Crime Complaint Center (IC3) in 2016.1 The article also mentioned that in the same year, wire fraud scammers targeted nearly $5.3 billion in the mortgage industry.

Unfortunately, this type of fraud is showing no signs of slowing down for 2019. However, there are steps that real estate professionals can take to avoid wire fraud, or minimize the impact if their clients fall victim to this type of scam.

10 Tips for Preventing Wire Fraud

  1. If you send wire transfer information (or any type of sensitive or financial information) via email, make sure it’s encrypted and/or password protected (you can call the recipient directly and give them the password).
  2. Instead of using the “Reply” option to respond to emails, use the “Forward” option and either type in the correct email or select it from your established address book. This will help ensure that your response goes to the correct, intended email, instead of a fraudulent one.
  3. Before wiring funds, contact the recipient using a verified phone number to confirm that the wiring information is correct.
  4. Ask your bank to confirm not just the account number but also the name on the account before wiring funds.
  5. Immediately call the recipient of the wire transfer to make sure the funds were received.
  6. Delete old emails on a regular basis; they may contain the kind of sensitive information used by hackers.
  7. Frequently change usernames and passwords. Use combinations of uppercase and lowercase letters, numbers and symbols.
  8. Make sure your anti-virus technology and firewalls are up to date and working properly.
  9. Immediately report and delete unsolicited email (spam) from unknown parties.
  10. Pay attention to common red flags that are associated with compromised email, such as misspellings, poor grammar, an unusual sense of urgency and emails sent outside of normal business hours. Also, be suspicious of emails that contain changes in payment type, such as changing from a certified check to a wire transfer, or account numbers that were revised at the last minute.

If You Suspect Wire Fraud

If you receive an unexpected or unusual email, forward it to the source it allegedly came from. This will alert everyone involved that there is a possibility of fraudulent activity surrounding their company or the transaction.

If your funds are transferred to a fraudulent account during a commercial real estate transaction, it’s imperative you act quickly to minimize potential loss. First, contact your bank or financial institution to see if they can initiate a recall of the funds. Then, reach out to the local office of the FBI. If the transaction just happened, they may be able to help return or freeze the funds. Regardless of the amount that’s lost, you should file a complaint at ic3.gov.

Immediately change all usernames and passwords associated with any account that may have been compromised, and contact anyone who may have been exposed to the scam and recommend they do the same. Also, tell them that they shouldn’t comply with requests for financial information that come from an unverified source.

Rely on a Trusted Commercial Real Estate Partner

Amrock Commercial is a leading provider of title insurance, closing and escrow services nationwide. Our relationships with leading underwriters and multi-site, multi-state capabilities are just of few of the reasons to choose us to manage all your commercial real estate deals.

But what truly sets us apart is our dedication to client care. Each member of our highly experienced team is committed to making every transaction smooth from beginning to end. We not only understand regional markets, we’re also experienced in multi-site and multi-state transactions. So, whether your real estate deal is across the street or across the country, Amrock Commercial will make it happen.

About Joanie L. Zimmer, Esq.
Vice President, National Commercial Counsel
Amrock Commercial

Joanie is a multi-faceted, highly skilled attorney and real estate professional who not only understands the legal aspects of the industry, but also has the skills and drive to build a successful office and maintain a dedicated client base. She has worked in the commercial title industry in both a closing and underwriting capacity and in private practice.

Over the years, Joanie has received numerous recognitions and awards. She is active in several professional organizations including the Cleveland chapter of Commercial Real Estate Women (CREW). She is also a member of the Cleveland Metropolitan Bar Association and is a committee member for the annual Real Estate Law Institute.

 

1 Housingwire.com. (January 23, 2018) Sounding the alarm: Mortgage wire fraud is a much bigger threat than you realize [Blog Post]. Retrieved from https://www.housingwire.com/blogs/1-rewired/post/42353-sounding-the-alarm-mortgage-wire-fraud-is-a-much-bigger-threat-than-you-realize/