Not even spam filters can save us in an age where email phishing and wire fraud have become commonplace. Unfortunately, one of the most prevalent places you find these scams is in the mortgage industry.
Wire fraud is not a new concept, but the ease in which it is being accomplished is. It isn’t relegated to one area either. Two of the fairly recent stories I have heard regarding wire fraud come out of Missouri in the east, and in Oregon City, just 35 miles from where I live. In Missouri, retired pastor Ross Fulton and his wife experienced wire fraud as they were attempting to wire $130,000 for an all cash payment on a new home. While the email they received with wiring instructions looked legitimate as it contained their agent’s signature, nothing could be further from the truth. In reality, a hacker had broken into their email and monitored Fulton’s conversation with his agent, using that conversation to time when they made the request for the money. Like most victims of wire fraud, it is unlikely they will ever see their money back.
In Oregon City, Adam Cole’s story is similar. The Cole family was working with WFG to purchase a new home this past December, and had been told to expect wiring instructions for their expected down payment of $123,000. The Coles did receive instructions for a transfer, but like the Fulton’s, it was not a legitimate set of instructions. Once again, responding to an email that had the “emails” of his agent, lender, and multiple people at WFG, Cole sent the money. Instead of arriving at WFG, Cole’s wire transfer was received in a bank in Florida, diverting to four other banks prior to being sent out of the country. Thankfully, WFG worked to get them into their new home, and when the story broke out on KGW news, the Coles received a lot of local support.
How does something like this happen? Unfortunately, all too easily. WFG reported that in addition to the Cole’s situation, six other clients experienced the same results from this type of scam, and eleven clients the year before. If you research data on wire fraud in the mortgage and real estate industry, the numbers are staggering. In 2016, $15.6 billion was the amount targeted by scammers in the mortgage industry, 15% of which was actually reported, and 103 is the number of countries that fraudulent transfers have been rerouted to. In May 2018, FBI data shows there was a loss of more than $1.6 billion in the U.S. alone.
Some of the ways that hackers are accomplishing such a high amount of wire fraud are the tools they are using. Even the reliability of calling to confirm is shaken, as scammers have taken to using phone porting technology. Porting technology gives scammers the ability to cloak their phone numbers and take on the appearance of the parties in the mortgage transaction.
So how can one protect themselves from falling victim to this when trying to buy a new home?
The safest thing you can do is to be overcautious. Be wary of someone claiming to be from your title company or lender (really anyone in the transaction) that informs you of changes to wire transfer instructions or provides excuses requiring the change of instructions. When you contact your parties in a transaction, make sure you are using reliable numbers that you have for them. Do not use numbers found in email or click on any links in an email that seem like they could be potentially fraudulent. Only open attachments regarding your transaction when you are expecting them. For more ideas on wire fraud safety, reach out to your local title company when in escrow with them.