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Real estate imposter scam targets would-be homeowners

In January 2017, a Denver couple signed a contract to buy a new house, planning to use $272,500 in proceeds from the sale of their previous home as a down payment.

But scammers had other plans for their money.

Before the couple’s April closing date, they received an authentic-looking email with instructions on wiring the down payment funds. The email, however, was a scam. When the couple wired the money, they unwittingly deposited it into a fraudulent account set up by scammers. Their money was gone and could not be recovered!

How can something like this happen?

The scam

Real estate imposter fraud, which targets mortgage customers and businesses that support the mortgage industry, is on the rise. According to the FBI, nearly $1 billion was diverted or attempted to be diverted from real estate purchase transactions and wired to fraudulent accounts in 2017. Reported crimes are up sharply from 2016, when wire fraud losses affecting homebuyers totaled $19 million.

In real estate imposter fraud, scammers impersonate employees at title companies or other businesses supporting the buying and selling of property because these companies typically use wire transfers to move large sums of money and customers commonly have funds readily available.

How it works

A scammer typically gains access to a title company’s or realty agent’s email account and searches for home purchases or refinances scheduled for settlement. He will then create a fake email address that closely resembles the real thing, such as john.doe.titlecompanyname@gmail.com. With access to the real email account, the scammer can observe the formatting of previous email exchanges and craft a phishing email that looks very authentic, down to the email signature and company logo. Using this genuine-looking email, he is able to impersonate a representative handling the transaction, such as a title company employee or attorney, and provide fraudulent wiring instructions to the customer, funneling the money directly into his own bank account.

The warning signs

You may be a target of a real estate imposter scam if your title company or other related business:

  • Informs you that previous wire transfer instructions were incorrect and provides new instructions
  • Uses an excuse for sending the wire transfer to a different account (for example, one business was told that an escrow account was being audited so the wire needed to be sent to another account)

Remember that a wire transfer is an immediate form of payment. It is almost always irreversible, even if fraud is involved. Not only would you lose money to the scammer, but you would still need to provide the funds required to close on your property purchase.

What to do

If you haven’t wired funds:

  • Before wiring any funds, always confirm instructions with your mortgage consultant or title representative by calling a phone number you trust. Do not call a number from an email if you haven’t used it before, as fraudulent emails often contain fake phone numbers.
  • Verify the full email address of the sender. This process will be different for different mail servers. For example, when you open an email on your phone using Yahoo, you can tap the sender’s name to reveal the full email address. If the email address does not end in the company name (meaning you don’t see “@CompanyName.com”), this is a usually a fraudulent email. Note the difference between john.doe.wellsfargo.com@gmail.com and john.doe@wellsfargo.com. However, sophisticated scammers can also spoof an email address by making a fraudulent email appear to come from john.doe@wellsfargo.com, so it’s best to confirm final instructions by phone.
  • Be highly suspicious of any correspondence stating your wiring instructions have changed. Call your representative directly if you receive this type of communication.

If you have wired funds and realize it was a fraudulent request:

  • If you wired money through your bank, request a wire recall immediately.
  • If you used a money transfer service, call the company’s complaint line right away.
  • Report the incident to the Federal Trade Commission and the FBI’s Internet Crime Complaint Center as soon as possible and provide all of the incident details. If your bank asks for a police report, give them a copy of your report to the FBI.

Real estate imposter fraud is just one of many financial scams. Learn about other trending scams and ways to help protect yourself on Wells Fargo’s Fraud Information Center.