Fraud Alert: An Introduction

    Wire Fraud: a noun, fraud committed using a means of electronic communication (such as a telephone or computer)

    Wire fraud, a daily occurrence in the real estate industry, resulting in losses for home buyers and sellers to the amount of over 1 Billion dollars last year. The FBI reports a 480% increase in the number of complaints in 2016.

    Perpetrators monitor real estate transactions and time the fraudulent request for a change in payment type (frequently from check to wire transfer) or a change from one account to a different account under their control right before closing.

    Beware of the following scam:

    1. An email account is hacked (this could be broker’s, escrow’s, or consumer’s email).
    2. Hacker monitors the account, waiting for the time when the consumer must wire funds. Broker, escrow, and consumer have no knowledge they are being monitored.
    3. Hacker, impersonating broker or escrow, instructs the consumer to wire funds immediately. The wire instructions are for an account controlled by the hacker. These instructions often create a sense of urgency and often explain the broker or escrow officer cannot be reached by phone so any follow-up must be by email. When consumer replies to this email, consumer’s email is diverted to the hacker.
    4. Consumer wires the funds which are stolen by the hacker with no recourse for the consumer.

    Term to know:

    Email Spoofing: the creation of email messages with a forged sender address. Because the core email protocols do not have any mechanism for authentication, it is common for spam and phishing emails to use such spoofing to mislead the recipient about the origin of the message.

    Social Engineering: (in the context of information security) the use of deception to manipulate individuals into divulging confidential or personal information that may be used for fraudulent purposes. “people with an online account should watch for phishing attacks and other forms of social engineering”

    Phishing: the fraudulent practice of sending emails purporting to be from reputable companies in order to induce individuals to reveal personal information, such as passwords and credit card numbers.

    Malware: software that is intended to damage or disable computers and computer systems.

    Smishing: a security attack in which the user is tricked into downloading a Trojan horse, virus or other malware onto his cellular phone or other mobile devices. SMiShing is short for “SMS phishing.”

    Ransomware:  a type of malicious software from crypto-virology that threatens to publish the victim’s data or perpetually block access to it unless a ransom is paid.

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