Home buyers frequently send wire transfers to cover down payments and closing costs in real estate transactions. These transfers handle significant sums, close quickly, and settle irrevocably, making them prime targets for cybercriminals.
Losses from real estate wire fraud rose from $9 million in 2015 to $446.1 million in 2022, according to the Federal Bureau of Investigation. Criminals constantly test the systems of law firms, mortgage brokers, and realtors involved in real estate transactions, seeking any data they can use to manipulate home buyers.
As CNBC recently reported, cybercriminals posing as a mortgage broker asked a home buyer to wire a down payment as the next step in the buying process. The request appeared legitimate, so the buyer sent the wire transfer. They didn’t realize something was wrong until they received a duplicate request for the down payment. The amount the victim wired to the criminals was just under $400,000.
Irreversible and Untraceable
Once the money is sent, criminals immediately siphon the stolen funds out of the account and disperse them. Because of the nature of wire transfers, real estate wire fraud can often be both irreversible and untraceable.
Even in cases where banks can locate and freeze the funds, it can take months for consumers to be reimbursed. Victims of real estate wire fraud lose their funds, sometimes permanently, but they also often miss out on the home purchase they were counting on.
A Disturbing Next Step
Real estate wire fraud is part of an increasing trend where criminals target consumers using crafted messaging, hoping to manipulate them into making a costly mistake. The Federal Trade Commission recently found that cybercriminals frequently pose as some of the top companies in the world and send consumers communications that can appear to be legitimate.
Real estate wire fraud represents a significant escalation in fraudulent methods because criminals hack the communications systems of real estate companies and send timely, convincing messages. Buying a home can already be a stressful process, and criminals prey on home buyers’ heightened emotions.
Because real estate fraud can cost consumers hundreds of thousands of dollars, it’s critical for home buyers to fully understand the process and ensure they are sending wire transfers to the correct recipient.