December 4, 2018

Buying a Home in the U.S.? Protect Yourself from Evolving Scams!

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Dec

04

Buying a Home in the U.S.? Protect Yourself from Evolving Scams!

Posted by: Bruce Perlman, Senior Vice President and General Counsel

When I blogged on the topic of scams targeting home buyers last year, I was talking mostly about email scams. Unfortunately, residential real estate transactions in the U.S. are targeted by scammers, and their techniques are becoming more sophisticated, including phone calls directly to buyers. The bad guys have become incredibly good at identifying people engaged in residential real estate. Real estate brokers and agents, mortgage officers, title and escrow closers, and real estate lawyers; the list goes on and on. For relocating employees on fast deadlines, this information can be critical.

What types of scams do you need to be on the lookout for?

Spoofing and phishing are both tricks of the scammers’ trade. A scammer who has been able to identify and infiltrate the email of a legitimate real estate agent will set up an email account that looks remarkably similar to the agent (“spoofing”); joe.realtor@realestatecompany.com becomes joe.realtor@realstatecompany.com. The email might even contain Joe’s company logo and contact information. Sometimes there are attachments, and sometimes not. It will probably look very genuine.

The scammer uses this email account to contact you, the homebuyer, with a very official looking email telling you to wire your deposit money to a specific bank account (“phishing”) belonging to the scammer. Once you do this, there is a very high probability that your money is lost. Unless you can engage your bank or law enforcement very quickly, chances of recovering your money are slim.

Now, on top of email scams, we are seeing scammers calling buyers directly on the telephone with what they call “new wire instructions” to steal closing funds. With this new type of fraud, it is important to make home buyers aware of this scam and let them know that they should make sure they are speaking to a contact they trust, and not discuss wire instruction changes by phone if they have doubts. They should not be deceived by a legitimate looking caller ID; those can be spoofed. The buyer should not divulge any information and should immediately reach out to their agent or escrow agent at a trusted number to be sure of their next step.

What can you do to protect yourself from scams?

The best advice from the government, banks, and others, is to be vigilant and prevent the problem before it happens. Just a few notes:

  • Reputable real estate professionals do not normally email wire instructions or other bank account information. If you receive an email like this, call your real estate agent, your lawyer, or whomever the sender claims to be. Do not use the phone number that might be in the email as it will connect you to the scammer. Similarly, don’t “reply” to the email to ask “Joe” if it is legitimate. You will not be reaching “Joe.” 
  • If you get such an e-mail, do not wire the money and do not email financial information to anybody. Call your mortgage representative or your real estate broker and verify any inquiry. 
  • Never divulge any information over the phone if you are unsure of the source, and immediately reach out to your agent or escrow agent at a trusted number to investigate. Do not trust caller ID, scammers can spoof a trusted caller ID to gain your trust. 
  • Once you’ve verified any inquiries as legitimate on any wire that you send, contact the recipient to be sure they received it. 
  • On anything unusual, contact all banks and law enforcement as soon as possible. It may sound dramatic, but call the FBI right away. They have tools available that can sometimes reverse such wires—but only if you act quickly. It is remarkably easy to get numb to this kind of information. Most of us have heard the advice dozens of times and figure we are too smart to fall for something like this. Given the speed of email and wires, a mistake will cost you dearly. Additionally, it is entirely possible to lose so much money in one of these scams that you can no longer afford to buy the home. If that were to happen, you need to also be aware that the home seller might still seek to legally enforce the terms of the sales agreement.

Cartus does not use email to communicate wire instructions with a buyer or transferring employee or anyone else. Cartus’ Broker Network and Cartus’ affiliate, Title Resources Group, both operate under the same strict rule. If you receive a communication like this from a Cartus-related party, contact Cartus right away. If you’ve already sent the wire, contact your bank and the FBI first.

While all of this sounds hyper-dramatic, the risk is real and the losses are huge. Below are links to additional resources providing further information on this topic. The National Association of Realtors (NAR) piece listed below is most aligned with residential real estate, and the FBI piece gives a sense of the size and scope of scams like this.

We will continue to keep you updated on this topic as new information becomes available.

Additional Resources:

National Association of Realtors: https://www.nar.realtor/articles/urgent-alert-sophisticated-email-scams-targeting-the-real-estate-industry

Consumer Finance Protection Board: https://www.consumerfinance.gov/about-us/blog/buying-home-watch-out-mortgage-closing-scams/

FBI: https://www.ic3.gov/media/2017/170504.aspx

U.S. Department of Treasury: https://www.fincen.gov/resources/advisories/fincen-advisory-fin-2016-a003

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Posted By

Bruce Perlman

About Bruce

Bruce joined Cartus in 1991 and was named senior vice president and general counsel in 2001. He has lectured extensively and written many articles on tax and legal topics related to global relocation issues.

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