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LEGAL CORNER with ANDREW PINEIRO, Esq.
WIRE FRAUD
As a real estate lawyer, we hear about incidents of wire fraud on a regular basis. A wire is the preferred method of funding a real estate purchase and paying off a mortgage due to the immediacy of the transfer and the irreversibility of the transfer. Generally, once a wire is initiated, it cannot be reversed. Due to this characteristic, the wire process is ripe for fraud.
In a real estate transaction, wire fraud involves the deceitful scheme to divert closing funds or mortgage payoff funds by altering legitimate wire instructions, so that the funds are diverted to the fraudster’s account instead of the authorized recipient’s intended account. The ruse is often accomplished via email phishing, which involves the fraudster targeting a realtor, mortgage broker, lender, attorney, closing agent, or even a buyer or seller, via email or other online means, to steal sensitive information and then impersonating that party via spoofed emails to the closing agent. This can occur when unsuspecting parties click a link that ultimately provides the fraudster the pathway to access vital information related to the transaction. Often the scheme involves hacking on multiple levels; after accessing the computers of a realtor, for example, the fraudster can steal the names and contact information for the seller, and then monitor the seller’s email for information sufficient to facilitate the hijacking and alteration of wiring instructions. All parties to the real estate transaction must be diligent to avoid being fooled by these spoofed emails that appear to come from a legitimate source. Once the wire is sent using the fraudulent instructions, the money lands in the fraudster’s account and it is quickly withdrawn or transferred elsewhere before anyone involved in the transaction gets wind of the hoax.
To protect yourself, independently verify the instructions. Before sending money to a third party, review and confirm the wire instruction document received from the title agent over the telephone and verbally confirm the information provided, including loan numbers, routing numbers, account holder name, and account number. Also make a note of the person’s name and title who verified the information. Be sure to use a known telephone number or one researched independently.
Watch for red flags! If unsolicited or last-minute changes to wire instructions are received, this is a big red flag. Wire instructions rarely change. Other red flags to look for:
*Emails that are sent outside of normal business hours, especially, if routinely in the past, the emails came during business hours
*Emails that contain poor grammar, misspellings, or unusual fonts
*Emails with a slightly different email address than previously used (watch for character changes like a zero “0” numeral and a capital letter “O”)
*Last second changes to instructions right before a 3 day weekend – if banks are closed on a Monday or Friday, it allows for more time to pass before the matter can be detected
This is a very brief snapshot of some of the pitfalls of wiring funds for the real estate transaction. When wires are confirmed and all protocols for avoiding fraud are followed, the wire is the best way to fund a transaction. The wire avoids some of the problems associated with checks including the lag time associated with clearing the check, fake checks, washed checks, double deposits (using a phone image to deposit the check in one bank and immediately depositing the same check in another bank), etc.
If you suspect that something just isn’t right with a situation involving a wire, contact your bank or an attorney that has experience with identifying and preventing wire fraud before you send your wire.
Andrew Pineiro, Esq., Pineiro Byrd PLLC,
4600 Military Trail, Suite 212, Jupiter, Florida 33458, apineiro@pblawfla.com.
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