Wire fraud is a very real danger in real estate closings. Criminals today are more sophisticated than ever. They will steal from you from the comfort of their own home, no longer having to resort to alley muggings. It happened to me last summer when my identity was stolen, likely as the result of the Equifax breach. Not wire fraud but it began with hacking into the internet. I am a careful person and never give away personal information unless I absolutely have to, so I was surprised when it happened to me. This kind of stuff can happen to anyone and even more frightening is wire fraud in the context of real estate closings. This is happening with more and more frequency.
What is Wire Fraud?
There are many different kinds but what I am talking about here is when someone thinks that they are wiring money needed for a real estate closing to one place (in Illinios, its usually the title company) but in fact, it gets wired into the account of a criminal. That is how your money is stolen right out of your bank account, usually never to be seen again. Was that your downpayment and closing costs? Too bad, its gone.
Are People Really that Stupid?
With some scams, you have to wonder how the victim could have been ‘that stupid’. That is not the case with wire fraud! You will not receive instructions with that say, for instance, send your funds to the Bank of Nigeria if you are buying a home in Barrington, Illinois. That would be stupid. Nor will you receive an email with a suspicious address. Everything will look okay on the surface, but the routing and bank account number are not correct! It will probably look like the email came from your own attorney! The criminal will either have ‘spoofed’ your attorney’s email address without his or her knowledge or have set up an email that looks very similar to that of your attorney with a very subtle difference. For example, if I were your attorney you would have received several emails from me using the email address email@example.com and one day you get something from firstname.lastname@example.org. Did you notice the extra period just now? Maybe, because you were looking for it, but in a different context it is unlikley that you would have noticed it. So you would open the email, maybe within a day or two of your real estate closing, and it would be friendly and conversational- like my other emails to you- and it would tell you ‘here are your wiring instructions’. It would be signed with my name and say something like “see you tomorrow!” You would not know that anything was suspicious until you got to the closing to find your money didn’t show up. Actually, that would not happen if you were my client because I have procedures in place to prevent this from happening, but theoretically this is what the criminal is thinking will happen. Or maybe the email looks like it came from your realtor. Or the title company. Realtors usually do not send out wiring instrucitons. Smart lawyers and smart title companies stopped doing it too.
How Do I Protect Myself from Wire Fraud in a Home Closing?
Simple. Don’t ever rely on emailed wire instructions. Even if it looks like it came from your lawyer’s office. I always tell my clients that they must personally make a telephone call to the title company (telephone number I will verbally give them) to get verbal wiring instructions. Call the title company using a phone number that you have obtained independently (not from an email!), such as from their website or better yet, from the title report. Take nothing at face value that you receive by email, verify by phone!
You can avoid wiring funds completley if you need to bring less than $50,000.00 to closing. Anything $50,000.00 or more must be wired, under the Illinois “Good Funds Act”. Less than that and you can get away with certified funds like a cashier’s check.
A Twist on the Wire Fraud Scam
Another thing that might happen, after you have the real wire instructions, is that you may get an email telling you that the wiring instructions “have changed”. Huge red flag. Wiring instructions don’t change. Someone is probably trying to steal your money. You can never be too careful.