Buying or selling a home is exciting, but it can also be one of the times you're most vulnerable to fraud.
Real estate transactions often involve large wire transfers, making them a prime target for scammers. In recent years, settlement wire fraud has become increasingly common, with criminals using emails, text messages and even fake documents to trick homebuyers and sellers into sending money to the wrong account.
We’re here to share a few simple precautions that can protect your funds and your peace of mind.
What Is Settlement Wire Fraud?
Settlement wire fraud occurs when a scammer intercepts or imitates communications related to a real estate transaction. They may pose as a title company, settlement agent, attorney or real estate agent and send fraudulent wiring instructions that appear legitimate.
If the funds are wired to the scammer's account, recovering the money is nearly impossible. Because down payments and closing costs often involve significant amounts of money, even one successful scam could result in a substantial financial loss.
Why Homebuyers and Sellers Are Targeted
During a real estate transaction, many details are exchanged electronically, so fraudsters know that buyers are expecting important last-minute communications. They take advantage of this by creating messages that look authentic and urgent.
A common tactic is sending an email that appears to come from a trusted party involved in the closing process. The message may claim that wiring instructions have changed and provide a new account number for the transfer. That's why it's important to verify every step before sending funds.
Three Steps to Protect Yourself
Whether you're buying your first home or selling your current one, following these four steps may reduce your risk of becoming a victim of wire fraud.
1. Call, don't email
Before sending a wire transfer, confirm all wiring instructions by phone. Use a number you obtained independently from a business card or a previous communication. Avoid using phone numbers provided in emails, especially if they contain wiring instructions.
2. Be suspicious of last-minute changes
It's uncommon for title companies and settlement agents to change wiring instructions at the last minute. If you receive anything requesting updated payment information, slow down and validate the request through a trusted source before taking any action. A healthy dose of skepticism goes a long way toward protecting your money.
3. Verify immediately after sending
Once the wire transfer has been completed, contact your settlement agent or title company right away to confirm that the money was received successfully. The sooner a problem is identified, the greater the chance of taking action.
What to Do If You Suspect Wire Fraud
If you believe you've sent funds to the wrong account or have been targeted by a wire fraud scam, act immediately. Time is critical when attempting to stop or recover a fraudulent wire transfer, so don't wait to report it.
Here are the first steps you should take:
Contact your financial institution immediately. Ask them to issue a recall request for the wire transfer due to suspected fraud, though the recall is not always successful.
Notify your closing team. Contact your title company, settlement agent, closing attorney or real estate agent so they can help verify what happened and take any necessary next steps.
Report the incident to the FBI's Internet Crime Complaint Center (IC3). Filing a report (opens in a new tab) as soon as possible allows federal authorities to investigate wire fraud and may assist in recovery efforts.
Contact local law enforcement. Report the crime to your local police or sheriff's office. Depending on the situation, you may also be directed to work with your local FBI field office (opens in a new tab) or the U.S. Secret Service. (opens in a new tab)
The sooner you report suspected fraud, the more options may be available to stop or recover the transfer.
Stay Safe with Members 1st
Protecting yourself from wire fraud starts with slowing down, asking questions and confirming information through trusted sources. A few extra minutes of caution could safeguard one of the largest financial transactions you'll ever make.
At Members 1st, we're committed to keeping our members informed and confident throughout the homebuying process. Our team of experts is here to answer questions, offer guidance and share resources so you can make informed decisions.
