Real estate wire fraud

If you are in the process of buying a home, it’s important to be aware of real estate wire fraud — an increasingly used form of cybercrime — and how to prevent yourself from falling victim.

What is wire fraud in real estate?

Real estate wire fraud is a cybercrime in which someone pretends to be a real estate agent to convince the recipient to send closing costs to a fraudulent account.

During the final stage of a home purchase, a homebuyer receives a legitimate email from their attorney, title company or mortgage company with details on where to wire money for the closing. Real estate wire fraud involves a cybercriminal hacking into the email system to send a second email with fraudulent wire-transfer instructions.

The attorney or title/mortgage company are usually unaware of the fraudulent email. It’s only after the wire transfer is completed that anyone realizes the crime has taken place. By that time, the cybercriminal has moved the money out of the receiving account. In most cases, the homebuyer cannot recover the money from the fraudulent account — or even from the bank they authorized to wire the money.

Due to the size of real estate transactions, the financial impact of wire fraud in real estate is significant. The Federal Bureau of Investigation (FBI) has estimated that in 2017 nearly $1 billion was diverted (or attempted to be diverted) to criminal accounts during home-purchase transactions.

What are the red flags to watch for?

Be aware of these two common scenarios in real estate cybercrime: 

• Last-minute changes. Cybercriminals capitalize on the fact that neither the buyer nor the seller wants a real estate transaction to fall through, so they may wait until just before the closing to change the wire transfer instructions (e.g., the recipient’s name, bank name and/or account number).
• Sending money to an unusual recipient. Most legitimate home closings involve wiring money to a title company or law office rather than an unrelated third party.

How can you protect yourself?

• Be suspicious. There is lots of written correspondence involved in purchasing a home, so be vigilant throughout the process.
• Always confirm wire instructions verbally or in person. Don’t rely on an email or letter, even if it appears to be legitimate.
• Use only known, verified phone numbers. Stick with the phone numbers you received and verified at the beginning of the loan process.
• Inform your financial advisor before you wire money from your Ameriprise accounts. They have experience to help protect you against financial fraud. 
• Learn about additional ways to prevent wire fraud in real estate. Our Privacy, Security & Fraud Center provides proactive steps to protect yourself online and report fraud. It also summarizes other types of cybercrime.