Beware: Fraudulent Wire Transfers Are on the Rise

The old days of writing checks for a real estate transaction are over and wires have replaced them. As a matter of standard practice, more and more law firms only accept closing funds issued via a bank wire directly to their trust account.  Moreover, many closing attorneys are sending mortgage pay-offs, agent commissions and seller proceeds via wire from their trust account.  Scammers and hackers alike have caught on to the fact that real estate transactions are an easy target for wire fraud. As a result, the North Carolina State Bar continues to caution attorneys and consumers of fraud targeting real estate transactions. 

The State Bar warns that hackers are using unsecured emails as a way to transmit false wiring instructions. Once an email is compromised, the hacker is able to gain access to the transaction information in order to assume the identity of the party and change the wiring instructions. By the time the scam is uncovered by the parties, the money is long gone. Buyers, sellers, agents and law firms need to be sure their wiring instructions are secure (encrypted or password protected) before sending them out via email. If wiring instructions cannot be sent via secure email, they should be hand delivered. 

With the passing of new consumer protection laws by the Consumer Financial Protection Bureau (CFPB), law firms are strongly encouraged to have a process in place to verify wiring instructions. Here at Hutchens Law Firm, we verbally confirm all wiring instructions with our clients (using only with the telephone number provided in the file to initiate the conversation) and are vigilant about sending our wiring instructions via encrypted email to prevent hackers from defrauding our clients out of funds.  We also encourage our clients and their agents to use secure email and discourage them from using trigger words like “Wiring Instructions” in the email subject lines.  

Even with security measures put in place to prevent cybercrimes, attorneys and their clients need to handle real estate transactions with caution. Scammers will always be looking for new and creative ways to defraud the innocent. If something regarding the transaction doesn’t’ seem right to you, talk to your attorney and do your due diligence before proceeding. 

Published by Bess Harris Reynolds on August 23, 2016