October 16, 2023 | By: Melissa Dittmann Tracey
Cyber criminals aim to take advantage of those who aren’t familiar with the nuances of the closing process.
Younger home buyers who don’t have prior experience in the real estate market may be more naive to the red flags of wire fraud. That’s why scammers are likely targeting first-time buyers, which means you need to beef up on cybersecurity best practices and share ways to thwart common hacking threats with these clients.
The threats are real: About half of title and settlement agents report receiving at least one phishing email a month with fraudulent wire instructions, according to a recent survey from the American Land Title Association.
A new generation of home buyers and sellers must learn to be alert to the dangers, says ALTA CEO Diane Tomb, who spoke with REALTOR® Magazine about the increasing threats.
What makes first-time buyers most vulnerable to wire fraud?
Tomb: First-time home buyers, who are not as familiar with the nuances of the closing process, are often the most vulnerable to scams because they don’t know what to look out for. Even though many are digitally savvy, cybercriminals have become more sophisticated over the last decade and are willing to wait for weeks or even months to strike. These fraudsters will often use fake emails, phone numbers or websites to impersonate a trusted real estate professional.
How do you explain how a wire fraud scheme works to clients?
Tomb: Wire transfer fraud, where home buyers are tricked into wiring a down payment or closing costs to an escrow account controlled by criminals, is by far the most common real estate scam impacting first-time buyers. Most often, cyber criminals begin with a common social engineering technique called “phishing.” By tricking a future buyer into inputting their private information or clicking a link, hackers then steal their login and password information. Once hackers gain access to an email account, they will monitor messages to see if the person is in the process of buying a home. Then, they use the stolen information to email fraudulent wire transfer instructions disguised to appear as if they came from a trusted real estate professional.
What can real estate pros do to protect first-time buyers?
Tomb: We know through experience that increased consumer awareness and educational efforts by real estate professionals lead to fewer victims. Real estate attorneys and title companies should continue to educate their customers on these scams, including putting consumer warnings on websites and communications, securing email communications, and sending notices to consumers and real estate agents informing them of the scams.
It is important to have a real estate agent with expertise and knowledge of the housing market to help answer any questions. Contact our Team today.