Cyber Fraud in Real Estate Closings

by | Sep 16, 2016 | Legal Tips

Over the past few months we have discussed issues with cyber fraud and how it affects real estate closings. Here is a real example of an attempted fraud at a law firm in the low country that was thwarted by a smart paralegal.

She writes: I received an email from someone claiming to be one of my sellers in a transaction that was to fund today.  It stated that the client had experienced some fraud in his account and asked that I wire their proceeds to a different account.  I emailed back and said that I would be happy to, but he would to need supply those instructions and call me to verify.  When I printed the instructions, I compared the email address with the one in my file and noticed that it was one letter off from the email address belonging to my seller.

The “crook” called me from a phone with a bad connection and claimed to be the client and “verified” that he had sent the instructions.  I then asked him to verify his driver’s license number and he told me that it was in the car and not with him.  I told him once he retrieved his license from his car, he needed to call me back with the number.  I haven’t heard from him again, but I did receive a call back from the actual seller who said he never sent the email or made the phone call.

Fraud can happen to you and your client on any closing. In order to protect your client here are some simple rules:

  1. Stop using unprotected email accounts such as yahoo and gmail. Use your company email which should have better software protection. Criminals monitor email accounts for weeks trying to learn when a transaction will occur and then use that information to set their scheme into motion.
  2. Carefully check the email from the law firm that purports to change the wire instructions. Does anything look unusual? Is the email address of the sender correct or does it have misspelled names? Is the email from someone at the firm who is not working on your file? Are there misspelled words and grammatical errors that seem unusual?
  3. Check the name of the bank the law firm is supposedly using. Would it make sense for a law firm in Columbia to use a Florida bank?
  4. Have your client call the law firm to verbally verify the wire instructions before sending any money. Make sure the client calls the law firm number that is public and not a number listed on the new wire instructions.
  5. Law firms rarely change wire instructions. If your client gets an email claiming new instructions be very leery. Verify the new instructions by speaking personally with the attorney.
  6. Call the law firm yourself and ask someone that you personally know if the wire instructions changed.

With fraud on the rise we all have to be extremely diligent. Stopping your client from losing thousands of dollars due to wire fraud is not just the right thing to do, it is smart business.

Historical Fact: Lake Wateree is one of South Carolina’s oldest man-made lakes. The lake was created in 1919 when the Wateree River was dammed to create a Hydro Station. The lake is owned and operated by Duke Energy. The lake was named for the now-extinct Wateree Native Americans who lived in the area until dispossessed by European settlers.  


Photo by perspec_photo88

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