American Land and Title Association, ALTA, says the number of wire fraud scams reported by title companies to the Internet Crime Complaint Center (IC3) spiked 480% in 2016, according to a warning issued to businesses by the FBI.
So how does this wire fraud scam work?
- First the hackers identify the title company, mortgage company and the real estate company
- They steal the logos, address, email addresses of these companies to use as a part of the scam
- They then hack into the email of the title company, mortgage company or real estate company and send emails that look legitimate to the buyer or seller.
- These emails request the escrow monies but have a new bank routing and account number that goes to the account of the scammers
- The money is withdrawn immediately making it difficult for the buyer or seller to recover the funds.
Sean Smith and Erin Wrona, a Washington DC couple, lost $1.57 million after their title company was hacked. After they made a down payment of $200,000, an email came appearing to be from their title company, Federal Title and Escrow, asking that they send the remaining money. They wired the money in advance of the closing, but the title company says it didn’t receive it.
The couple is suing the Federal Title and Escrow “alleging that the title company either conspired to defraud them or was so negligent in its online security protocols that it all but allowed the money to be stolen,” according to a statement released by their attorneys, McDermott Will & Emery.
This is just one of many stories where home buyers and sellers have been defrauded.
At New Frontier Title, we take the security of the buying process very seriously and we’ve put into place protocols to ensure that this does not happen to our of our clients.
New Frontier Title Company protocols are as follows:
∙We do not accept e-mailed wire instructions without proper vetting.
∙We do not provide wire instructions through general office email. Our wire instructions are only sent via our secure server.
∙We do not provide wire instructions to any third party, including the real estate agents.
∙Sellers are required to complete and sign New Frontier Title’s Proceeds Instruction Form.
∙We have a verification system in place where we contact the sender by phone directly and the address on account must match exactly with info in the file and names on the account must match exactly to that of the Settlement Statement
-We advise our clients that if they receive new wiring instructions on any closings, they are to notify our operation manager by phone to confirm the information. We do not alter our wiring instructions via email without first having a phone conversation with our clients.
We pride ourselves on personalized service and constant communication with our clients throughout the entire buying or selling process.