This might not be your regular, light-hearted Saturday read, but it’s an important one.  

Aaron Cole and his wife were getting ready to close on their dream home when the unthinkable happened: they lost their entire life savings of $123,000 when Cole wired the money — which he thought he was sending to the title company as the down payment on their new home — to a scammer.  He said the scammer’s email with the wire instructions looked just like any other email from the title company.  What’s more, Aaron is a tech guy, so he never thought it could happen to him.

Wire fraud is real, and we need to be informed and spread the word so we can protect ourselves. It’s the only way to stop the bad guys.

Wire fraud can and does happen, far too often.  And the fraudsters are getting really good at infiltrating to look like a trustworthy source.  The Consumer Financial Protection Bureau reports that real estate-related phishing scams jumped 1,100% in the last 2 years, with an annual loss of nearly $1 billion.  I find that figure incredibly alarming.

In 2016, I wrote an article about Verne Harnish, a businessman whose blog I follow, losing $400,000 in a wire scam.  His case was different in that the loss was through his business, not through a real estate transaction, but it was a horrible loss nonetheless.  The scammers had hacked his email and were studying him and his business and banking habits like bank robbers casing a bank.  They completely nailed it, to the point where his assistant AND his banking officer were duped by complete strangers.  I encourage you to read the original article and the follow-up article I wrote a few weeks later.  You’ll find plenty of information and insights on how to protect yourself and your business from would-be hackers.

There’s no “undo” button you can click after you hit send, and in most cases, when the money is gone, it’s gone — as was the case for the Coles.  But the good news is, thanks to some creative thinking and a little goodwill from the title company, the Coles were still able to buy their dream home.  Read more about the unique solution they came up with in the article below.

Wire fraud is real, and we need to be informed and spread the word so we can protect ourselves.  It’s the only way to stop the bad guys.

–Greg

This might not be your regular, light-hearted Saturday read, but it’s an important one.  

Aaron Cole and his wife were getting ready to close on their dream home when the unthinkable happened: they lost their entire life savings of $123,000 when Cole wired the money — which he thought he was sending to the title company as the down payment on their new home — to a scammer.  He said the scammer’s email with the wire instructions looked just like any other email from the title company.  What’s more, Aaron is a tech guy, so he never thought it could happen to him.

Wire fraud is real, and we need to be informed and spread the word so we can protect ourselves. It’s the only way to stop the bad guys.

Wire fraud can and does happen, far too often.  And the fraudsters are getting really good at infiltrating to look like a trustworthy source.  The Consumer Financial Protection Bureau reports that real estate-related phishing scams jumped 1,100% in the last 2 years, with an annual loss of nearly $1 billion.  I find that figure incredibly alarming.

In 2016, I wrote an article about Verne Harnish, a businessman whose blog I follow, losing $400,000 in a wire scam.  His case was different in that the loss was through his business, not through a real estate transaction, but it was a horrible loss nonetheless.  The scammers had hacked his email and were studying him and his business and banking habits like bank robbers casing a bank.  They completely nailed it, to the point where his assistant AND his banking officer were duped by complete strangers.  I encourage you to read the original article and the follow-up article I wrote a few weeks later.  You’ll find plenty of information and insights on how to protect yourself and your business from would-be hackers.

There’s no “undo” button you can click after you hit send, and in most cases, when the money is gone, it’s gone — as was the case for the Coles.  But the good news is, thanks to some creative thinking and a little goodwill from the title company, the Coles were still able to buy their dream home.  Read more about the unique solution they came up with in the article below.

Wire fraud is real, and we need to be informed and spread the word so we can protect ourselves.  It’s the only way to stop the bad guys.

–Greg

Aaron Cole, his wife, and two children stand in front of the home they nearly lost in Canby, Oregon, after Cole was swindled out of the family’s $123,000 down payment in a wire fraud scheme.

(As published on REALTOR® Magazine)

Buyer Bilked Out of $123K: ‘Just Like That, It’s Gone’

by Melissa Dittmann Tracey, June 27, 2019

Falling prey to a wire fraud scheme, he lost the down payment that took his family years to save. Now he’s helping real estate pros protect their clients against cyber scams.

After a yearlong search, Aaron Cole and his family finally found their dream home in Canby, Ore., in December 2018. The seller accepted Cole’s $440,000 offer, and with a down payment of $123,000, he and his wife were ready to move in just in time to celebrate Christmas and their son’s fifth birthday.

Nothing seemed amiss when Cole received an email during the closing process with wiring instructions for his down payment. The email, which appeared to come from his title agency, listed Cole’s agent, loan officer, and other parties involved in transactional documents, along with correct contact information for each. So, Cole followed the instructions and completed the wire transfer.

Eight days later, he received a phone call from his title agency, WFG National Title Insurance Company, providing wire instructions for his down payment. That’s when Cole realized he had sent his family’s life savings to a scammer.

CFPB Tips to Fight Cyber Scams

The Consumer Financial Protection Bureau recently issued another warning about the growth of phishing scams targeting real estate professionals’ email exchanges with clients. The CFPB offers these tips on keeping transactions safe:

  • Always identify two trusted individuals to confirm the closing process and payment instructions. Consider creating a code phrase known only by the trusted parties as a way to confirm identities over the phone.
  • Avoid exchanging any details about your closing over email.
  • Before wiring money, confirm instructions—in person or phone—with your trusted representatives. Never follow instructions contained in an email.
  • Avoid using phone numbers of links contained in an email.
  • Never email financial information.
  • Be mindful of phone calls you receive. Scammers may sometimes contact a client to verify personal or financial information. Always refer back to trusted professionals to confirm.
  • Report suspicious activity right away. If you suspect funds have been taken, contact your bank or title company immediately and ask for a wire recall. You can also file a complaint with the FBI’s Internet Crime Complaint Center.

Over the next few days, he worked with his title agency, bank, federal investigators, and police to recover the funds. Every dime of his $123,000 down payment was lost and untraceable. “You spend your entire life to save to buy a house, and then, just like that, it’s gone,” Cole says. The most heartbreaking part of the ordeal was telling his wife they could no longer afford to buy the house, Cole adds. They were stuck, having already sold the house they were living in at the time, with no place to go.

“I probably sent about 150 emails back and forth during this transaction, and this email looked like all the others,” Cole says. In hindsight, he remembers the only difference was an email address listed in the message that contained an odd extension: [name].wfgnationaltitle@mail.com.

Stop This From Happening to Your Client

Cole isn’t alone: Reports of real estate-related email phishing scams jumped 1,100% between 2015 and 2017, according to the Consumer Financial Protection Bureau. The CFPB estimates a loss of nearly $1 billion in real estate transactions from such scams.

Cole says he remembers the bright red “WARNING” labels about cyber scams in the transaction documents he signed. “I really don’t think there’s any bigger warning or messaging a company can do about the dangers,” he says. “But it’s also just another warning on a document. You see it, sign, and move on to the next one.” He adds that he wishes his real estate agent had warned him in person.

Bruce Phillips, senior vice president and chief information security officer at West, a WFG company, says it’s critical for real estate professionals to educate clients about the risks. “A real estate professional has the opportunity to sit down and look the client in the eye and say, ‘This is a problem,’” Phillips says. “I believe that has a better chance in getting in someone’s mindset. It’s happening more than you think. … There is no amount of technology that you can buy that will stop this. This is a processing problem that the industry needs to address.”

Be mindful of oversharing in transactions, Phillips says. Several parties are usually included on emails containing housing-related documents—the buyer’s agent, listing agent, loan officers, title representatives, and assistants, among others—and any unfamiliar email address tacked on to the message is an indication that a hacker may have infiltrated the email chain, Phillips warns.

“Unsecure email and mobile devices are particularly at risk, and consumers are vulnerable at emotional times with title deadlines, such as home closings,” Phillips says. “It’s so easy to make it look like you’re someone else on email. Never trust an email. It can become tragic very quickly.”

Becoming the Face of Wire Fraud Victims

As for Cole, his purchase transaction remained in jeopardy for days. His family lacked extra funds to make up for his stolen $123,000 down payment, and his approved $300,000 mortgage wouldn’t cover the entire cost of the home he was buying.

In an unusual move, his title agency, WFG, offered to hire him as a spokesman for its newly created Cyberfraud Awareness Team to educate consumers and the housing industry about wire fraud in real estate transactions.

Cole’s salary: $123,000.

With this olive branch, he and his family were able to move in according to their original plan, and they spent Christmas together in their new home. Most wire fraud victims, though, aren’t so lucky. Phillips knows of situations where buyers lost their entire savings and were left homeless.

Cole doesn’t take his new role as the face of wire fraud victims lightly. “You hear about this type of scam, you see the warnings, but you never know of anybody who it actually happened to,” Cole says. “We then start to assume that we’re somebody who is smart enough that we’d never fall victim to something like this. I’m a tech person; I never would have thought it could happen to me. I want everyone to know what I know now—that it can. And to be aware so that we prevent this from happening to a lot more.”

Melissa Dittmann Tracey is a contributing editor for REALTOR® Magazine. She can be reached at mtracey@realtors.org. Follow her on Twitter: @housingmuse