Increasing Risk of Wire Fraud in Real Estate Transactions

On a national level, and with growing prevalence in Omaha, Nebraska, real estate professionals are reporting increased instances of wire fraud scams in real estate transactions. The scams are hitting both residential and commercial real estate transactions, but are becoming especially pernicious in commercial real estate, resulting in millions of dollars wired to the wrong account.

 

The scams, generally, result from an email account or a real estate broker database being hacked, where the scammer learns about the transaction, and then sends last minute fraudulent wire transfer instructions that look real because of the details. Often, the fraudulent instructions will include a middle-man, such as a real estate professional, attorney, or title company receiving the wire instructions and forwarding those instructions to the financial institution. By using the intervening party, the fraudulent instructions look genuine to the financial institution.

 

For all individuals and entities involved in real estate transactions, the safest approach is using secure email services, especially when sending wire instructions. However, if secure email services are not used, warning signs include last minute changes to the wire instruction, erroneous email addresses, or a change to an overseas financial institution. If any of these red flags arise, the wire instructions should be verified with the originating party.

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