Are You Using a Wire Fraud Notice?


Wire Fraud Notice

From 2000 through 2017, the FBI’s Internet Crime Complaint Center (IC3) has received more than 4 million victim complaints. IC3 is the lead federal agency for investigating cyber-attacks and also provides the public with information about criminal cyber activity. In May of 2018, the IC3 released its Internet Crime Report for 2017. The Report provides that in 2017, the agency received more than 301,000 complaints and estimates more than $1.4 Billion in losses.

Among the highest reported losses were classified as “Business Email Compromise” or BEC. The BEC scam involves a hacker’s access to a business’s email (through phishing, hacking, spoofing or other methods) and then facilitating wire fraud payments to the criminal. Criminals are becoming increasingly sophisticated to gain access to your or your company’s email accounts. They pose as real estate professionals, potential clients, title companies, lawyers, and lenders. Their ultimate goal is to intercept wire information and redirect the funds to another account they control.

In 2017, BEC scams prompted more than 15,000 complaints and $675 Million in losses. The Report provides that the real estate sector was heavily targeted with many victims reporting losses during a real estate transaction.

In response to these alarming trends, the National Association of Realtors and local boards are encouraging all brokerages to immediately implement consumer wire fraud notices in their practices. The notices serve to educate clients about electronic communication during the course of the transaction and warn clients about how to protect themselves against wire fraud. Further, the notices help real estate professionals avoid liability, should their clients become victims of wire fraud.

Notices can be provided in several forms, both of which are recommended.

  1. A transactional disclosure, which a client signs along with other state-mandated and purchase/sale documents.
  2. An email disclaimer that is prominently included right above your signature in every email.

Both serve as an effective way to alert clients to potential thieves that may pose as a legitimate participant in their transaction.

Here’s an example of a typical transactional disclosure (which is to be signed by all clients):

Criminals/hackers are targeting email accounts of various parties involved in a real estate transaction (e.g., lawyers, title agents, mortgage brokers and real estate agents). Among other concerns, this has led to fraudulent wiring instructions being sued to divert funds to the criminal’s bank account. These emails may look like legitimate emails from the proper party. Our brokerage strongly recommends that you, your lawyers and others working on a transaction, should refrain from placing any sensitive personal and financial information in an email, directly or through an email attachment.

When you need to share Social Security numbers, bank accounts, credit card numbers, wiring instructions or other personal or financial information, we strongly recommend using more secure means, such as providing the information in person, over the phone, facsimile, or through secure postal services. In addition, before you wire any funds to any party (including your lawyer, title agent, mortgage broker, or real estate agent) personally call them to confirm the instructions are legitimate. You should call them at a number that you obtain on your own (not from an email signature line) to be sure you are speaking to the professional and not a criminal.

The National Association of Realtors has provided a sample email disclaimer is as follows:

IMPORTANT NOTICE: Never trust wiring instructions sent via email. Cybercriminals are hacking email accounts and sending emails with fake wiring instructions. These emails are convincing and sophisticated. Always independently confirm wiring instructions in person or via a telephone call to a trusted and verified phone number. Never wire money without double-checking that the wiring instructions are correct.

Educating your clients about wire fraud is one of the best ways to protect them from becoming a victim. Using the above disclosures will aid in this education and also serve to protect you and your brokerage from civil liability. Read the IC3 Report to learn more about current trends in Internet crime.


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