Progress? These days, we all have issues with how technology has infiltrated our lives. Even before COVID-19, as a society, we have been asking these questions as to whether technology is truly progress or an illusion that winds up making our lives more stressful and complicated. Certainly, the technology and ease of email is a blessing and curse for many reasons, and not least of which, the security of email transmission when making wire transfers. Therefore, it’s important that one ensures they avoid wire fraud.
Currently, in most instances, buyers involved in a real estate transaction are required to wire their funds either the day before closing or that morning. Similarly, but less frequently, sellers require that their net proceeds are wired to them at the conclusion of the closing. In the case of buyers, the funds that they are required to wire are typically their closing costs and the balance of their down payment.
In the case of sellers, the funds are wired to them which represents the net amount they are to receive after they pay off their existing mortgage (if any), their attorney fee, their real estate commissions, and the realty transfer fee. As such, it is typically a significant amount of money. Although the wiring process is secure from bank to bank, the potential for wire fraud to infiltrate the process occurs at the time the wiring instructions are emailed to the buyers either from their attorney or the settlement agent/title company.
This is why it is important that, even if one thinks that their email is secure, that they always call the sender of the wiring instructions to confirm on the telephone with a live person the details of the wiring instructions. If you typically have the name of a contact at your attorney’s office or at the title company, it is important that you speak to that person. This way, you will ensure that there was no surreptitious interception of the email that allowed a hacker to substitute different wiring information and then spoof the email attaching fake wiring instructions that would send the money to the hacker’s bank account.
A simple example as to how this happens is that the wiring instructions are sent from the attorney to the client to then wire their closing proceeds, but the email sent is hacked allowing the hacker to send the buyer a spoof email pretending to be the attorney by attaching a different set of wiring instructions. The hacker’s wiring instructions will look very similar to the attorney’s, such as copying the letterhead and logo, but with changed routing and account numbers. Unfortunately, this happens more than any of us would ever think and there is little to no recourse if this happens.
At Abdou Law Offices, we vehemently mandate that our clients verify the wiring instructions on the telephone. Also, if one takes a look at the footer of all of our emails, it contains the following warning:
WIRE FRAUD ALERT: For all wire transfers, please confirm bank wire information via telephone with this Firm prior to initiating any wires. Never wire funds to us, or to any of our clients without explicit verbal confirmation from this office. Never wire transfer money based on an email request from our office without calling this office and speaking with someone personally to confirm wire information. When you call, do not use the phone number from the e-mail signature line. Do not accept emailed wire instructions from anyone without voice verification even if an email looks like it has come from this office, or someone involved in your transaction. You will never be instructed to wire money related to a closing without verbal confirmation. Never wire to an international account. So, heed this warning, and always verify the details of the wiring instructions on the telephone with a live person that you verify is the true sender of the wiring instructions in order to prevent wire fraud.
Please contact us at (732) 540-8840 for more information about the contents of this blog or any of our other services.