5 Ways To Protect Your Clients From Wire Fraud

If the scammers succeed, your clients are still responsible for the money they agreed to pay in the transaction, says Texas National Title CEO David Tandy. “The sale goes through more times than I would have expected. But if the amount is large enough, then it’s unlikely the buyer could replace those funds.”

Wire fraud is very common, Tandy says. It’s not unusual for a title company to see several attempts a day. Title companies take steps to try to protect against these criminal attacks, but they need your help. Here’s what he recommends:

1. Warn And Repeat

Talk about wire fraud at your first meeting with clients and then again as they get closer to signing a contract.

Repetition is key to protecting your clients. Your frequent warnings may be what stops them from sending money to scammers. Homebuyers have told Tandy they were seconds away from authorizing the transfer before they remembered the risks.

“A buyer may get an email the day before closing telling them to wire the money early,” Tandy says. “So many people go on autopilot trusting their email, and they wire the funds.”

2. Get On the Same Page With Title Professionals

One of the best ways you can help is to reinforce what the title company tells your clients, Tandy says. Agents and title companies should talk and coordinate.

Some title companies send wiring instructions by email with the understanding buyers should call to confirm before wiring funds. Encourage your clients to confirm the title company’s phone number and save it in their phone. Then tell them to only trust information received from that number.

Other title companies may use a secure portal to send and receive messages including delivery of wiring instructions. Remind your clients to only trust messages received in the portal, not from email.

Regardless of what process a title company uses, your clients should never rely solely on an email from the title company or anyone else involved in the transaction, Tandy emphasizes. Your clients should always call a verified title company phone number and confirm.

3. Teach Buyers to Be Suspicious

Scammers have ways to know the perfect time to send a fraudulent email. “Think of everyone who’s involved in those email threads toward the end of the transaction,” Tandy says. “It might be 10 or 20 people. If just one email account has been breached, the scammers can follow along and know exactly when to strike.”

Modern scams are sophisticated, he cautions. A fraudulent email may look just like the real thing, with email signatures, pictures, and logos.

Tell your clients to confirm the authenticity of any message they don’t recognize. “One buyer told us he didn’t trust the phone or email and asked if he could drive down to the office to pick up the wiring instructions. We said absolutely!”

4. Stop Fraud Quickly

Most of the time, your clients’ money cannot be recovered if they wired funds to a fraudulent account, Tandy warns. There are a few protections in place, but your clients should not rely on them. The sooner your clients report wire fraud, the better the chances of recovering the funds. They should immediately notify law enforcement, their lender, title company, and agent.

Banks sometimes hold up transfers they consider suspicious. “The FBI and the Secret Service say that if you call within hours of wiring the money, the bank may be able to stop everything,” says Tandy. “That’s called a kill chain.”

5. Risks for Sellers

On occasion, your seller clients may also be a victim of wire fraud scams if they have to bring money to the closing table, Tandy says.

“If sellers wire those funds, then they are as much a target as the buyer,” he adds. “In that case, they would need all of the fraud warnings and wiring instructions that were provided to the buyer.” It’s important that your seller clients give the title company the correct wiring information.

Tandy cautions against trends toward faster and more convenient title processes. Unless your clients are investors trying to flip a home quickly, there is no need for such quick turnarounds, he says.

Even the title company could be a wire fraud victim where they are tricked into sending the seller’s proceeds to a fraudster instead of the seller, Tandy notes. “If a title company is the defrauded party, then it would have to replace the funds that it lost to the fraud.

“There was one time, two hours after a closing, we got a call from someone pretending to be the seller’s agent. The person said, ‘I’m here with the seller and they just realized they gave you the wrong wire information. We can give you the correct information now.’ And we said, ‘That’s great. The seller needs to come back to the office and provide the new wiring instructions to us personally and we will make the change.’ And they didn’t.”

Source: Texas REALTOR® Magazine