Realtors, consumer advocates warn of closing funds scam

Spoofed email addresses lure buyers into sending money to wrong accounts

On Your Side: Real estate scams rise nearly 500 percent

BIRMINGHAM, AL (WBRC) - Real estate agent Joey Brown is aware of many schemes criminals could use to target his clients but a recent close call prompted some new policies for his brokerage firm.

“We were pretty close to closing a transaction and an email came across with wiring instructions,” the RE/MAX Southern Homes agent explained to WBRC while hosting an Open House in The Preserve neighborhood of Hoover.

“When I glanced at the email, it appeared to be legit, but I happened to notice the email address was incorrect,” said Brown.

The email appeared to be from a closing attorney. Brown knew well but the address domain was for a Gmail account, rather than the attorney’s company account. That small difference was enough for Brown to call and verify the wiring instructions before the buyers lost money to criminals.

Now his broker has taken the extra step of implementing procedures for alerting clients to the potential for wire fraud and ways to protect themselves.

“I’d never heard of this 10 years ago. I’d never heard of this 5 years ago,” David Smitherman of the Birmingham Better Business Bureau. “Scammers are always looking for the next opportunity. If they can find a way to drive a wedge between you and your bank account, then they’re going to do it.”

The BBB’s Scam Tracker program found at least 45 cases across the country, including one in Madison County, Alabama, where real estate transactions were targeted in similar scams. The National Credit Union Association is also tracking this trend and alerting consumers.

In many reported cases, the spoofed email directs a down payment or closing costs be wired to an offshore bank account where it becomes nearly impossible to recover the funds. The sophisticated scammer may even provide a phone number in the email for buyers to call with questions; instead of reaching the actual real estate professional, the call is answered by the criminal.

“When you’re buying a home, that could involve hundreds of thousands of dollars, and some consumers report having lost that much,” said Smitherman.

The best way to ensure your money is going to the correct place is to find contact information for the business you know is supposed to receive the funds and call to verify the wiring instructions. Another option is to ask your realtor if a certified check can be brought to closing, rather than having to transfer your savings electronically.

Last year the Federal Bureau of Investigation issued a warning about several variations of fraud involving business email compromise. The notice lists real estate transactions as an emerging trend for scam targets, saying “perpetrators were able to monitor the real estate proceeding and time the fraudulent request for a change in payment type (frequently from check to wire transfer) or a change from one account to a different account under their control.”

If you suspect you’ve been a target, experts recommend you contact your bank and realtor immediately. Law enforcement, including the FBI’s Internet Crime Complaint Center, should also be alerted.

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