Imagine you’re in the last few stages of closing on the purchase of a home or property. You’ve negotiated an agreed upon price, opened escrow, completed inspections, secured title insurance, and now you’re ready to transfer the closing funds into your escrow account. For some buyers, this can be hundreds of thousands, if not millions of dollars, to fund closing costs. The buyer authorizes the transfer of funds to a title company, and just when you think the deal is closed, a cyber thief can steal your money through escrow fraud, if you are not careful.
In recent years, internet scams have increased substantially – especially in the real estate sector. In fact, large scale cyber thieves often target the escrow process because they know their victims are expecting to transfer a large sum of money. Unfortunately, escrow fraud is on the rise and has been ever since the digitalization of the closing process. With a fake email address and the right wording, you could transfer thousands of dollars to a fake title company. Landmark Title takes extensive safety measures to ensure the privacy of your information and the security of your money.
False emails and websites in phishing schemes are two of the most common strategies to engage someone in escrow fraud. Criminals will send seemingly legitimate emails from an address that sounds like a company you already work with. Often, they will even create and include a replica website representing a known title company with slight, hard to detect changes. These small differences are extremely easy to miss, especially to individuals that are distracted and overwhelmed during the purchasing process. Cyber criminals count on this for their escrow fraud targets.
Fraudsters will use the same false email address to send instructions to the buyer on how to wire escrow money needed to close. This is often sent to a buyer when they need to transfer funds to a title company or to a title agency that needs to transfer funds to a seller. Under each scenario, the thieves are intentionally targeting individuals and organizations that are sending a large sum of money. These emails can be very realistic, causing many people to fall victim to their deception.
Once the money is transferred, there’s not much you can do. Escrow fraud is difficult to catch once it occurs, because once money is sent and the thief receives the wire, both the money and the culprit disappear. In most cases, that money is completely irretrievable.
To better protect yourself from becoming a victim, learn more about the wire fraud process here.
Even though escrow fraud is an elaborate scam, there are several signs that you can look for:
1. Beware of fake email addresses
When you receive an email from a title agency or bank, double check the email address to make sure it is correct. One wrong character can mean the complete loss of your money. Cross check the email with the information given to you elsewhere. If you need to confirm anything, contact a phone number outside of the suspicious email. Additionally, be careful to avoid any links in an email from a different address.
2. Question unusual payment methods
Title and escrow agencies typically require payment through legitimate electronic services, like a bank account transfer or credit card. If you receive a request to utilize an unusual method of payment, do not send money. When you receive an email requesting an unconventional method of payment, contact your escrow officer directly to confirm the transfer of funds, before taking any action.
3. Check for fake websites
Since escrow fraud is a sophisticated scam, criminals will go as far as creating a fake website to gain trust. These sites can look exactly like the website of a trusted company, so it is important to be diligent and check details in a link for minor differences.
How to avoid escrow fraud
Now that you know what to look for, we will share specific tips to help avoid escrow fraud altogether.
1. Make sure emails and websites match
Fake emails and websites are one of the telltale signs of escrow fraud. Therefore, it is necessary to double check all links and communication methods before making any decision with your money.
2. Don’t click on or dial a phone number in a suspicious email
If an email looks suspicious to you, it probably is. This means you shouldn’t use any of the contact information listed within.
3. Ask about the safeguards offered by your title company
To avoid escrow fraud, make yourself familiar with the preventative measures your title company offers. For example, Landmark Title encrypts all email communications to protect against fraud.
4. Keep your transactions secure
Avoid free Wi-Fi with no firewall when addressing closing details. Make sure your passwords are strong, change them regularly, and verify any information you receive via email through your closing agent or other contacts. Finally, confirm that your institutions or advisors use at least two authentication steps before sending money out.
If you find yourself a victim of escrow fraud, follow these steps.
Landmark Title and Assurance Agency is well versed in handling commercial and residential real estate transactions. We are also keenly aware of the increasing threat that escrow fraud poses to real estate transactions. To protect our customers and our partners, we take extensive preventative measures, we also work closely with residential realtors, commercial brokers and their clients throughout the escrow and title process to make sure that proper steps are taken to a successful close. Please contact our office at (602)768-2800 with any questions about our escrow and title services.