Watch Out for Scammers Targeting Home Buyers at Closing if You're in the Market for a New Home
Scammers know that buying a home is a complicated process and take advantage of the confusion to steal your money and information at closing
Are you thinking about buying a new home? It's almost the most popular time of the year for home sales, and you wouldn't be alone if you're thinking about jumping into the housing market. If you are looking, you should also be looking for scammers that want to steal your closing cost funds by pretending to be your real estate agent, closing attorney, title company, escrow company, or mortgage company.
Stealing Closing Money
Scammers are targeting buyers close to their closing dates with the intent of stealing money intended for the closing process, such as the down payment and closing costs. The scammers do this by pretending to be the real estate agent or settlement agent, such as the title company, escrow officer, or closing attorney. This scam will usually take place via email, with false claims of a last-minute change in the closing process, a check that is no longer acceptable, or a change in the wiring instructions. They tell the buyer to electronically transmit the money to a new account.
Know the protocol for transferring funds and sending information
Talk about the closing process and protocols for transferring funds and sending personal information with your real estate or settlement agent before the process begins. Don't move forward in the process until you understand everything completely. If you receive any communications that deviate from this established protocol, red flags should go up right away. Before moving forward with the closing process, establish a 'back channel' with a direct phone number in order to confirm any requests you may receive later. You're dealing with a significant amount of money and these people are working for you, so you deserve this ability. Make sure your real estate agent knows that any requests he/she receives on your behalf should be verified the same way. Even if the agent verifies something, verify it yourself. Real estate agents are human, too.
Talk with the person or company before sending money or information
If you get a request, usually by email, asking you to send money or to provide personal information in connection with a closing, don't do it without checking the validity first. Even if you recognize the sender, the email or communication has a high likelihood of being fake. Most parties in the closing process probably already know each other as they often work together frequently, so they often communicate directly with each other via phone before calling you to explain whatever request will be coming to you.
Whenever you get a communication asking for money or some other valuable piece of information, you should always call the sender using pre-established means in order to verify the integrity of the message. If there are phone numbers or links in the email, do not use them. Calling or sending an email to that address will only get you in touch with the scammer if the email is fake. Find a phone number yourself if you don't already have one. Don't forget to verify that the person or company requesting information or money is actually someone you're working with.
Don't blindly open email attachments
Be wary if any emails come with attachments, even if they appear to be sent from someone you know or may work with. The sender's account may have been hacked and the attachments could contain malware that will weaken your device's security. This happens more frequently than you might believe. Remember that the people you work with are human and make mistakes themselves that make them susceptible to hacking. Before opening an attachment, get in touch with the sender through established methods to verify the validity of the message.
Before the wire transfer
Before you send a wire transfer, ask your financial institution for help in identifying any red flags in the wiring instructions, such as possible differences between the name of the account and that of the intended beneficiary of the funds. Your bank might also be able to compare the number of the receiving account to numbers that have been identified in past complaints as the destination of fraudulent transactions. Make sure the recipient of the funds know that the funds are coming and when.
After the wire transfer
After you send the wire transfer, confirm that your real estate or settlement agent received it a few hours after it was sent. If you or they suspect any problems, report the transaction to law enforcement and your financial institution as soon as possible. Your odds of getting money back after a wire transfer are low, but this helps increase the odds in your favor.
using email for sensitive information
Don't email financial or any other sensitive information. Email isn't secure enough for this use. Unfortunately, some real estate and closing agents trust email to be safe, even when they should know better. If they request information via email, politely advise that you would like to transmit it a different way. You might have to find a fax machine or drop it off in person, but this is the best way to make sure you don't run into any identity theft headaches later.
if You Become a Victim
- Alert your financial institution and the money transfer company IMMEDIATELY. The sooner you act, the more likely it will be to recover your money.
- Contact your local FBI office and state Attorney General's office.
- Regardless of the amount involved, file a complaint with the FBI's Internet Crime Complaint Center.
- Report the scam to the Federal Trade Commission (FTC).