Buyer Beware: How to Spot Down Payment Wire Transfer Fraud

Blog posted On September 19, 2018

Buying a home is the biggest purchase most Americans will make in a lifetime and saving for a down payment is the biggest obstacle to making that purchase.  Often, the down payment will include a significant portion of the home buyer’s life savings, especially for first-time buyers. Earlier this month, CNBC reported on a new variant of wire transfer fraud schemes targeting home buyers at the time of closing, in some cases wiping out their entire down payment savings with no chance of recouping the funds.

One of the ways cybercriminals are targeting home buyers is through email.  Scammers hack into email accounts through malware and gain access to sending and receiving emails.  If a real estate attorney or realtor is a victim, the scammer is able to send legitimate-looking email messages to home buyers with money wiring instructions.  Often, the fraudulent wire transfer goes overseas, out of the realm of US law enforcement.  This makes it even harder for consumers to get funds back once they have been fraudulently transferred.

When you are in the process of buying a home or refinancing a mortgage, you are going to inevitably have to transfer large sums of money.  Being aware of who is on the receiving ends of these transfers is essential to protecting yourself and your finances.  Never blindly respond to an email asking for a wire transfer without speaking to your realtor, lender, or real estate attorney.  Consumers are usually protected against credit card or bank account fraud, but wire transfers that are authorized by the consumer are difficult to recover.  When you know you are going to have to make a wire transfer make sure to exert extra caution.

The FBI reports there has been a 136% increase in losses related to wire fraud from December 2016 to May 2018.  Globally, over 115 countries have been on the receiving end of fraudulent transfers.  Since 2013, the total amount of money lost to wire transfer fraud has exceeded $12 billion.  The FBI warns consumers who are buying a home or undertaking any other type of large transaction to be vigilant, and not to react immediately to any email requests.  Take the time to voice verify, call your realtor, lender, or real estate attorney, and talk with your bank.  Double and triple checking now can prevent a devastating loss in the future.

If you have any questions about wire transfer fraud, talk with your local mortgage loan officer before you have to transfer funds. 


Sources: CNBC