Preventing wire transfer fraud is an orchestrated effort.

At the end of another unprecedented year of change and evolution, the commercial real estate industry continues to thrive. But with so many transactions closing — especially as we look toward the end of the fourth quarter — protecting our businesses from fraud remains one of our most important responsibilities. At First American Title National Commercial Services, we remain extremely cautious and use advanced technology software to help protect our customers’ transactions against fraud. That said, preventing wire transfer fraud requires constant vigilance from all parties to the transaction, as cybercriminals are only getting smarter – and their methods more sophisticated.

“In my opinion, wire transfer attempts are much more common, and there are so many new ways fraudsters are trying to steal money,” said Shelliza Lallmohamed, escrow manager for our National Commercial Services office in New York City. “When I started at First American six years ago this was rarely an issue, now we see it all the time.”

One of the reasons for that, according to Lallmohamed, is that people are now more familiar with the title company’s role in a real estate transaction.

“They have also become more aware of how we communicate with our customers,” added Lallmohamed.

How Wire Fraud Happens

That familiarity with the way we communicate between transaction parties is key to how fraudsters work. In fact, according to the National Association of Estate Agents, the highest reported real estate fraud in 2020 was Business Email Compromise/Email Account Compromise (BEC/EAC). In a BEC/EAC scam, fraudsters can assume the identity of a transaction party – the title agent, real estate attorney, escrow officer, etc. – and issue new instructions via email to transfer funds directly to a fraudulent bank account.

“We find that many of the people we work with are not on secure networks,” says Lallmohamed. “This could make it easier for criminals to hack into email accounts to impersonate transaction parties in an attempt to divert money.”

While often unsuccessful, fraudsters remain ruthless. In fact, according to the American Land Title Association, cyber criminals target one in three real estate transactions.

Preventing Compromises of Business Email/Email Accounts

BEC/EAC scams can be difficult to track down, especially as fraudsters become more sophisticated. According to the FBI, scammers use various methods to impersonate a trusted source (such as a title company or broker). Some of these include spoofing an email account by using minor variations of a legitimate email address, sending spear-phishing emails that appear to be from a trusted sender asking for confidential information, or even using of malware to infiltrate corporate networks to access email threads about wires, billing, billing, etc. According to Nori Strong, head of Escrow Operations at First American National Commercial Services, some of the biggest “red flags” of wire fraud are:

  • Instructions by email marked “immediate”, “urgent”, “high importance” or “secret”
  • The customer’s email account is different from what we know (sometimes fraudsters change one letter and it’s easy to overlook when you scroll through it)
  • Words that are grammatically incorrect, misspelled words or names
  • A change in the transfer instructions originally received or in the method of payment; for example you are initially asked to make a cashout by check and at the last minute they change it to a wire transfer

In addition, there are some actions you can take now to prevent wire transfer fraud:

  • Don’t call phone numbers in emails or the actual instructions unless you’ve verified that contact by some other means (Google, etc.)
  • Never rely on incoming phone calls to verify wires; call a known person on a known number instead
  • Do not talk to a person we have been referred to and never accept an answer that they should call us back or that someone should call us back
  • Look carefully at the payout letters looking for: different font; misspelled names; wrong bank; typing errors; never use the contact details in the document to verify the thread
  • For example, if the transfer is rejected it has the wrong ABA number, stop everything and make sure the mistake was legit and you are not dealing with a fraudster
  • When we are asked to transfer to a foreign bank; this becomes critical as once the money is transferred internationally it is nearly impossible to get it back

“But as scammers get more sophisticated, so do we,” Lallmohamed said. “Not only do we have best practices for detecting potential email fraud, but we’ve also launched a new technology, ClarityFirst®, which provides our customers with secure, wired authentication that requires two-factor authentication. By using ClarityFirst to send and verify wire transfer instructions, we can reduce the risk of a BEC/EAC scam endangering the transaction.”

ClarityFirst is the first of its kind, comprehensive technology solution for commercial real estate transactions. In addition to increasing the security of your transaction, ClarityFirst also offers a robust set of real estate information tools, order milestone tracking, document sharing and more – available 24/7 from your desktop or mobile device.

For more information about ClarityFirst, visit ClarityFirst.com.

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