A prospective home buyer in Massachusetts recently became the victim of a wire transfer scam, causing him to lose his $300,000 down payment for a condo. The man followed the wiring instructions that he received in an email, only to discover at the closing that a wire fraud scammer had stolen his money.
Sadly, there are thousands of similar stories throughout the country. According to FBI reports, down payment wire fraud in real estate transactions results in approximately a billion dollars in losses each year, with tens of thousands of victims targeted in 2017 alone.
Real estate attorney Melvin Monachan, founder of The Law Office of Melvin Monachan, PLLC, explains the growing threat of down payment wire fraud and what home buyers can do to protect themselves from losing their down payments.
What is Down Payment Wire Fraud?
Down payment wire fraud is a devastating crime that occurs during a real estate closing and results in the complete loss of a home buyer's down payment. Wire fraud scammers gain access to a real estate agent's email account by electronically sending the agent malware. The malware searches the agent's inbox for communications with buyers about upcoming closings and down payments. The scammer will then use the agent's email account to contact a buyer, giving them wiring instructions to send their down payment to an illicit account. The buyer will follow the instructions, thinking the email came from their agent, only to later discover at the closing that their down payment has been stolen.
Wire fraud scammers often go uncaught by law enforcement officials, leaving a home buyer with little hope of getting back their lost money. With hundreds of thousands of dollars at risk, it's important to take steps to protect yourself against down payment scams when closing on a home.
Protecting Against Down Payment Wire Fraud
There are steps that a home buyer can take to avoid falling victim to a wire fraud scammer.
Buyers should always verify wire fraud instructions sent to them in an email. Call your attorney or real estate agent and ask them to confirm that they emailed you wire transfer instructions and make sure that the account numbers are accurate.
Also, pay close attention to minor details contained in the email. Take note of the time stamp and be suspicious of emails sent outside of regular business hours, and ones with strange links, attachments, and typos. Carefully examine the address that sent the email. Scammers will add duplicate numbers and letters to email addresses, hoping that you will fail to notice that your real estate agent did not send the email.
Buying a Home? Contact Attorney Monachan
Melvin Monachan, of The Law Office of Melvin Monachan, PLLC, represents New York home buyers in the real estate closing process for residential and commercial properties throughout the state. Contact attorney Monachan by calling (516) 714-5763 or by completing our online contact form today to help ensure that your home closing is a success.