Just hours after submitting their $775,000 down payment for their new home, Kevin and Nicole Noar from Solana Beach discovered they’d been scammed. Instead of the money going to their escrow agent’s account, it went to a hacker’s bank account in Singapore, according to ABC 10 News San Diego. Welcome to the world of escrow scams.
How could this happen?
According to the Noars, their escrow company sent them a message via an unsecured email exchange. The message contained official wire instructions, but it didn’t include any account numbers.
The hacker duplicated the email and simply added the account numbers of a bitcoin exchange. The couple’s bank didn’t notice the irregularity. So, it wasn’t until Nicole called the escrow company that they found out what had happened. And by then it was too late.
Internet Scammers Target Californians More Than Other States
Wire fraud scams have steadily been on the rise in recent years. We even explained how this type of scam works in an earlier blog post, along with some tips on how consumers can protect themselves.
But it seems that the scammers aren’t likely to stop any time soon. The New York Times reports that between January and October 2019, 799 victims across the country fell victim to real estate scams. Their total losses amounted to almost $70 million.
Moreover, for some as of yet unknown reason, the Golden State seems to be the target of choice for escrow scams. According to the FBI, approximately 50,000 Californians fell prey to online financial scams in last year. In total, they lost more than $593 million — more than any other state in the U.S.
Escrow Agencies Are Taking New Measures
Fortunately, thanks to the growing awareness of wire transfer fraud, many escrow agencies and title firms are now taking new measures to protect their clients and themselves, such as:
- Implementing top-quality cybersecurity software such as firewalls, antivirus programs and anti-malware software
- Only giving wire transfer instructions by phone — and never by email
- Educating employees regarding hackers’ methods so they’re better equipped to recognize phishing and other types of scams
- Leveraging secure communication portals where sensitive information is listed on pages that clients can only access with their unique passwords
- Teaching employees how to create strong passwords for each individual application
- Instructing employees to change their passwords on a monthly basis
- Requiring two-step authentication for any password changes
- Using the audit logging features provided by their email clients in the event of a breach
Real Estate Businesses Band Together Against Escrow Scams
Additionally, businesses are beginning to band together to combat this type of crime. The organization Stop Wire Fraud aims to make professionals and consumers more aware of wire transfer fraud, offer practical tips to prevent it, empower victims to tell their stories and work together to find viable solutions.
Ultimately, as more and more business is conducted virtually, criminals will continuously devise increasingly sophisticated schemes to rob people of their hard-earned money. The only way real estate businesses can fight back is to remain vigilant about suspicious communications, stay informed about new developments and continue to advocate for those unfortunate enough to fall victim.
As escrow experts ourselves, we hope to do our part in the fight against escrow scams. Escrow Hub LA strives toward a positive and fast escrow experience, where you feel safe and secure in your endeavors.