Protecting Your Real Estate Transaction from Wire Fraud During Escrow
Buying or selling a home is an exciting milestone—but it’s also a time when homebuyers, sellers, and even real estate professionals can become targets of wire fraud. As more financial transactions move online, criminals have found new ways to exploit the escrow process, putting large sums of money at risk. Understanding how wire fraud happens—and how to protect yourself—is critical for ensuring a safe and secure transaction.
What Is Wire Fraud in Real Estate Transactions?
Wire fraud in real estate typically involves cybercriminals who intercept or impersonate parties in the transaction, such as escrow officers, real estate agents, or even lenders. Their goal is to trick buyers or sellers into wiring funds to fraudulent accounts.
Common Wire Fraud Tactics
- Email Spoofing: Criminals create fake email addresses that closely resemble those of trusted parties, like your escrow officer or agent.
- Hacked Accounts: Fraudsters may hack into the email accounts of legitimate parties and monitor transactions, waiting for the perfect moment to intervene.
- Fake Wiring Instructions: Criminals send fraudulent wiring instructions to homebuyers, who unknowingly transfer their down payment or closing funds to the wrong account.
Once the funds are wired to a fraudulent account, they can be nearly impossible to recover.
Why the Escrow Process Is a Target for Fraud
The escrow process involves large sums of money being transferred between parties—often in a short period of time. Because buyers and sellers typically communicate via email with escrow companies, real estate agents, and lenders, this creates a prime opportunity for fraudsters to step in.
High-Value Targets
- Earnest Money Deposits
- Down Payments
- Loan Payoffs
- Seller Proceeds
Since these transactions involve life-changing amounts of money, cybercriminals are highly motivated to exploit any opportunity they find.
How Buyers and Sellers Can Protect Themselves
While escrow companies and real estate professionals work hard to prevent wire fraud, buyers and sellers also play a critical role in protecting their funds.
Steps to Protect Your Money
- Verify Wiring Instructions by Phone: Always call your escrow officer at the verified phone number listed on the company’s official website to confirm wiring instructions. Never rely solely on emailed instructions.
- Be Suspicious of Sudden Changes: If you receive updated or “corrected” wiring instructions via email, that’s a red flag. Call to verify immediately.
- Use Strong Email Security: Enable two-factor authentication on your email account and avoid using public Wi-Fi when communicating about your transaction.
- Review All Emails Carefully: Check for subtle misspellings in email addresses or unfamiliar language in messages—these could indicate a fraudulent attempt.
The Role of the Escrow Company in Fraud Prevention
Reputable escrow companies, like Neighborhood Escrow, have extensive security protocols in place to help prevent wire fraud and protect clients.
How Escrow Companies Keep Transactions Secure
- Secure Communication Channels: Many escrow companies now use encrypted portals instead of email to transmit sensitive information.
- Identity Verification Procedures: Escrow officers confirm the identity of all parties before issuing wiring instructions.
- Employee Cybersecurity Training: Staff are trained to recognize suspicious communications and report potential fraud attempts.
- Clear Client Education: Trusted escrow companies educate buyers and sellers on how to protect themselves from fraud and what red flags to watch for.
What to Do If You Suspect Wire Fraud
If you realize you may have wired funds to a fraudulent account, immediate action is critical.
Steps to Take
- Contact your bank immediately and request a wire recall.
- Notify your escrow officer and real estate agent.
- File a report with the FBI’s Internet Crime Complaint Center (IC3).
- Consider contacting an attorney for additional legal guidance.
The faster you act, the better your chances of recovering stolen funds—but prevention is always the best defense.
Work with a Trusted Escrow Partner for Added Security
The escrow process should provide peace of mind, not anxiety about potential fraud. By working with a trusted escrow company like Neighborhood Escrow, you gain a knowledgeable partner who prioritizes secure transactions and proactive communication. To learn more or to schedule your escrow services, contact Neighborhood Escrow at 310-378-2456 today.
