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Thieves using 'spear phishing' to steal money from homeowners

HOUSTON – Wendy Waterman and her mother's home flooded 19 inches during Hurricane Harvey, so they were excited to find a home they wanted to buy out of the floodplain.

But that dream became a nightmare days before Waterman's and her mother's closing date.

“You bring a check to the closing,” Waterman said. “Initially, we thought, 'Yes that's what you're supposed to do' until I received the email saying to wire it.”

The email had her title company's logo and even her escrow officer's name on it.

It said, "I should have made mention that you will have to wire the $181,000 from your account to our title.”

They received wiring instructions with the title company’s logo that also looked legitimate.

When the Waterman's couldn't reach anyone at Chicago Title, they wired the money.  After they wired the money, they spoke with someone at Chicago Title.

“We found out it was fraudulent because Chicago Title called us after the fact,” she said.

Experts say the Waterman's fell victim to a “spear fishing” scam.  Someone had spoofed their title company’s email to apparently steal the Waterman's money.

“What we’re seeing is our people’s emails are getting hacked or they’re finding out the name of the title company or the closing company through social media or some other avenue and then they’re connecting with the client and asking them to wire funds directly to the bank account,” said Chaille Ralph, the past chair of the Houston Association of realtors.

And the phishers are stealing hundreds of thousands of dollars at a time.

Realtor Nancy Scott said her client narrowly escaped losing $300,000.  The client suspected something was up and sent her an email.

“The red flag was that they received wiring instructions that said they had to send the money immediately and it came almost two weeks before the closing which is very unusual,” said Scott.

After checking the correspondence, she realized two numbers were wrong.

“One was the phone number,” said Scott.  “One was an account number.”

In the Waterman's case, the email would also have had to be scrutinized to find what was different.

The Waterman’s realized later, the real email for the escrow officer ended with @CTT.com.  Someone spoofed that escrow officer’s email address adding an extra T.  So it looked like this: @CTTT.com.

Wendy said they had no luck getting their money back from the SunTrust Bank account that they wired it to until Wendy's mom found a board member's email.

“The next day she gets an email back from SunTrust, saying this will be resolved and taken care of,” said Wendy.

Experts say buyer beware, this is one headache you want to avoid, especially if you suspect that someone is spear phishing you.

“It could be someone’s life savings,” Ralph said. “It’s their home, it’s their future so it really is critical that they connect with somebody personally that they trust and know in the transaction.”

“After something happens to you like Hurricane Harvey and then you get hit again, it's devastating,” said Waterman.  “It's devastating and I can't imagine what's happening to those people who don't get their money back.”

HAR said it has been advised of an uptick in wire fraud cases targeting the real estate industry, including our REALTOR® members and their clients – particularly home buyers. FBI statistics show a record number of reported wire fraud victims across the U.S. in May 2018. These have the potential of costing unsuspecting consumers thousands of dollars that will likely never be recovered. With that in mind, HAR has prepared the tips below to guard against wire fraud.

  • When possible, use a cashier’s check for closing funds instead of a wire transfer.
  • Call before you wire! Buyers should initiate a call to the title company and have the title representative read back the wiring instructions for verification before initiating a wire transfer.
  • If you discover a fraudulent transfer, time is of the essence. First, contact your financial institution and request a recall of the funds. Second, contact your local FBI office and report the fraudulent transfer. Law enforcement may be able to assist the financial institution in recovering funds. Finally, regardless of dollar loss, file a complaint with the FBI’s Crime Complaint Center (IC3) at www.ic3.gov.
  • Verify by phone all requests for a change in payment type and/or location. Scammers often request that payments originally scheduled for check dispersal be made via wire instead.
  • Most wire fraud cases begin with hacked email accounts and/or bogus emails purportedly from title companies, lenders, real estate brokerages and other trusted sources, so confirm verbally (by phone or in person) about planned email exchanges between parties.
  • Fraudulent emails can seem legitimate, containing company logos and branding, as they direct consumers to wire funds to a fraudulent account. Once funds are wired there, that money is lost.
  • Never send personal information, such as bank account numbers or other financial information, via email or other unsecured electronic communication.
  • If you receive electronic communication regarding wiring instructions – even if the communication appears to come from a legitimate source – be sure to verify the authenticity of the communication before transferring funds by using a recognized phone number that does NOT appear in the electronic communication.
  • In general, brokerages will never use electronic communication, such as email, text messages or social media, to ask a consumer to wire funds or provide personal information.
  • HAR members are committed to helping consumers realize the American Dream of homeownership every day and are working hard to ensure it does not turn into a financial nightmare.