Imagine this: You’re deep in escrow, just itching to pick up the keys to your dream home. You’re ready to wire your life savings, when you get an email from the title company with final instructions. The email address checks out, so you send the funds and wait for the good news.
Then … nothing.
Worse than nothing; not only did you miss the deadline to close escrow, you dropped your entire down payment right into a hacker’s pocket. They’ll get away scot-free. Meanwhile, your troubles have just begun.
How Do Escrow Scams Work?
The above scenario is only one of a number of ways that fraudsters have targeted victims through the escrow system. Though they rarely succeed, scammers constantly try tactics such as hacking, phishing, and confidence tricks, always looking for weak points in the system. And the most reliable weak point is usually a human.
Hacking, or cyber fraud, has been on the rise in the real estate industry. Criminals target the very businesses whose purpose is to protect buyers and sellers, gaining access to supposedly secure email servers, and camp out until the transaction is at its most vulnerable. At this point they’re able to pose as a trusted contact, sending an email that appears legitimate even under close scrutiny. This email will usually contain instructions to wire closing funds — but the routing information will send those funds somewhere you don’t want them to go.
There are steps you can take to protect yourself against hackers, but most hackers of this type prefer to target the other end of the transaction. A hacked business can yield a wide array of transactions to choose from when they’re planning their big scam. Do your best to work with businesses demonstrating a strong cybersecurity policy.
Phishing involves deceptive or harmful emails designed to appear legitimate, often using links to counterfeit websites which harvest the target’s passwords, personal information, bank details, and more. For the savvy, these emails usually show signs that they’re less than legit, but they still manage to snare the unwary in droves — so these lo-fi tricks haven’t needed to evolve much to remain effective.
Once you understand how phishing works, you’ll know how to avoid phishing scams. Long story short, train yourself to be skeptical, and learn to trust your nose when you get emails that seem, well, phishy.
What Can We Do to Avoid Escrow Scams?
Scammers are constantly adjusting tactics and upgrading technology to try to get ahead of current security measures, and cybersecurity experts are constantly trying to stop them. Most individuals don’t have the resources to participate firsthand in this technology arms race — but you should work with businesses who do.
Step one is to work with a licensed REALTOR®. Members of the National Association of Realtors are trained to shepherd transactions with utmost care and security, and work with trusted professionals who do everything possible to protect your interests.
Ask your agent for a timeline and action plan for your particular transaction. Make a list of direct contact information to use in the event you receive an unexpected email or call during the process, and keep it handy with your documentation. Quiz your agent, broker, and escrow officer to explain how their various companies protect buyers and sellers from fraud.
We asked Christopher Portillo of Kartikay Escrow, Ascent’s affiliate escrow partner, what they do to prevent cyber theft. “We take the utmost care when handling client funds and use advanced security measures,” said Portillo. “Kartikay’s seasoned escrow officers and personnel have been trained in all aspects of wire fraud prevention and follow strict procedures so all managed funds are safe and secure.
“Any wire instructions provided by clients must be signed and notarized to insure that the party receiving the funds is actually who completed the form. We never accept transfer instructions by email or phone. Before funds are wired, Kartikay will call clients to verify their identity and relationship to the file, and then confirm the wire instructions. Kartikay Escrow continually updates procedures to safeguard funds.” Portillo added, “We’re always available to answer questions and offer guidance on how to prevent wire fraud.”
Ascent Real Estate aggressively pursues the highest possible security for its digital assets, constantly upgrading technology and practices to adapt to the changing cybersecurity landscape. Staff and agents are trained in best practices, while Ascent’s security partners regularly audit and test the company’s systems to spot potential vulnerabilities.
Buying a home shouldn’t be scary. Protect yourself and work with professionals who prioritize your safety and your interests.