Real Estate Transaction Scam/Fraud Alert

Criminals Hack Broker Emails to Scam Closing or Earnest Funds

In the past two weeks, CTM Software and the Colorado Association of REALTORS® (CAR) has been made aware of several attempts to deceive real-estate agents and title company employees into wiring earnest money and/or closing funds into a fraudulent account. In a small number of cases, these criminals have been successful at misdirecting funds. CTM and CAR encourage all parties involved in real-estate transactions to stay vigilant in protecting their information by using common sense and verifying the details of any communication regarding the transfer of money. In many of these cases, there have been red flags that can be an obvious indicator to double check the details of an action. CTM and CAR offer the following information to help you stay informed and to help prevent future theft and fraud.

Scammers are actively searching the internet and collecting email addresses of real-estate agents, brokers, title company employees, and anything else that can make their fraudulent digital communications appear to be legitimate. They also attempt to gain access to the real-estate agent or brokers email account by guessing commonly used passwords or using other known security vulnerabilities of large email providers. Once they have gained access to the victims email account they monitor the account waiting for an email indicating that an offer has been made. At this point they make fake email accounts that are very similar to the agents in the transaction and then delete the legitimate offer before it can be read. They then proceed to replace it with a modified version of the original offer so that it appears that it came from the fake email account they have just created. At this point the scammer/hacker has become the middle man in the transaction, modifying and manipulating the email communications without the original parties knowing.

The scammers goal is to intercept and change the wiring instructions, thus causing the funds to be routed to an account where they can immediately steal the funds. In the cases we have reviewed, the scammers have gone as far as to change the phone numbers in the offers to prevent the agents from calling each other, and could conceivably use a phone number they control to pretend to be victim. The scammer has extensive knowledge of the real-estate transaction, and in some cases, has even pretended to negotiate the price, ask for supporting documentation, requested the contracts be resent for review them etc. This appears to be a very skilled and organized group of criminals.

CTM and CAR offer the following tips to help prevent you from falling victim to this scam/fraud:

• Change you email password often. Do not use that same password on any other website or account.
• Be sure to use a password that is not a common phrase, contains both uppercase and lowercase characters, and with at least one number or punctuation character. This will make it significantly harder for the password to be hacked.
• Verify the agent’s email address you are communicating with using information outside of was sent via email. This can be done by calling the agents office, or making sure it matches what is listed with the local MLS or CTM Software agent database. In the fraud cases we have reviewed, the fake email will be very similar with just one character transposed so at first glance it looks the same.
• Use two methods of communication such as phone and email to verify the transaction, especially the wiring information. Be sure to use a phone number that was verified outside of the email as the scammer has been known to change the agent’s phone number in the fake emails.
• Be suspicious of wiring instructions that are not to a local title company or real-estate company. In the fraudulent cases we have reviewed, the wiring instructions involved banks in a different state, or to a third party that had no relationship to the transaction
• Be suspicious of unsolicited offers of the wiring instructions or of any changes to the wiring instructions. In the cases we reviewed, the wiring instructions were offered premature to an agreement on price and terms being reached.

CTM Software and CAR take fraud very seriously, and are working diligently with law enforcement to actively pursue and prevent this activity from flourishing in our industry.

CTM Software has set up an email address dedicated to gather information regarding active fraud or scams in hopes that any information gained can be used to issue further alerts, and can be used by law enforcement to identify the criminals responsible.

If you believe yourself to be the victim of a scam, or an attempted scam, please contact your local law enforcement agency and file a report. After reporting the fraud to local law enforcement, and after obtaining their permission to do so, please send us an email at fraudalert@ctmsoftware.com providing us as much information as possible, describing what happened, and the dates of the occurrence. Even in failed attempts to fraudulently steal money or affect a transaction, we would appreciate being notified. The best way to prevent this type of fraud is by educating one another and sharing information.

Related Info:

http://realtytimes.com/consumeradvice/buyersadvice1/item/31907-20141209-hackers-perpetrate-wire-transfer-fraud-in-real-estate-transactions 
http://www.atgf.com/underwriting/news/email-wire-fraud-scheme-warning 
http://www.hf-law.com/news-events/news/fbi-warns-businesses-that-email-fraud-is-on-the-rise-is-your-crime-coverage