Over the last few years, a pattern of scams began to emerge involving scammers stealing hundreds of thousands of dollars (or more) by posing as real estate agents or title companies and targeting real estate transactions.
In some versions of the scam, scammers hack the email accounts of consumers or real estate professionals to obtain information about upcoming real estate transactions.
Once they have access to the consumers or real estate professionals’ email account, the hackers send an email to the buyer, posing as the real estate professional or title company, stating that there has been a “last minute change” to the wiring instructions.
The scammers’ email instructs the buyer to send the funds to a different account, which belongs to the scammers. And then the money is gone.
Last year, the Federal Trade Commission and the National Association of Realtors issued a warning to consumers, advising them that they could be the next victims of one of these mortgage closing cost phishing schemes.
But, according to the American Land Title Association, that warning was not enough to fully prevent future schemes from being successful and consumers are still falling victim to the phishing scams.
And the ALTA, the national trade association of the land title insurance industry, wants the Consumer Financial Protection Bureau to do something about it.
ALTA said this week that it sent a letter to the CFPB, urging the agency to warn consumers about the prevalence of the real estate funds phishing scams.
“Despite efforts by the title industry and others to educate consumers about the risk, homebuyers continue to be targeted,” Michelle Korsmo, ALTA’s chief executive officer, said.
“With the spring home buying season underway, it’s vital to continue raising awareness about these schemes,” Korsmo added. “The CFPB should take this opportunity to protect consumers from criminals looking to steal their money.”
According to ALTA, the warning should show how consumers can protect themselves and provide questions to ask to help determine if real estate professionals have procedures in place to protect their money.
According to Korsmo, in many cases, the scam targets borrowers before title companies become part of the transaction. Korsmo said that ALTA educated its members over the last few years about the scams, but adds that the “best defense” for the scams is educated consumers.
“In many instances, they obtain access to unsecure email accounts used by consumers or real estate professionals,” Korsmo said.
“They use this access to find transaction patterns and details to make their fraudulent communications seem legitimate,” Korsmo concluded. “The criminals will instruct the buyers to send the funds to a different account and the money vanishes in minutes.”