In the news is the announcement of Modus, a Seattle-based real estate technology start-up that applies the latest in software to title and escrow operations announces the launch of its unique Digital Earnest Money Deposit feature. This is especially important to the real estate industry.
Seeing how wire fraud has become a seriously escalating problem in the U.S., Modus has replaced the need for wire transfers with a secure, proprietary platform (similar to Venmo), that enable users to directly access their account and securely submit funds to escrow. This convenience also offers peace of mind to real estate agents and their clients during home closing.
According to an article in PRNewswire, Business Email Compromise (BEC) / Email Account Compromise (EAC) is a sophisticated scam targeting people performing wire transfer payments. “Fraudsters have heavily targeted the real estate sector in recent years, impacting title companies, real estate agents, buyers, and sellers. Between 2015-2018, there has been an 1100% rise in the number of BEC/EAC victims involving real estate transactions and reported monetary loss.” In fact, the FBI is reporting that more than 1800 real estate victims were impacted in 2018 with a loss of $230 million, almost double the $120 million 2017.
While most of these real estate wire fraud cases go unreported in the media as well as to government law enforcement agencies, it’s more important than ever for the public to protect themselves. A number of lenders, title, and escrow companies have begun using encrypted emails and code words to legitimize communication between parties involved in a closing, but even that can have its failures. Modus eliminates the need for the wire completely.
Arizona resident Marika Meeks and her husband buy and flip homes for a living. You’d think they would be pretty savvy about the home buying process. But even they nearly became scam victims.
“We just came through a transaction that was a little scary and could have been disastrous for us financially,” says Meeks. During the closing, they were told NOT to show up with a check. Instead, they were told to wire the full purchase price of the house, saying that any transaction over $20,000 must be accomplished by wire transfer as a safer alternative.
It was the email with these instructions the Meeks took a closer look at. At first they said there was nothing unusual about it. The name on part of the email address, after all, was an exact match to the person they had been dealing with at the title company, so there were no glaring red flags. But before wiring all that money, Meeks says her husband took a closer look and discovered it was a fraud.
An article in azfamily.com explains how this happens. “Scammers frequently hack into free email systems like Yahoo or Outlook. In Meeks’ case, the scammer hacked into their Gmail account. Then, they scan your personal emails looking for the perfect opportunity, in this case, a home purchase.”
The scammer assumed the name of the title agent Meeks had been dealing with, using it to start a new email address. So it appeared to be the same person she had been dealing with but with a slightly different email address. In that email, the scammer provided the false wiring instructions.
The National Association of Realtors provides a template agents can use to warn their clients about wire fraud and offers advice on what to look for to protect them against it. Simply Google “NAR protecting your clients from cyberfraud.”
Source: PRNewsire, AZfamily, TBWS