Sue Larsen was giddy with anticipation. She and her husband Jeff were finally going to move into their new home in Wilmette. And just in time, too. They were expecting their first baby in just over a month.
They'd sold their condo in the city. Their mortgage was approved and the closing time confirmed. They'd wired their down payment money to the title company. Now they just had to sign all the documents and the home would be theirs.
After doing the final walk-through the couple headed over to their closing. When they arrived they were told that the down payment money wasn't there yet. A call to the bank confirmed that the funds had been wired, but the title company hadn't received them. The Larsens waited anxiously for another half hour. Still nothing.
The funds never did arrive. The $137,000 Sue and Jeff had saved up over the past three years was gone without a trace, stolen by a hacker.
They wouldn't be buying that new home after all.
The down payment that disappeared
The day before closing the couple received a call from their attorney, who said, "I got the wiring instructions for your down payment from the title company. I'm going to send them to you right now. Get your bank to wire the money ASAP so the funds are there for closing."
Sure enough, Sue and Jeff received the attorney's email a few minutes later and had their bank wire the $137,000, as instructed.
What neither they nor their attorney realized is that hackers had gained access to the attorney's Gmail account and were monitoring it for messages about upcoming real estate transactions. The hacker intercepted his email to the Larsens, changed the destination account number for the wire transfer, and then forwarded the altered email on to the couple. The email looked legit and came from the attorney's email address, so the couple had no reason to believe that anything was amiss.
But the instant their bank sent that wire the hacker had their money in his account, and the Larsens were out $137,000.
They immediately alerted the police and the FBI, but they were never able to recover the money, because both the hacker and his account were offshore.
This horror story may seem like a freak occurrence, but it's not.
Wire fraud has become rampant in real estate. According to a report in the Wahington Post, FBI data shows that in 2017 $969 million was "diverted or attempted to be diverted from real estate purchase transactions and wired to criminally controlled accounts." It's especially bad in affluent areas like Chicago's North Shore, where wire transfer amounts can be in the hundreds of thousands of dollars. Our managing broker told us that they discussed this issue in a recent regional meeting. 95% of the brokers at the meeting said that one or more of their agents had had a transaction affected by wire fraud.
Real estate agents and attorneys are especially vulnerable to hacking, as many of them use personal email accounts on Gmail, Yahoo, or AOL, which are not as secure as enterprise email accounts.
How to avoid being a victim of wire fraud
If the Larsens had known about the risk of wire fraud and how these scams are perpetrated, they might not have made this innocent, but devastating, mistake. Here's what you can do to avoid being a victim of wire fraud:
- NEVER wire money based on an email from your attorney or real estate agent. CALL the intended recipient (in this case, the title company) directly and confirm that the wiring instructions you have been given exactly match their instructions. Have them read the destination account number to you and check it against the number in the email.
- Be especially wary of an email that claims to have new wiring instructions that differ from those you have already received. Call the sender directly and confirm that the instructions have changed.
- Do not call a phone number that is on an email, as that might just connect you to the hacker. Instead, look up the number of the recipient of your wire transfer yourself, or ask a trusted source.
- Change your email password frequently (every three months) and make sure the password is a complex combination of letters, numbers and symbols that would be difficult for a hacker to figure out.
- Never send a credit card number, social security number or other personal information in an email.
Have questions about North Shore Chicago real estate? Give me a call at 847-687-5957. I'd be happy to answer your questions or help you find your next home!