Preventing Wire Fraud

Preventing Wire Fraud

I was enjoying the company of other real estate investors at a meetup being held by the Polk County Real Estate Investors Association.  It was one of their monthly meetings in which the topic of conversation is whatever anyone wants to share (by the way, I think this is a great idea for other REIA leaders to implement).  The subject of preventing wire fraud from real estate closings came up.

Fraud occurs when an email hacker or such sends an email to the lender or title company purporting to give revised or corrected wiring instructions just before closing or funding.  An extremely seasoned investor who runs a title company shared a brilliant tactic.  I regret that I don’t remember his name so that I could give him full credit, but he said that from now on, the wiring instructions they send out omit the last 4 digits of the bank account, thus requiring the party who is receiving or sending the funds to contact them via a designated phone number in the wiring instructions to verify the receipt of the instructions and get the last digits of the account number. 

In addition to omitting the last four digits of the account number and having the recipient call a number which is not your regular business number to get those missing digits, you could go a step further and have an authentication code printed in the email that the recipient must give you to verify you are dealing with the correct person.

During the phone call, the caller can be asked questions to which only a party to the deal would know the answers.  All requests to alter wiring instructions should cause a lot of investigation and double checking! I’m reminded of a previous email I sent out in which I urged you to change your passwords from time to time, especially the ones you use for your email accounts.  If you are not changing them at least once a quarter, I urge you to do that now!