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5 Tips to Avoid One of the most Costly Scams

Picture this: You’ve saved $75,000 — your entire life savings for a down payment on a new home. You spent months looking and finally found your dream house. Your offer’s been accepted, your mortgage approved and closing day is set. You’re over the moon.

Before you close, you’re emailed wire instructions on where to send that $75,000 from your Title Company. You follow the instructions perfectly. Days later you find out the Title Company never received your down payment, your entire life savings is gone and that dream home you were so close to making a reality is gone, too.

If that seems far-fetched, it’s not. In fact, 14,000 Americans fall victim to wire fraud every year according to the FBI, and more than $3 billion has been lost since October 2013.

It’s not just aspiring homeowners who are being impacted: businesses and individuals needing to wire money for various reasons are also victims of an increasingly sophisticated fraud. Sadly, the population of victims is growing.

So how can you avoid falling victim to one of the fastest growing crimes? Here are 5 tips.

1. Carefully review wiring instructions

Ask yourself an important question: does the name and location of the wire beneficiary make sense for your transaction? For example, if you’ve been working with XYZ Title Company in Colorado, but the wiring instructions list Jane Doe Title Company out of Florida as a beneficiary, additional verification would be necessary.

2. Verify instructions

Fraudsters are good at creating fake websites, making initial fake phone calls, and hacking email systems. Always verify payment instructions in person or by calling a phone number that is publicly available and listed on multiple sites and resources. Do NOT use the number listed on the wire instructions as fraudsters can easily change that information, so you call them instead of a real representative from a mortgage or title company.

3. Question a change

Hacking an email and changing wiring instructions is a common tactic used by fraudsters. If you received wiring instructions from XYZ Title Company, but then receive a second email notifying you that instructions have changed (.e.g. the company you’re wiring funds to has recently switched bank accounts or banks) this is a GIANT RED FLAG. It’s highly improbable that an organization or individual will switch bank accounts or banking relationships so abruptly and so close to the date of a closing or large transaction.

4. Don’t send money before receiving the product

Fraudsters often try to make you feel pressured to expedite a payment on a deal that is just too good to be true. If you are being asked to wire payment prior to receiving the goods or services, chances are they don’t exist.

5. Don’t ignore your gut feeling

If something doesn’t feel right, don’t be afraid to question it and do the necessary due diligence to ensure you’re making the correct decision. Chances are that doubt will help prevent you from making a costly mistake.

Wires are a safe and efficient way to send money. However, if the threat of wire fraud is too concerning, a good alternative can be to use a certified funds or cashier’s check, especially if you plan to hand over funds in person (at a house closing, for example). Certified funds or cashier’s check operate just like cash, so it may not be the best option if you plan to send your hard earned money via mail, out-of-state or out of the country as it still runs the risk of getting misdirected or stolen.


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