Phishing scams have been around since the dawn of the internet, but this new type of scam is as sophisticated as it is devastating. Known as a mortgage closing scam, this scam targets homebuyers in an attempt to “steal” their down payments.
How Mortgage Closing Scams Work
Traditional phishing scams use an email to bait a person into giving away personal information by posing as a legitimate company. In a mortgage closing scam, criminals won’t just pose as your real estate agent or title, escrow, or lending company, they will actually hack into your email systems and monitor your correspondences until they see if and when you have agreed to a wire transfer of your down payment.
Hackers will then replicate every detail of your agent’s email and reach out to you right before you are about to send your down payment. The counterfeit email will include new or altered instructions of where to wire your money, and will prompt you to send it as soon as possible.
Once the money is sent, it immediately gets diverted to criminally-controlled accounts, often offshore, and sometimes impossible to recover. In just one click of your mouse, your entire down payment on your new home could disappear forever.
Mortgage closing scams are increasingly common; in 2017, the FBI reported that scammers diverted or attempted to divert $969 million from real estate transactions—a 5000% increase from the previous year.
As scary as that may seem, a few simple precautions can ensure this never happens to you. With these tips, you can protect your money and invest it in your new home:
Verify Email Instructions
The best advice to avoid mortgage closing scams is also the best piece of advice to protect yourself from any phishing scam: do not ever reply to an email with personal information, and be suspicious of any payment instructions, especially if they come at the last minute.
If you do receive an email like this—or any suspicious email—confirm the information with the other party directly. Call them immediately or visit their offices as soon as possible. Do not use any of the contact information provided in the suspicious email, either, as this may be fake information that will direct you to the scammers instead. Use a search engine to get contact information from their website.
Look Out for Red Flags
Given how close cybercriminals can now mimic legitimate emails, it’s important to keep an eye on the small details to identify scams. New wiring instructions are the biggest red flag, but there are smaller items that can tip you off:
- Any sense of urgency, such as telling that you only have a few hours to wire your mortgage, should be immediately suspect.
- Email addresses should be checked thoroughly; often scammers use an address that is the almost the exact same as the agent’s, but one subtle letter or symbol off.
- Links in the email should lead to sites you know. Phishing scams will sometimes even set up fake websites that imitate the real ones, so be sure to double-check the URL and, similar to contact information, visit the any linked website via a search engine if you sense a scam.
- Unexpected attachments can also be a red flag for scammers delivering ransomware or other viruses.
Set Up Safeguards
There are also plenty of options you can implement yourself in order to protect your down payment. The most important safeguard is to educate yourself on how the process should go so you are more likely to spot unusual activity, but it never hurts to add an extra layer of protection.
Use secure passwords on all your devices, and avoid using unprotected wifi connections in public places like coffee shops or airports, as this will prevent hackers from accessing your email in the first place. Even cutting the Internet from the transaction by using fax machines or overnight mail can prevent a mortgage closing scam from affecting you.
Act Fast If the Worst Happens
Gone are the days of crude, poorly-spelled, and easily-identifiable phishing scams. These scam emails look so close to the real deal it can be easy miss the signs, especially when you are already in a high-pressure situation. You’re overwhelmed with paperwork, getting your down payment together, and preparing to move—and that’s what scammers are hoping to take advantage of.
If you are scammed, act immediately. The longer it takes for you to do something about it, the more likely the scammers will get away. Within seconds, the money is in a fake account, and within hours, it could be in the scammer’s pockets and out of your reach forever. It is imperative that after you make the transfer, contact your agents directly to ensure it went through. This way, in the unlikely event you have been scammed, you can detect it right away and contact your bank (as well as the bank the money was wired to) to freeze the funds. Be sure to also file a report with the FTC and the FBI’s Internet Crimes Complaint Center. This is the greatest chance you have of recovering any of your money.
By following the above tips, you can protect your investment money and ensure your down payment is made smoothly, without fear of scammers.