Real estate transactions are an attractive target for sophisticated fraud scams. In a typical scenario, cybercriminals identify a pending sale transaction and then build a profile of the parties—including the title company, real estate agents, and the buyer and seller. They hack into one or more parties’ email account and monitor email traffic for their opportunity to strike, usually sending false wire instructions that divert deposits, closing costs and even mortgage payoff funds from their intended, lawful recipient.

In a real estate transaction, wire fraud is generally purported using one of these techniques:

• Business E-Mail Compromise (BEC) – Targets businesses working with foreign suppliers and/or businesses regularly performing wire transfer payments.
• E-Mail Account Compromise (EAC) – Targets individuals. These sophisticated scams are carried out by fraudsters compromising email accounts through social engineering or computer intrusion techniques to conduct unauthorized transfer of funds.
• Phishing/Vishing/Smishing/Pharming – Unsolicited email, text messages, and telephone calls purportedly from a legitimate company requesting personal, financial, and/or login credentials.
• Spoofing – Contact information (phone number, email, and website) is deliberately falsified to mislead and appear to be from a legitimate source.

Implementing wire fraud risk management strategies will help members and associations minimize liability for losses due to fraudulent cyber schemes. And, insurance coverage may be available to help mitigate the damages of a cyberattack or wire fraud incident.

Recommended Practices:

1. Educate buyers about possible scams. Many brokers are requiring a signed disclosure to acknowledge the risk of wire fraud.
2. Include a wire fraud notice in your email signature. 
3. Use a transaction management platform or secure email to communicate with clients.
4. Never send wire instructions (or any personal or financial information) via e-mail.
5. Verify wire instructions with a phone number independently obtained.
6. Use smart email practices:

• Double check the sender’s email addresses and call the sender if you’re unsure they actually sent the email.
• Monitor your email account for unrecognized activity.
• Keep your operating system and antivirus programs updated.
• Avoid using unsecured (public) WiFi.
• Never click suspicious attachments.
• Use strong passwords for your email and all online accounts, and two factor authentication when available. A strong password generally has these characteristics:
• At least 8 characters
• A mix of letters and numbers;
• A mix of uppercase and lowercase letters;
• At least one special symbol (i.e., ! @ # $).

NAR encourages all real estate licensees to know the signs of potential wire fraud and to educate their clients about these scams. Licensees should be knowledgeable about how to advise their clients if they believe they have been victimized by a wire fraud scam, and use best practices like these.

If fraud occurs, advise your clients:

1. Time is of the essence.
2. Immediately contact their bank to issue a recall notice of the wire transfer.
3. File a complaint with the FBI at ICgov. Filing within 24 hours, but no more than 72 hours, provides the best chance of recovery.
4. Contact your local FBI office.

Learn More:

IC3 2019 Crime Report
Cyber and Fidelity Insurance Report for Brokers
Window to the Law: How Avoid Wire Fraud in Transactions
Window to the Law: Cyberscams and the Real Estate Professional
Window to the Law: Creating a Cybersecurity Program
Data Privacy and Security
Data Privacy and Security Toolkit

NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require a password.

---

One of the most common cybercrimes in the U.S. is wire fraud in real estate. More than 13,000 people were victims of wire fraud in the real estate and rental sector in 2020, with losses of more than $213 million—an increase of 380% since 2017, according to FBI data.

Wire Fraud: The Basics

How to Avoid Mortgage Wire Fraud (Experian, Mar. 8, 2024)

• Be careful with email attachments
• Update your technology
• Nail down contact information
• Set up special codes
• Be suspicious of last-minute changes
• Call before initiation a wire transfer
• Verify the wire transfer

Wire Fraud (Investopedia, Nov. 3, 2023)

“Wire fraud is a type of fraud that involves the use of some form of telecommunications or the internet.

This type of crime can make use of any and all forms of electronic media including telephone or fax machine, email or social media, or SMS and text messaging. Wire fraud often involves communications made between state or national borders, and is punishable by both hefty fines and jail sentences.”

What Is a Wire Transfer? (The Balance, Aug. 4, 2022)

A wire transfer is a method of moving funds electronically. It can go between both banks and credit unions. It can also be sent either domestically or internationally.

Wire Transfer Scams (Washington State Office of the Attorney General)

Common wire transfer scams are outlined.

Wire Fraud in Real Estate

Consumers: Agents Aren’t Warning Us Enough About Scams (REALTOR® Magazine, Mar. 6, 2024)

“Home buyers and sellers say they’re not getting enough warnings about the risks of wire fraud and other scams targeting real estate transactions, and they want agents to educate them more about protection, according to CertifID’s newly released 2024 State of Wire Fraud study.”

Bracing Against a Rising Tide of Real Estate Fraud (HousingWire, Jan. 22, 2024)

“Fraud operators are now using AI tools to identify likely targets using PII stolen on the Dark Web, create realistic fake identities, ownership documents and payoff instructions, use deep fakes for impersonations and deploy large-scale phishing scams to gain access to sensitive systems that they can then use to their advantage.”

Quick Facts — Mortgage Fraud Offenses (United States Sentencing Commission, 2022)

Mortgage fraud has decreased by 86.1% since FY 2016.

Real Estate Wire Fraud Scams Cost Victims Tens of Thousands in House Down Payment Money (ABC7, Mar. 22, 2022)

"Real estate fraud is one of the fastest growing cyber scams across the country," said FBI Special Agent Siobhan Johnson. "When you look at 2018 to 2020, we saw approximately a 42% increase in the percentage of real estate crimes that we're seeing."

How To Defend Against Real Estate Wire Fraud (Security, Jan. 25, 2022)

“Real estate wire fraud has become so ubiquitous that there’s a coalition of companies and industry groups dedicated to raising awareness about it. But since the Coalition to Stop Real Estate Wire Fraud was established, attacks have only increased — there were 11,300 victims in 2018, but more than 13,600 in 2020.”

How to Protect Yourself from Wire Fraud

How To Beware of Mortgage Wire Fraud During Closing (ROCKET Mortgage, Apr. 20, 2024)

Know your closing process, write down contact information for all involved parties, beware of last-minute closing changes, call to confirm any wiring instructions, and be wary of phone conversations.

Before You Wire Money (Federal Trade Commission, Dec. 2023)

Learn how scammers operate, common scams, what to do if you wired money to a scammer, and how to report fraud. If a scammer asked you to wire money, report it to the FTC at ReportFraud.ftc.gov.

Hot Topics in Broker Risk Reduction (National Association of REALTORS®, Nov. 2023)

A monthly roundup of risk reduction topics by Katie Johnson, NAR General Counsel & Chief Member Experience Officer.

Wire Fraud in Real Estate: Beware of Criminals Targeting Your Down Payment (AARP, May 24, 2023)

“At the 11th hour, the buyer will get an email saying, ‘There's been a change in plans. Send your money here,’” says Tomb, adding that “here” will be a fraudulent account. And the money is moved swiftly to thwart tracing, sometimes bouncing through multiple accounts, with the help of money mules, and finally overseas, according to a recent financial trends analysis of business email compromise in the real estate sector by the U.S. Treasury’s Financial Crimes Enforcement Network.

Protect Your Real Estate Business with NAR’s Cyber Liability Insurance Program (PDF) (National Association of REALTORS®, 2020)

CyberPolicy, in partnership with NAR, created a customized and comprehensive cyber liability insurance program designed exclusively for REALTOR®-owned firms.

Wire Fraud Notices (National Association of REALTORS®)

In an effort to educate clients about the risk of wire fraud, a number of REALTOR® associations have developed wire fraud notices for use by their members. These have been aggregated by NAR.

Wire Fraud Email Notice Template (National Association of REALTORS®)

Provides an example of a notice you may wish to consider adding to your email signature line. This notice should not serve as a substitute for educating your clients and other participants in your real estate transactions about email wire fraud.

Wire Transfer Scams (Attorney General of Texas)

Signs of a wire transfer scam to be aware of: you’re unexpectedly asked to wire money, you’re sent a check in exchange for a return payment, you’re asked for a confirmation code before withdrawing funds, or you’re asked to wire money to another country.

Reports & Other Resources

2024 State of Wire Fraud Report (CertifID, 2024)

71% of consumers believe it’s someone else’s responsibility to teach them about wire fraud.

Internet Crime Report (Federal Bureau of Investigation, 2023)

• $12.5 Billion victim losses in 2023
• 2,412 Average complaints received daily
• 758,000+ Average complaints received per year (last 5 years)
• Over 8 Million complaints reported since inception

2023 Mortgage Fraud Report (CoreLogic, 2023)

“We estimate that in the second quarter of 2023, 0.75% of all mortgage applications were estimated to contain fraud, about 1 in 134 applications. The highest risk segment remains 2- to 4- unit properties, with 1 in 28 transactions estimated to have indications of fraud. Purchases in this segment showed higher risk than refinances, although risk in both has increased by more than 20% compared to Q2 2022.”

Legal Case Summary: Licensee Liable for Wire Fraud Losses (National Association of REALTORS®, July, 25, 2018)

Kansas federal court upholds jury verdict that determined that a real estate licensee was 85% responsible for the buyer’s losses, which occurred when the buyer transferred purchase money to fake account after licensee allegedly forwarded email containing fake wiring instructions to the buyer.

Videos

Window to the Law: Avoiding Wire Fraud in Transactions (National Association of REALTORS®, Oct. 1, 2022)

Consider these best practices to protect yourself and clients from wire fraud schemes:

• Educate your clients and staff about how to combat wire fraud scams by providing them information and tips.
• Instruct clients to always verify wire instructions either in person or through a call to a trusted phone number.
• Practice email hygiene, using strong passwords and monitoring for suspicious activity.
• Include a wire fraud notice in your email signature informing recipients about wire fraud.
• Lastly, review your E&O and cyber liability policies and ensure sufficient coverage in the event of cyber incident.

Payment Technology That Streamlines and Secures (National Association of REALTORS®, Aug. 24, 2022)

Hear from two leaders in payment technology as they discuss the current state of digital funds, how the industry can reduce wire fraud, and add transparency and efficiency to a real estate transaction.

Hot Topics in Risk Management (National Association of REALTORS®, Feb. 4, 2019)

Buyers and sellers across the nation have been targeted, so please take note and take action. Begin by alerting all clients about the potential for them to encounter this fraud. Don’t send wire instructions via email. Use secure, dual-authenticated email and transaction management systems when sharing sensitive information.

The Voice for Real Estate 93: Fraud, Rural Win, Water Rule, CARE (National Association of REALTORS®, Dec. 18, 2018)

Real estate transactions are one of the biggest targets of wire fraud. That's because the big money involved in the transactions make them tempting targets. The FBI reports that almost 10,000 people lost more than $50 million [in 2017] in real estate-related wire fraud.

Wire Fraud - 2017 AE Institute (National Association of REALTORS®, March 21, 2017)

Katie Johnson, NAR General Counsel & Chief Member Experience Officer presents best practices for wire fraud risk management.

Websites

Coalition to Stop Real Estate Wire Fraud

The Coalition to Stop Real Estate Wire Fraud aims to raise awareness of wire transfer fraud and educate homebuyers, real estate and mortgage professionals, and policy makers about the urgency of the problem; provide concrete steps that people can take to prevent the risk of fraud; and identify and empower those who have been victimized to tell their story and advocate for solutions.

Fraud and Scams (Consumer Financial Protection Bureau)

The Consumer Financial Protection Bureau (CFPB) is a U.S. government agency that makes sure banks, lenders, and other financial companies treat consumers fairly. Our resources can help you prevent, recognize, and report scams and fraud.

eBooks

Fraud Prevention for Commercial Real Estate Valuation (eBook)

Cyber Smart: Five Habits to Protect Your Family, Money, and Identity from Cyber Criminals (eBook)

---

Have an idea for a real estate topic? Send us your suggestions.

The inclusion of links on this page does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.