The downpayment on a house is the largest single sum of money many people spend in their lifetimes, and now the feds have a stark warning for would-be homebuyers: Watch yourself, or lose it all to scammers.
The warning from the Consumer Protection Bureau (CPB), issued in a blog post Monday, reveals that reports of phishing scams rose a staggering 1,100 percent between 2015 and 2017. More astonishing still, scams led to a $1 billion loss in real estate transactions in 2017 alone.
“The FBI has reported that scammers are increasingly taking advantage of homebuyers during the closing process,” CPB explained. “Through a sophisticated phishing scam, they attempt to divert your closing costs and down payment into a fraudulent account by confirming or suggesting last-minute changes to your wiring instructions.”
The CPB explained that these scams often involve targeting real estate professionals. The scammers try to compromise agents’ email accounts, for example, in order to monitor communication with clients and figure out when a transaction is scheduled to take place.
Then, when the deal is about to close, the scammers strike.
“During the closing process, scammers send spoofed emails to homebuyers — posing as the real estate agent, settlement agent, legal representative or another trusted individual — with false instructions for wiring closing funds,” CPB warned.
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This type of scam, known as phishing, made headlines late last year when one Oregon father lost his entire downpayment. Though that particular story included a happy ending — the man’s title company hired him as a consultant so he could earn the money back — other cases simply result in massive losses for would-be homeowners.
A report, also from late last year, further noted that the real estate industry tends to be a prime target for cyber criminals because it involves large transactions that often take place online. The report revealed that over the course of the previous year, real estate companies suffered an average of 277 cyber attacks.
However, the CPB this week did outline ways to guard against this kind of cyber attack. Among other things, the agency recommends confirming wire instructions with advisors (rather than just trusting an email), never emailing financial information and avoiding links or downloads that arrive in an email.
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