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Business Email Compromise: Internet Scam That Interrupts Down Payment and Closing Cost Funds

What you'll learn: What a Business Email Compromise scam is


When the purchase of your new home is coming down to the wire, don’t fall for an internet scam designed to ambush your down payment. Homebuyers are increasingly being targeted by the so-called business email compromise (BEC) scam, in which scammers compromise your mortgage professional’s email account to send you fake instructions for wiring your down payment to a fraudulent account.

More than $1.7 million was lost because of business email compromise scams during 2019 reports the FBI — much higher than totals for types of fraud more commonly in the news such as personal data breaches, which accounted for over $120 million during 2019.

Business email compromise scams first shifted to individual consumers in 2015, when scammers claiming to be lawyers directed victims to make wire transfers in secret or time-sensitive financial transactions. In 2017, BECs took off in the real estate sector as fraudsters discovered they could trick homebuyers out of their down payments and closing costs.

How Do Business Email Compromise Scams Work?

Because closing agents need to receive the funds for a home purchase before the closing date to guarantee clear funds available to all the parties involved, most homebuyers are already expecting to receive instructions for wiring their down payment and closing fees ahead of time. Some states require this process. That expectation is what BEC scammers leverage to trick homebuyers out of their money.

In the case of homebuyers, BEC scammers compromise the email accounts of real estate or mortgage professionals using social engineering or computer hacking. The scammers watch compromised email accounts carefully for upcoming closing dates on real estate purchases.

Near the scheduled closing date, they fake an email from the mortgage professional with instructions for wiring money to what turns out to be a fraudulent foreign account.

BEC fraud involving homebuyers typically involves title companies, real estate agents, lawyers, and anyone buying or selling a home. Because of this, some title companies are now requiring verification of any change in payment type or destination.

The risk of losing money forever through a BEC real-estate scam is very high. Funds sent overseas are rarely able to be recovered, and losses are usually not covered or insured by banks. BEC scams are a quick and easy way to lose your entire nest egg and savings for your dream home.

How Do I Avoid Being Scammed?

The best way to avoid becoming the victim of a BEC scam is to keep communication channels with your mortgage professionals open. Don’t respond or click on emails concerning down payments or closing costs. Confirm everything the old-fashioned way — by voice with a telephone call to the numbers you already have on file.

When closing on your home purchase is drawing near, ask your agent how and when to expect the fund transfer to happen. Anything outside the expected timeframe should be a clue that something could be wrong. Another red flag is a request to transfer money to a bank across the country or overseas; most closing agents use local or regional banks.

Before transferring any money, confirm any request for a funds transfer with a voice call to the number you’ve typically used for your mortgage professional. Do not call any number included in an email requesting a transfer; that number could be part of a spoofed email leading to a scammer. Also do not e-sign any documents, log in to accounts or websites, or send money or account information without confirming first.

If you’re especially concerned, check with your bank about adding another layer of security with a note on your primary account requiring voice confirmation before allowing wire transactions to go through.

What Do I Do If I Am Scammed?

If you discover you’ve been tricked into a fake transfer of funds and are a victim to internet scams, take action immediately. Time is of the essence. Contact your bank or financial institution and ask that they recall the funds. Policies vary among institutions.

Next, report the fraudulent transfer to the local FBI. Follow that with another report to BEC fraud reporting system of the FBI’s Internet Crime Complaint Center. These are the best ways to get help with recovering your money.


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