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Lane Keeter, CPA

Partner: Tax Consulting, Estate Planning, and Heber Springs Managing Partner

Scammers Are Targeting Homebuyers

It seems of late that I have spent an inordinate amount of time and space writing about identity theft, fraud, and scams. The problem is rampant, as we all know, but I thought maybe, just maybe, I was done for a while.

But just as you might think you have seen and heard it all, some new scheme pops up on the scene. Such is the case, and while I tire of devoting my column to such topics, I would be remiss if I did not address this, as it can affect so many.

Scammers have now figured out a way to target homebuyers in a con job that is becoming more and more common, effectively stealing the buyers' down payment by tricking them into wiring it to offshore bank accounts.

It is a lose-lose situation in that your money is gone, you likely have lost the house as well (unless you have other funds readily available), and the chances of you getting either back are nil. But how does this happen and what can you do to protect yourself from being a victim?

In the typical real estate transaction, some kind of real estate professional is often involved. It could be a realtor, real estate lawyer, or title company, for instance. What happens is a cyber-criminal may invade the email account of said professional using malware of some kind without anyone ever knowing it. Doing so allows the thug to keep tabs on the professional to discover upcoming real estate transactions.

Once a target is identified and a closing date for the transaction approaches, the thief has enough control over the real estate professionals email account that he will actually use it to send an email to the buyer. Because the email looks legit, after all, it is "from" someone with whom they are working, the buyer may think it is real.

The email will instruct the buyer that, rather than closing as previously planned, they need to wire the down payment instead to the seller's bank account. I have even read that follow up phone calls have been made to the victims to give the situation the appearance of even greater legitimacy.

Of course, as you might now suspect, the wire transfer is not to the seller's account at all, but rather is to one belonging to the scammer. Typically, the account is offshore somewhere, far from the reach of authorities here at home.

And donít look to your financial institution to reimburse you for the lost funds either. While most banks will make you whole for losses occurring because of stolen account numbers, rarely will the do so if you actually authorize the transfer yourself, which is what happens here.

So what can you do to avoid becoming a victim?

Well, hopefully, now that you know the problem exists, you can be vigilant in guarding against it should you find yourself involved in a real estate transaction. Never hesitate to follow up and verify any correspondence that seems suspicious.

At the beginning of the process, be sure you know the name and phone number of the professionals involved. If you can, get this information either in person or by mail, not be email; after all, it is the email accounts that are being compromised.

When it comes time to do the deal, be sure you pick up the phone and voice verify any information needed (such as bank names and account numbers), especially if it involves the electronic transfer of funds.

Don't panic or overreact to emails received, especially those that contain an unexpected change of plans or that purport an emergency or unusual sense of urgency demanding your action. Again, always VOICE verify.

And finally, as is good advice in any situation, do NOT share personal information via email. Just don't do it! Email is too easily compromised, especially regular email with little or no security features or that is sent over unsecured Wi-Fi networks.

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