The process of buying property is the latest target for wire transfer fraud. Here’s how it works: Wire transfer instructions are emailed to the buyer. The buyer complies and follows the instructions to the letter. The next day, the escrow agent contacts the buyer asking if the money has been sent yet. The buyer checks with his bank and is assured that the funds have been transferred out. A short while later, when the money has still not shown up, everyone begins to retrace steps. As it turns out, the wire transfer instructions were bogus. The email came from an address that looked very much like that of the escrow or title company, but it was not actually theirs.

And the recipient bank account? It was real, it just wasn't the correct one. And, yes, it was emptied out before anyone was the wiser.

This scheme – perpetrated by hackers – has been going on around the country for a while now. To combat this growing threat, this alert describes the steps involved, summarized below:

First, hackers identify the email accounts of real estate agents and brokers. Most of this can easily be found on social media.  Then they hack directly into the accounts and identify emails that reference pending real estate deals. From these strings of emails, the hackers pull out specific details about the deal, such as (a) the names of the parties, (b) the title company involved, (c) the escrow officer in charge of the deal, and (d) other information specific to the transaction.

Next, they send a fraudulent email directly to the buyer or lender, making it appear like it was sent by the real estate agent, mortgage broker, or escrow agent. These fraudulent emails now direct the buyer or lender to wire the funds necessary to close escrow directly to a different bank account than provided in the preliminary report or in the escrow instructions. Obviously, this new bank account is controlled by the hacker, not the title company or the escrow holder.

Then, if the fraud is not detected, the money is wired to the bogus account controlled by the hacker and is immediately withdrawn.

For the most part, prevention recommendations tend to focus on the non-secure nature of most email accounts. It's a fair bet that most consumers and businesses do not have secure email accounts and can be easily hacked. But, in a world where Target, Sony, and other large companies are vulnerable to attack, it is unlikely that anyone is ever going to enjoy a very high level of security.

Buyers and sellers should confirm all email wiring instructions directly with the escrow officer by calling the escrow officer on the telephone. In that conversation, the correct account number information should be repeated verbally before taking any steps to have the funds transferred.

Certainly, if wiring instructions are changed via email, the buyer should confirm that by phone with the escrow officer and the buyer's real estate agent. Speaking to each other directly could go a long way toward preventing this type of scheme from happening to you – and your business associates.