Wire fraud poses an increasing challenge for escrow officers, homebuyers, and the real estate industry as a whole. The perpetrators are growing more sophisticated, and the stakes are rising. It’s essential to understand these threats and how to protect yourself and your transactions from potential losses. In our commitment to safeguarding your transactions, we believe in empowering you with knowledge about this industry so you can navigate it with confidence. We’re dedicated to keeping you informed and educated about potential threats, so you can feel more secure throughout your transactions.
In an article by RAMRAS Legal, PLC posted in Spring 2021, they bring attention to a case where the Arizona Court of Appeals held that an escrow agent could be held liable for negligence and breach of fiduciary duty for wiring funds to an imposter (Mago v. Arizona Escrow & Financial Corporation, 1 CA-CV 19-0753, 2021 WL 829259). The imposter, who had hacked the buyer’s email account, created an email address closely resembling the seller’s, save for a barely noticeable difference—an “rn” where an “m” should be—and provided wire instructions to an unrelated entity. This alarming scenario, despite its clear red flags, led to a significant financial loss and a lengthy legal battle. In Spring 2023, RAMRAS Legal, PLC shared an update to this case revealing the final cost of the wire fraud, including attorney’s fees, reached about $200,000—a loss that could have been prevented by implementing advanced email protection services or adhering to ALTA’s best practices.
Another example involves a variation of the notorious “Nigerian letter fraud” (Sakthiveil v. Clear Title Agency of Arizona LLC, 1 CA-CV 20- 0407, 2021 WL 728857). The victim, an owner of multiple properties, was enticed by a promise of gold worth $28 million in exchange for wiring $4 million to overseas bank accounts. The victim refinanced his properties, and when the gold never arrived, he sued the title company for “orally guaranteeing his gold deal.” While this case might seem an outlier, it underscores the importance of being aware and skeptical of too-good-to-be-true offers.
Tips to Prevent Wire Fraud
Our experienced team remains vigilant to the evolving landscape of wire fraud and other potential threats. We continuously update our practices to stay ahead of potential risks and ensure the safety of your transactions. Here are some practical steps you can take to protect yourself from wire fraud:
- Be suspicious of unsolicited emails or messages: Any unsolicited emails or messages that ask for financial transactions or provide wire instructions should be treated with suspicion.
- Double-check email addresses: Look carefully at email addresses to ensure they are legitimate. Even small discrepancies can be a sign of fraud.
- Verify wire instructions: Always verify wire instructions, preferably through a separate, trusted means of communication, like a verified phone number.
- Don’t rush: Scammers often try to create a sense of urgency. Take your time to verify all aspects of the transaction.
- Educate yourself: Familiarize yourself with common scams like the “Nigerian letter fraud” and be skeptical of offers that seem too good to be true.
- Use advanced email protection services: These services can help flag suspicious emails and protect against hacking attempts.
- Follow Best Practices: Utilize guidelines like ALTA Outgoing Wire Preparation Checklist
- Test your cyber smarts with Google’s interactive phishing quiz! It’s an essential skill in our digital world and will help you outwit the fraudsters!
The complexities of real estate transactions can seem daunting, especially with threats like wire fraud. With our stringent verification processes, protection services, and adherence to industry best practices, you can trust First Arizona Title Agency to handle your transactions with the utmost care and expertise.
Stay informed, and stay vigilant! And if you have concerns about wire fraud, we’re here to guide you safely through your real estate journey.
1. RAMRAS Legal, PLC. Quarterly News: Arizona Title & Escrow Law Update. (2021, Spring).
2. RAMRAS Legal, PLC. Quarterly News. Arizona Title & Escrow Law Update. (2023, Spring).
3. Mago v. Arizona Escrow & Financial Corporation, 1 CA-CV 19-0753, 2021 WL 829259 (App. Mar. 4, 2021)
4. Sakthiveil v. Clear Title Agency of Arizona LLC, 1 CA-CV 20-0407, 2021 WL 728857 (App. Feb. 25, 2021)
5. Mago v. Arizona Escrow & Financial Corporation, 1 CA-CV 22-0270, 2023 WL 2704099 (App. Mar. 30, 2023)
6. American Land Title Association. (n.d.). Outgoing Wire Preparation Checklist. ALTA.