Alert: Wire Instructions Fraud

Alert: Wire Instructions Fraud

by Onyinyechi Muilenburg

Be careful when you wire funds for your real estate closings to avoid spoofing/phishing/social scams, which are becoming more common.  I have seen it happen. Good practice is to verify the receiver’s account information over the phone before you wire the funds.  Do not rely on emails!  

Common fact pattern:
(a) Buyer is set to wire funds to the title company for closing,
(b) hacker has been tracking the progress of the transaction, hacks the emails, and sends Buyer a fake (but real looking) email giving new or changed wiring instructions to fraudster’s account, and
(c) Buyer fails to verify and sends funds to fraudster thinking the funds were sent to the title company and the money is gone.

Who bears the loss, assuming the fraudster is long gone?  Case law is still developing, but initial cases appear to suggest that courts will put the liability on the party who was in the best position to stop the fraud and misappropriation of funds.  This is a very fact-specific issue that will be different for each case.

No information in this article is intended to constitute legal advice. For specific legal advice, please contact an attorney.

If you have any questions or would like more information about real estate, please contact Gavin Parker.