At the recent National Association of Realtor meetings in Washington, D.C., the Secret Service warned about a new cryptocurrency scam targeting real estate transactions. In its risk reduction tips, NAR provides the following overview of how the scam works and best practices to protect yourself, whether you’re an agent or a consumer looking to buy or sell.
Cybercrime – particularly wire fraud – continues to be a top concern in the real estate industry. The U.S. Secret Service has informed NAR about a new cryptocurrency scam targeting real estate professionals, some of whom have lost a significant amount of money.
In the scam, fraudsters pretend to be wealthy all-cash homebuyers and engage a real estate agent to develop a relationship.
Through the course of the engagement, the fraudster lies about becoming rich through cryptocurrency and then invites the agent to check out a crypto investment website that looks legitimate with cryptocurrency that seems real.
This scam is a variation of a “pig butchering” where the victim is “fattened up” before taking the bait. The real estate agent makes a small investment, sees a large return, and is allowed to withdraw their profit. The agent then invests more money—even their retirement savings—only to lose it all. Other forms of cybercrime remain unabated.
For 2024, the FBI Internet Crime Complaint Center (IC3) reported potential losses exceeding $16.6 billion, up 33 percent over 2023. The top scams facing consumers and businesses in the real estate industry are:
Phishing/vishing/smishing/pharming whereby fraudsters use unsolicited emails, text messages and phone calls from a purportedly legitimate company to obtain personal, financial and login credentials;
Wire fraud is carried out by fraudsters compromising email accounts to effectuate fraudulent fund transfers; and
Personal data breach whereby cybercriminals view, copy, steal or transmit an individual’s personal or sensitive, protected or confidential data.
Real estate professionals should be aware of the risks facing not only their businesses, but also consumers, and educate staff and clients about preventative steps they can take to prevent falling victim to cybercrime. In addition, it’s important to report any suspected or actual cyber fraud incident at www.ic3.gov within 72 hours to have the highest chance of recovery. Last year, IC3’s Recovery Asset Team recouped nearly all of a homebuyer’s $956,342 in closing funds, which they wired after receiving a spoofed email from their supposed real estate agent.
NAR’s risk reduction tips for Cryptocurrency Scams:
Never respond to unsolicited texts, social media messages, or emails soliciting an investment.
Be cautious when sharing personal information online, as scammers will exploit personal details to build trust.
Recognize the red flags: rapidly developing a relationship, making an impression of wealth and investment knowledge, promising fast and high returns, creating urgency to make a quick decision, and declining in-person interactions.
Thoroughly research any investment platform, including online corporate records and registration with regulatory bodies such as the Securities and Exchange Commission.
Immediately report suspected cryptocurrency fraud by reporting it to www.ic3.gov, and local law enforcement.
Risk Reduction Tips for Wire Fraud:
1. Train staff to be suspicious before clicking on unknown links or attachments.
2. Routinely patch and update business software and equipment.
3. Distribute information to consumers, remind consumers throughout the transaction about the threat of wire fraud, and always verify any wire or payment instructions with a known contact before sending any money.
4. Use strong passwords and avoid using the same password for multiple accounts.
5. Use multifactor authentication whenever available.
6. Backup data and files regularly, using the 3-2-1 backup strategy; 3 copies of the data in 2 different formats with 1 copy stored off-site.
7. Require vendors to adhere to good cybersecurity practices, and obtain assurances in contracts.
8. Immediately report any suspected cybercrime incident by filing a report at www.ic3.gov, to the local FBI office, and local law enforcement.
Next week, we’ll take a deeper look at Deed Fraud, which is not a new scam but continues to be widespread in the real estate industry. Unfortunately, like any industry, real estate is not immune to scammers. Work closely with your realtor to reduce risks of jeopardizing the transaction or your personal finances. #ThatsWhoWeR