A simple wire transfer
It should have been a dream come true for James and Candace Butcher. They’d chosen the house they wanted to retire in, negotiated the price, and sold their home for a down payment.
All that was left was the last wire transfer – $272,000.
The next day, they were bankrupt.
Too good to be true
Like many older adults, the Butchers entered the real estate market with family in mind. They wanted to live closer to their son, and to have a place big enough for grandchildren to enjoy.
“We were truly excited, when through negotiations, we won the bid,” Candace Butcher said. “Through the entire process, I kept saying, ‘I can’t believe this is going to be our house.”
All it took to rob them was a simple confluence: wire fraud and poor security precautions. The email that provided the Butchers with wire transfer details was sent from the proper domains for the Butchers’ pay agreement, under the proper names.
The only problem, according to the complaint and the Butchers’ attorney, was that those domains had been hacked.
Someone had gotten inside Land Title Guarantee Co. and Envoy Mortgage and used their contact information to obtain a fraudulent wire transfer.
The secret behind the hack
It’s a frighteningly simple trick: all it takes is the password to the right email account. The exact dollar amount had yet to be specified, and the Butchers had no reason to think an email from their mortgage company would be anything but legitimate. They’re currently suing both companies for insufficient security.
They’re also suing Wells Fargo, the bank handling the transfer. According to the complaint, Wells Fargo failed to acknowledge the fraud and neglected to make recourse available, including a 72-hour freeze that would have saved the couple’s savings.
Instead, while the problem is being resolved, the Butchers are living in their son’s basement.
The details of the whole sad saga can be found here, but the takeaway is simple: security is everything. Everyone cares about housing. Not everyone is an expert in data security. The real estate industry has a moral and professional responsibility to guarantee secure transactions.
Better safe than sorry
Real estate customers can avoid tragedies likes the Butchers’ by taking precautions on their end.
The National Association of Realtors provides guidelines for both. They should be required reading for anyone in real estate, but by way of a simple version:
If you’re a real estate professional, be aware of the possibility of fraud. Build warnings into your client communication structure. Better yet, educate your clients about common types of scams and what to do about them.
Better than better, designate or hire a staff member who is specifically responsible for the process, keeping lines of communication open to guarantee this never happens to you.
Don’t reuse passwords.
Don’t repeat passwords.
Clean out your email to secure sensitive information.
Instruct clients double-check everything. What happened to the Butchers started because they trusted an unverified email.
Don’t do that, ever.
When you receive instructions via email, confirm them by phone or in person, and at the risk of stating the obvious, don’t use any of the contact info in the email. Some very committed hackers will even put up legitimate looking websites. Call someone you’ve already spoken with in person, or for that matter, drop by.
New startup solves this problem
You can do all of those things and still feel insecure about the process. But we’ve uncovered a brand new real estate tech startup that is dedicated to solving this problem.
“BuyerDocs can help prevent wire fraud cases like this with its simple, free, easy-to-use solution. Our service can save home buyers from losing their down payments to a scam, while also helping protect title companies from potential lawsuits,” Abigail White, Cofounder & CMO
Because the startup is brand new, it’s not yet the industry standard, but it truly should be.
Send a link to your title company and ask why they’re not using BuyerDocs to protect your clients.
Finally, trust your instincts and teach your clients to do the same. If something about the transaction feels wrong, go with that feeling and confirm.
The Butchers are working with attorneys and the FBI to resolve their fraud claim. This is how you keep from having to do the same.