Wire Fraud Prevention: Protecting Your Down Payment

Learn how wire fraud scams work in real estate, warning signs to watch for, step-by-step verification process before wiring money, and what to do if you've been scammed.

Tags:wire-fraud, closing-process, security, down-payment, escrow
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Two days before closing, you receive an email from your escrow company with wiring instructions. The email looks legitimate. You wire $200,000. The next day, you discover the email was fake. Your money is gone.

This happens to home buyers every week. Wire fraud targeting real estate transactions has exploded. Criminals hack email accounts, impersonate escrow companies, and steal down payments. Once money is wired, it's nearly impossible to recover.

Table of Contents

How Wire Fraud Works

The Basic Scam

Step 1: Criminals hack email accounts

They target real estate agents, escrow officers, and lenders through phishing emails, malware, or weak passwords. Once in, they monitor email conversations.

Step 2: Criminals learn transaction details

They read emails between buyer, agent, and escrow. They know your name, property address, closing date, and how much you're wiring. They wait for perfect timing.

Step 3: Criminals send fake wiring instructions

They impersonate the escrow company or agent. The email looks legitimate—similar email address, professional formatting, company logo. Urgent tone: "Wire today or closing will be delayed."

Step 4: Buyer wires money

You follow the instructions. You wire to the criminal's account. Money disappears immediately.

Step 5: Scam discovered

Real escrow company asks: "Where's your money?" You realize you were scammed. Money is gone.

Why It's So Effective

The email address difference is subtle. Real: escrow@titlecompany.com. Fake: escrow@titlecompany.co (missing "m"). Easy to miss if you're not looking carefully.

Perfect timing. Sent right before closing when you're stressed and rushed. You're expecting wiring instructions. Urgency prevents careful verification.

Wire transfers are immediate and irreversible. Money leaves your account instantly. Criminals move it quickly. Nearly impossible to recover.

Real Seattle Examples

Ballard couple loses $180,000: Closing Friday. Wednesday they received email with wiring instructions. Email looked legitimate. Wired $180,000 Thursday morning. Friday, real escrow company asks where money is. FBI investigation, no recovery.

Capitol Hill buyer catches scam: Received email with wiring instructions. Something felt off—urgent tone. Called escrow company directly (didn't reply to email). Escrow: "We didn't send that email." Avoided losing $150,000.

Redmond buyer loses $220,000: Received text message with wiring instructions claiming to be from agent. Wired money same day. Next day discovered scam. Partial recovery ($40,000), lost $180,000.

Warning Signs of Wire Fraud

Red Flags in Email

Urgent or pressuring language: "Wire immediately or closing will be delayed." "Must receive funds today." "Time-sensitive."

Legitimate escrow companies give you advance notice, don't pressure you, and understand you need time to verify.

Email address doesn't match exactly:

Always check the full email address carefully. Compare to previous emails. Verify the domain name.

Different bank account than expected: Escrow companies rarely change banks. If the bank account is different from previous communications, verify.

Request to wire to individual account: Legitimate escrow companies use business accounts. Individual accounts are a red flag.

Poor grammar or spelling: Professional companies proofread. Typos and errors suggest a scam.

Unexpected email: You weren't expecting wiring instructions yet. Timing seems off. Closing date hasn't been confirmed.

Red Flags in Phone Calls and Texts

Caller asks you to wire immediately: Legitimate companies give you time. Pressure is a red flag.

Caller won't let you call back: "I'm leaving the office, must do now." Legitimate companies let you call back.

Caller provides different number: "Call me at this number to verify." Use the number you already have, not one they provide.

Wiring instructions via text: Legitimate escrow companies don't send wiring instructions via text. Always verify by phone.

How to Verify Wiring Instructions

Step-by-Step Verification Process

Step 1: Receive wiring instructions

Via email, text, or phone. Don't act immediately. Take time to verify.

Step 2: Do NOT reply to email or text

Don't click "reply." Don't use the phone number in the email or text. Criminals control those.

Step 3: Find verified phone number

Use the phone number from a business card, company website, previous verified communication, or purchase and sale agreement. Do NOT use the number from the suspicious email or text.

Step 4: Call escrow company directly

Ask for your escrow officer by name. Verify they sent wiring instructions. Confirm bank account details. Get verbal confirmation.

Step 5: Verify every detail

Bank name, routing number (9 digits), account number (every digit), account name (should be escrow company name), wire amount, reference information.

Step 6: Read back information

Read each number and letter. Confirm with escrow officer. Don't assume anything.

Step 7: Get confirmation in writing

Ask escrow to send wiring instructions from verified email, or pick up instructions in person, or receive via secure portal.

Step 8: Verify again before wiring

Call your bank before initiating the wire. Confirm you're wiring to the correct account. Double-check all details.

Step 9: Confirm receipt

After wiring, call escrow to confirm they received funds. Get confirmation same day. If they didn't receive it, investigate immediately.

Multiple Verification Methods

Use multiple channels: email + phone call, phone call + in-person pickup, secure portal + phone call.

Never rely on a single method. Email alone is not secure. Text alone is not secure. Phone call alone could be spoofed.

Best practice: receive instructions via secure portal or in person, verify by phone using known number, confirm receipt after wiring.

What to Do If You've Been Scammed

Immediate Actions (Within Minutes)

1. Call your bank immediately

Report fraudulent wire transfer. Request wire recall. Provide details of scam. Act within minutes, not hours.

Time is critical. First 24 hours: some chance of recovery. After 24 hours: very low chance. After 48 hours: nearly impossible.

2. Call receiving bank

Contact the bank where you wired money. Report fraud. Request account freeze. Provide wire details.

3. Call FBI

Report to FBI Internet Crime Complaint Center (IC3) at ic3.gov. File complaint. Provide all details. Get case number.

4. Call local police

File police report. Get report number. Provide all evidence.

5. Notify escrow company

Tell them you were scammed. Provide details. They may have insurance. May help with investigation.

Within 24 Hours

6. Contact your insurance

Homeowners insurance may cover (unlikely). Cyber insurance may cover (if you have it). File claim. Provide documentation.

7. Gather evidence

Save all emails (including headers). Save text messages. Screenshot everything. Print bank records. Document timeline.

8. Change passwords

Email accounts, bank accounts, all financial accounts. Use strong, unique passwords.

9. Hire attorney (if needed)

Consult with attorney specializing in wire fraud. May help with recovery efforts.

Recovery Chances

Realistic expectations: most wire fraud victims don't recover money. Average recovery: less than 10%. Speed is critical—act within minutes.

Best case: act within minutes, receiving bank freezes account, money still there, partial or full recovery.

Typical case: discover scam hours or days later, money already moved, no recovery.

How to Protect Yourself

Before You Start House Hunting

Use strong passwords on email accounts, bank accounts, all financial accounts. Use a password manager.

Enable two-factor authentication on email, bank accounts, all financial accounts. Adds extra security layer.

Update software: computer operating system, antivirus software, email client, browser.

Be cautious with public Wi-Fi. Don't access financial accounts on public Wi-Fi. Use VPN if necessary.

Verify everyone's identity. Agent: check license. Lender: verify company. Escrow: verify company. Use official websites, not Google.

Save verified contact information: phone numbers, email addresses, physical addresses. Use these for all communication.

Establish verification protocol. Tell your team: "I will always call to verify wiring instructions." Get their agreement. Make it standard practice.

Ask about secure communication. Does escrow company have secure portal? Can you pick up instructions in person? What's their verification process?

When You're Under Contract

Expect wiring instructions. Know when you'll receive them, how you'll receive them, who will send them. Be prepared to verify.

Never wire money based on email alone. Always call to verify. Use known phone number. Confirm every detail. Don't rush.

Be suspicious of changes. Bank account changes, amount changes, timing changes. Verify everything.

Trust your instincts. If something feels off, it probably is. Don't let urgency override caution. Better to delay closing than lose money.

On Wiring Day

Call escrow before wiring. Verify wiring instructions. Confirm they're expecting your wire. Get verbal confirmation of all details.

Wire during business hours. Escrow company is available. Can confirm receipt immediately. Can address issues quickly.

Confirm receipt same day. Call escrow after wiring. Confirm they received funds. Get confirmation number. If they didn't receive it, investigate immediately.

Alternative Payment Methods

Cashier's Check

Get cashier's check from your bank, made payable to escrow company. Bring to closing. Hand to escrow officer.

Pros: Can't be intercepted by criminals, verifiable, secure.

Cons: Must get from bank in person, may have daily limit, takes time, may not be accepted for large amounts.

When to use: Smaller down payments (under $50,000), if you're uncomfortable with wire transfer, if escrow company accepts.

In-Person Wire at Bank

Go to your bank in person. Bring wiring instructions. Bank initiates wire while you're there. Bank verifies information.

Pros: Bank employee helps verify, can ask questions, more secure than online wire, immediate confirmation.

Cons: Must go to bank during business hours, may take longer, may have higher fees.

When to use: Large amounts, if you're uncomfortable with online wire, if you want extra verification.

Secure Portal

Escrow company provides secure online portal. Log in with credentials. View wiring instructions. Initiate wire through portal.

Pros: More secure than email, encrypted, verified by escrow company, reduces fraud risk.

Cons: Not all escrow companies offer, still need to verify, requires internet access.

When to use: If escrow company offers (preferred method if available).

Pick Up Instructions in Person

Go to escrow office. Pick up wiring instructions in person. Verify with escrow officer. Wire from bank or home.

Pros: Most secure, face-to-face verification, can ask questions, no email interception.

Cons: Must go to escrow office, takes time, may not be convenient.

When to use: Large amounts, if you're very concerned about fraud, if escrow office is nearby.

Insurance and Liability

Who's Responsible?

Generally, the buyer is responsible for verifying wiring instructions. Buyer bears the loss if scammed. Escrow company not liable (unless negligent). Bank not liable (unless negligent).

Exceptions: escrow company was hacked or negligent, bank was negligent.

Reality: most buyers don't recover money. Legal action is expensive. Proving negligence is difficult.

Insurance Coverage

Homeowners insurance: usually doesn't cover wire fraud. Check your policy. May have cyber coverage endorsement.

Cyber insurance: may cover wire fraud. Rare for individuals to have. More common for businesses.

Escrow company insurance: escrow companies have errors and omissions insurance. May cover if escrow was negligent. Doesn't cover if buyer was negligent.

Options: sue escrow company (if negligent), sue bank (if negligent), sue criminals (if caught, unlikely).

Reality: legal action is expensive, success is rare, most victims don't pursue.

Better approach: focus on prevention, verify everything, don't become a victim.

Summary

Wire fraud targeting real estate transactions is common and increasing. Criminals hack email accounts and impersonate escrow companies. Once money is wired, it's nearly impossible to recover.

Always verify wiring instructions by calling escrow company directly using a known phone number. Never wire money based on email or text alone. Verify every detail: bank name, routing number, account number. Confirm receipt same day after wiring.

Be suspicious of urgent requests, email address changes, or unexpected instructions. If scammed, act immediately (within minutes): call your bank, receiving bank, FBI, and police.

Prevention is key: use strong passwords, enable two-factor authentication, verify everything.

Next Steps

  1. Save verified contact information for your escrow company, agent, and lender
  2. Establish verification protocol with your team
  3. Enable two-factor authentication on all financial accounts
  4. When you receive wiring instructions: don't act immediately, call escrow using known number, verify every detail, get confirmation in writing
  5. After wiring: call escrow to confirm receipt, get confirmation number, keep all documentation

Additional Resources

Report wire fraud:

Learn more:

Disclaimer: This article provides general information about wire fraud prevention. It is not legal or financial advice. Consult with appropriate professionals about your specific situation.

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