Cyberscams that trick homebuyers into wiring money offshore are costing the Los Angeles area $5 million dollars a month, the FBI reported this week.
Hackers are posing as real estate agents or title companies over e-mail and giving clients bogus wiring instructions, said supervisory special agent Michael Sohn.
By the time the crime is detected, sometimes just hours later, the money can be gone for good, with homeowners averaging losses about $130,000, he said.
"It’s very devastating," said Sohn, who's based out of the FBI's Los Angeles field office. "It's their entire savings that gets stolen by these criminals. They have no recourse. They lost everything."
Cybersecurity experts say the scam first surfaced in 2013, spurring the Federal Trade Commission to recently issue its second warning in two years.
The real estate industry continues to be a draw for cyber thieves because homebuying transactions involve large amounts of money and typically require wire transfers.
Sohn said scammers have not necessarily gotten more sophisticated over the years. Rather, "the tools that the cyber criminals have access to have become easier to buy or to download."
Dominique Alepin, assistant regional director for the FTC in Los Angeles, said real estate agents make for easy marks because they're easily identifiable, and those that rely on Gmail or other email accounts that "are not very secure" create an opening for thieves.
"Cybercriminals get access to the real estate agent, thereby seeing which deals are going to be closing that week," Alepin said.
HOW TO AVOID GETTING SCAMMED
- Home buyers should never trust an email with a change in wiring instructions.
- If you get scammed, get your bank to immediately do a wire recall. By the time 72 hours have passed after a crime has been committed, that money is usually gone for good.
Long Beach Realtor Jeannie Jones is still unnerved by the cyberhack she and her clients underwent in 2014.
Scammers broke into Jones’ Gmail account then pretended to be her and e-mailed a client purchasing a townhouse. The criminals directed the client to wire money to a different account than what they had been told originally.
By the time everyone put the pieces together a day later, $10,000 had vanished. With the bank involved in the transaction refusing to take any responsibility, Jones ponied up the replacement money.
"First of all, I was shocked, then I was mad," said Jones, an agent at Coldwell Banker Coastal Alliance. "It’s just such an invasion of privacy. It felt like I was violated."
Geoffrey McIntosh, president of the California Association of Realtors, said that he's been on a mission to educate members about cybersecurity and has sought the help of experts like Sohn.
"Realtors are trusting. I think that makes us an easier target," McIntosh said. "I doubt this would happen as much to attorneys."
CAR has been urging members to use strong passwords, regularly update computer systems and install anti-virus software.
McIntosh said that he tells agents to never hand over wiring information to a client except in-person or on paper — if they do it at all.
"Frankly, the client should deal with the escrow (officer) directly," McIntosh said.
Alepin of the FTC said if homebuyers question the veracity of wiring instructions, they should immediately call their agent and escrow company to confirm.
"We want to reinforce for consumers that the phone is cool again," Alepin said.