Most of us have heard about or read about people being scammed. In fact, the Federal Trade Commission reported for 2018, that 1.4 million Americans reported instances of fraud, losing $1.48 billion dollars (yes, billion with a B). The most common method for scammers to defraud people of their money was by wire transfer. In fact, in 2018, Americans lost $423 million due to wire fraud.
Oftentimes scammers defraud during large financial transactions by getting down payments, closing costs or other proceeds wired to a fraudulent account rather than to the intended account of the bank or lender. Once a wire transfer is sent, it is nearly impossible to retrieve the money, so if it’s been sent to an incorrect account, it’s as good as gone as it has moved on many more times after your wire transfer.
While this type of scam is most commonly seen in real estate transactions, it can happen in any instance where large sums of money are being wired – including equipment financing.
Most often the scam is initiated through email. The purchaser receives an email with wire instructions, often using some type of urgency ploy. Typically, it looks quite legitimate, often addressing you by name and using the name and/or signature of an agent of the company or lender from whom you are purchasing or financing. Many times the email address used can be very similar to the legitimate email of a vendor or lender.
The scam can also be initiated via phone call. Using the same urgency ploys, the scammer will provide you with wire instructions, or they will ask you to verify identity information (social security numbers, bank account numbers, etc.). The communication can also advise you of a last minute account change to which to make payment.
If you aren’t diligent and careful, you simply follow the instructions provided, thinking you have complied with a legitimate request. It’s not until you actually talk with your vendor or lender that you realize they never received your wire payment.
In this age of digital monetary transactions, how do you protect yourself, your business, and your money? We’ll review some keys to staying diligent and protected.
Prior to the actual closing and transfer of money, ask your contact to review the process and the timing. This will give you an understanding of how the procedure works and what you can expect. It’s a great time to ask questions about how money is transferred, who you should be dealing with and how to contact them.
Have an email address and a phone number for the people who will contact you about any payment or monetary transfer information. This will allow you to directly contact them should any questions arise.
Many emails from scammers contain typographical errors, syntax errors or errors in plurality. These errors are often what alert careful readers to the possibility that the email may not have come from a legitimate source. Additionally, pay careful attention to the email address. While the sender’s name might be the same as the company with whom you are doing business, oftentimes the FROM: email address does not accurately represent the company. Scammers are clever. They can spoof email addresses, signatures and phone numbers, or use fake information. Leave nothing up to chance.
When you receive wire instructions, use the contact information obtained earlier in the process to verify ANY instructions. NEVER use the contact information presented in the email with the wire instructions because if the instructions are fraudulent, the contact information presented in that email is most likely also fraudulent.
If something feels off, or not quite right, question it. The companies with whom you are dealing don’t want you to be cheated and welcome opportunities to thwart scammers. Information you can provide about potential fraud schemes can help stave off future scams.
Understanding fraud goes a long way in preventing it. The more you know, the less likely you are to be a victim. Arm yourself with information, be diligent and communicate directly with your lender. A trusted financial partner, like CCG, will help you navigate the closing process to ensure your money goes where it’s supposed to.
Resources:
U.S. Dept. of Justice
FBI – Internet Crime Complaint Center
Financial Crimes Enforcement Network