{"id":23057,"date":"2023-12-18T16:06:34","date_gmt":"2023-12-18T16:06:34","guid":{"rendered":"https:\/\/www.anthonydidonato.net\/wordpress\/?p=23057"},"modified":"2023-12-18T16:06:35","modified_gmt":"2023-12-18T16:06:35","slug":"avoid-cyber-liability","status":"publish","type":"post","link":"http:\/\/www.anthonydidonato.net\/wordpress\/avoid-cyber-liability\/","title":{"rendered":"Avoid Cyber Liability"},"content":{"rendered":"\n

Failure to warn clients about wire fraud scams could mean financial loss for your clients\u2014and legal trouble for you.<\/p>\n\n\n\n

Benjamin and Joyce Fox were eager to move to a home near family and settle into retirement. In 2017, after a three-month house hunt, they found a three-bedroom townhouse in Lafayette, N.J.<\/p>\n\n\n\n

The townhouse was a foreclosure, owned by JPMorgan Chase. The Foxes agreed to pay cash for the $91,500 listing. They withdrew the money from a home equity line of credit on their current house. On Aug. 29, 2017, Joyce received wire transfer instructions via her Yahoo email account. An email from her real estate attorney had told her to expect such instructions. She wired the $91,500.<\/p>\n\n\n\n

On closing day, Sept. 1, 2017, the couple\u2019s homebuying dream turned into a nightmare. The closing representative scrutinized the wire transfer receipt: \u201cThat\u2019s not our bank, and that\u2019s not our account number.\u201d<\/p>\n\n\n\n

The Foxes had fallen victim to an elaborate wire fraud scam that has become all too familiar to anyone who works in real estate sales\u2014a scam that involves infiltrating email accounts and sending fraudulent wire transfer instructions. In this case, the scammers had sent fictitious emails to the Foxes, impersonating both their real estate attorney and real estate agent, for weeks leading up to closing.<\/p>\n\n\n\n

Today, more than two years later, the couple is still paying the $91,500 for a home they\u2019ve never owned. They\u2019ve filed suit, seeking to hold their attorney, agent, and others accountable for not warning them of the dangers of such scams.<\/p>\n\n\n\n

Could You Be Held Liable?<\/h2>\n\n\n\n

Real estate mortgage closing scams are one of the top five wire fraud schemes, according to the FBI\u2019s Internet Crime Complaint Center, accounting for $150 million in losses in 2018 alone.<\/p>\n\n\n\n

As cyberfraud scams grow more sophisticated, real estate pros are finding themselves more at the center of such lawsuits. In one case from 2018 (Bain v. Platinum Realty LLC), a Kansas court found a real estate agent and her brokerage liable after fraudulent wire instructions that the agent allegedly forwarded to the buyer resulted in the buyer losing $196,622. The agent denied sending the email. A jury found the agent and her brokerage 85% liable and ordered them to pay the buyer $167,129 in lost funds. A federal court upheld the verdict.<\/p>\n\n\n\n

Protect Yourself\u2014and Your Clients<\/h2>\n\n\n\n

The Foxes accused their agent of using an unencrypted, personal email account to send contracts that the couple argues put their personal information at risk. Upon further investigation of what went wrong, the Foxes had received all incoming and outgoing messages from Joyce Fox\u2019s Yahoo account leading up to the wire transfer. The actual transfer instructions from their attorney\u2019s office came in just seven minutes prior to the fraudulent instructions; the scammer had taken control of Joyce Fox\u2019s account, deleted the attorney\u2019s message, and replaced it with fake instructions. The fake message was sent from an email address that omitted just one \u201cl\u201d from the attorney\u2019s email address.<\/p>\n\n\n\n

\u201cThe best practice to prevent liability is to not let your clients become a victim in the first place, and that means educating them up front\u2014and often\u2014and especially as money is exchanging hands,\u201d says Lesley Muchow, deputy general counsel at the National Association of REALTORS\u00ae.<\/p>\n\n\n\n

NAR is working with the FBI and other real estate industry groups to help warn consumers and arm real estate professionals with tools to educate consumers about the dangers of wire fraud scams. There are videos, pamphlets, and checklists for brokerages to use, urging agents to:<\/p>\n\n\n\n