How safe is your wire transfer?

I was recently part of a real estate settlement. While we were waiting, the title agent told us a story about a settlement that went horribly wrong. The buyer’s email was hacked (unbeknownst to the buy) and the hacker sent wire instructions to the seller for an off-shore account (acting as the title agent). The buyer signed the instructions and sent $200,000 off-shore. GONE, just like that. Needless to say, the settlement never happened, and the buyer is most likely never going to see that money again.

The internet and ease of money movement are certainly making life simpler when it comes to transferring funds. With this luxury comes risk that I’d like to point out and provide a few simple steps to try to avoid problems.

The Risk: The days of a hacker sending a “desperate” email requesting money to be sent to a loved one while being stuck in a foreign country are long gone. Everyone knows about that scam. Hackers are getting into emails and simply watching them for periods of time. They are waiting for an opportune time to intercede and steal more significant sums of money, all while the consumer thinks they are in complete control. How?

  1. The hacker gains access to your email without you knowing it.
  2. They watch and wait for a potential transaction or request (real estate transactions are the most common).
  3. Around the time when money is assumed to be transferred by all parties (sender, receiver, financial institution) they take over the email address and send wire instructions for their off-shore account.
  4. If the individual signs the wire form (assuming it is coming from a trusted email) to send the funds and the money gets sent – it is GONE at the expense of the individual.

Simple steps to avoid this from happening:

Always use a secure email portal to send wire instructions. If your financial institution does not work off secure email, it might be time to reevaluate that relationship.

VERBALLY VERIFY EVERYTHING. I know we all want things done quickly and easily but this step is the most crucial and involves all parties to the wire:

  • Sender – call the bank receiving the funds to verbally verify the wire instructions
  • Financial institution sending the wire – verbally verify with the sender the wire instructions.

Change email passwords on a consistent basis.