How mortgage escrow fraud works
Escrow fraud preys on ignorance and hastiness as it relies on fake email accounts to execute the scam. One way this scam works is when the fraudsters hack into a title company’s system to retrieve emails and information about upcoming home purchases.
They’ll often set up a fake website under a name similar to the title company you’re working with. For example, if the name of your title company is “Johnson and Sons” the fraudsters might make “sons” singular, so the website and email address reads: Johnson and Son.
This slight difference in the URL, in what otherwise looks to be a legitimate site, is easy to miss if you’re busy, as many people are, says Todd Spodek, managing partner at Spodek Law Group in New York City.
From there, the thieves will email you instructions to wire the money needed to close on the house. In other cases, they’ll email the title company to wire the money to the seller. The scam works the same way no matter who they’re targeting.
The money is then wired to the fraudster’s account, where they immediately withdraw it and disappear. There have been rare instances where the money has been intercepted, but in most cases, it’s irretrievable.
They’ll often set up a fake website under a name similar to the title company you’re working with. For example, if the name of your title company is “Johnson and Sons” the fraudsters might make “sons” singular, so the website and email address reads: Johnson and Son.
This slight difference in the URL, in what otherwise looks to be a legitimate site, is easy to miss if you’re busy, as many people are, says Todd Spodek, managing partner at Spodek Law Group in New York City.
From there, the thieves will email you instructions to wire the money needed to close on the house. In other cases, they’ll email the title company to wire the money to the seller. The scam works the same way no matter who they’re targeting.
The money is then wired to the fraudster’s account, where they immediately withdraw it and disappear. There have been rare instances where the money has been intercepted, but in most cases, it’s irretrievable.
How to protect yourself
- Make sure email addresses match.
- Don't use the phone number in the email.
- Find out what safeguards your title company has.
- Get proof of cyber fraud insurance from your title company.