Cyber intrusions are becoming more commonplace, more dangerous and more sophisticated. Following the events of 9/11, the FBI dedicated 50% of their resources to terrorism and 50% to criminal fraud, including cybercrime. Cybercrime continues to challenge the FBI, as those involved are generally highly educated and experienced in computer intrusion. Moreover, the criminals typically work abroad to avoid capture and prosecution.

The FBI trains agents in the different areas of cybercrime and works closely with industry experts to gain insight, including Fidelity National Title Group's Senior Vice President, Lisa Tyler. This collaboration helps the FBI and the industry to develop policy to prevent these devious acts from being perpetrated.

There are many types of cybercrimes involving money transfers, bank fraud and corporate fraud. One of the most common frauds currently seen by the FBI is down payment diversion. Down payment diversion happens when a fraudster successfully diverts a buyer's down payment to an account controlled by the fraudster.

Generally, fraudsters perpetrate the crime by gaining access to one or more of the personal email accounts used by a party to the transaction. The criminals, unbeknownst to the account holder, watch email communications and wait for the right time to strike. The fraudster may communicate with the intended victim directly from the compromised email account(s) or may set up a spoofed email account which closely resembles other transaction participant's legitimate email accounts.

The fraudster may create an email account with a slightly altered domain name, such as fnt.com rather than fnf.com, or may create a new email address that incorporates the correct account, but uses entirely a different domain name, such as settlement.fnf@mail.com.

In order to communicate directly out of the compromised email account, the fraudster may set up filters directing specific emails into a particular folder. With these filters established, fraudsters can control who reads and responds to those specific emails. For example, the fraudster may direct all emails from the escrow officer to the trash folder and timely delete those email messages once the fraudster has responded to the email or used it in some manner to further the fraud scheme.

The fraudster may then use the information gained from those email communications to send a "spoofed" email to the buyer posing as either the buyer's real estate agent or the escrow officer. This email communication will eventually include "updated" wire instructions for the buyer to use for closing funds. These "updated" wire instructions direct funds either to a domestic money mule's account or even to an offshore account controlled by the fraudster in some manner.

This is why Fidelity National Financial Family of Companies has developed a Wire Safe Campaign to help educate consumers of this fraud scheme. As part of these efforts, an on–hold message informing real estate buyers that they are a target has been implemented. In addition, at the beginning of every transaction, settlement agents provide buyers with a Wire Safe Wire Fraud Alert Form, warning them of the down payment diversion scheme. Both the message and wire fraud alert form, instruct all buyers to verbally verify all wire instructions before sending any payment.

The FBI advised to always be on alert as most parties do not recognize they are emailing with a fraudster. Some helpful reminders are to hit "forward," rather than "reply to" when communicating via email, to ensure you are communicating with the proper contact on your files. Also, verify wire instructions via a known, trusted number obtained at the beginning of the transaction rather than using numbers obtained from email communications.

The FBI also alerted us to fraudsters setting up names of companies that appear to be associated with the closing company but are completely fake companies. The fraudster communicates with those involved in the transaction acting as if they are a subsidiary of the closing company or work on the closing company's behalf to collect payments. They dupe unsuspecting targets into directing funds to alternate bank accounts they control. A way to avoid this is a simple internet search to confirm the company is not associated with the closing company.

When it comes to fraudulent wire instructions, time is of the essence! Do not delay if you suspect a diverted wire. Contact the sending party via a known and trusted number to verify wire instructions. If the sender has sent a wire to a fraudsters account, have the sender contact their bank immediately to initiate a recall. Report any fraudulent wire instructions received by the Company's direct operation employees to management and wirefraud@fnf.com immediately.

The Fidelity National Financial Family of Companies, with lessons learned from the FBI, develops and implements policies to help protect all those involved in an escrow transaction. FNF constantly strives to stay up–to–date on industry related crimes and then shares this knowledge through internal communications, trainings and Fraud Insights. If something in a transaction seems suspicious to you, never hesitate to contact settlement@fnf.com.

This article was provided by contributing author:
Karen Phelps, Project Manager
Fidelity National Title Group
National Escrow Administration