Greg's Corner

Email scam dupes homebuyers, bank delays refund

By Greg Collier

Homebuyers are finding themselves vulnerable to a sophisticated and growing threat: business email exchange (BEC) scams. These cybercrimes exploit the trust and urgency inherent in property purchases by infiltrating email communications between buyers, sellers, and their agents. With access to sensitive information, scammers impersonate legitimate parties to redirect substantial down payments and closing costs into their own accounts. This deceptive tactic not only results in significant financial loss but also disrupts the dream of homeownership for many unsuspecting victims.

One couple wired $25,000 meant for their home purchase but were tricked into sending it to a scammer. However, TD Bank, which held the scammer’s account, froze the account before the scammer could abscond with the funds. Despite this, more than 20 months later, the couple still don’t have their money back due to a bank delay.

After nine years in a townhome, the couple decided to buy a single-family home. They found a house and were set to close. They received a legitimate email from their title company. The next day, a scammer impersonating the title company sent an email with new wire instructions, which went unnoticed. They authorized a $25,000 transfer from their Chase account to the scammer’s TD Bank account.

When the real title company reported not receiving the payment, they realized they had been scammed. They rushed to Chase Bank to recall the wire, but it couldn’t be recalled. Fortunately, TD Bank had frozen the account. They reported the fraud to the FBI through the Internet Crime Complaint Center (IC3). The FBI informed them that TD Bank needed an indemnification letter from Chase to release the funds. After much persistence and involving the Better Business Bureau (BBB), Chase issued the letter.

However, the letter repeatedly failed to reach the correct hands at TD Bank. Months passed with no resolution, forcing the couple to dig into their retirement savings to make the down payment for the house. It wasn’t until the couple got the local media involved before the letter from Chase finally found the right recipient at TD Bank. The couple is receiving a refund but only for a partial amount.

Banks should prioritize assisting scam victims promptly and efficiently, minimizing bureaucratic hurdles. The current landscape, where fraudsters can exploit complex financial systems, demands that banks adopt a more proactive and compassionate approach. Simplifying the process for victims to recover their funds and providing clear, supportive guidance can significantly alleviate the emotional and financial stress caused by scams. By reducing red tape, banks can enhance their reputation for customer service and contribute to a more secure and trustworthy financial environment.

Homebuyers should always verify any payment instructions in person or over the phone to avoid falling victim to BEC scams. Scammers can create convincing emails that appear to be from trusted parties like real estate agents or title companies. To ensure the legitimacy of wire instructions, buyers should contact the issuing party directly using a known, reliable phone number, or visit them in person. This extra step of verification can prevent significant financial loss and provide peace of mind during the homebuying process.