Scams Continue: Beware ANY Change in Wiring Instructions

In March, I cautioned lawyers to beware of last-minute changes to wiring instructions.  I followed up with a post on the latest scam, one that targets a lawyer’s clients by providing the client with “new” wiring instructions.

I’m writing again because the scams continue.  In fact, this is something that HAS HAPPENED & WILL CONTINUE TO HAPPEN even here in little ol’ Vermont.

Here’s an excerpt from an e-mail that I received last week.  I’ve removed identifying information.

• “I had a commercial closing today in which I was representing the seller and the seller’s proceeds (a substantial amount) were to be wired by the settlement agent [another lawyer] to a 1031 intermediary.  I had verified the wire instructions with the 1031 intermediary (with whom I have worked many times) and with [the settlement agent’s] office by phone in advance of closing.  Twenty minutes before the scheduled closing, [the settlement agent’s] office received an e-mail which purported to be from me concerning the wire instructions.  The e-mail was not from me, but it looked authentic but for an error in our office phone number and when you scrolled over the address, you could see it originated from a different e-mail address (not mine).  Fortunately, [the settlement agent’s office] realized it was a fraudulent e-mail and did not reply.  The hacker had clearly been following the e-mail traffic on this transaction and presumably the fraud would have involved the hacker providing revised wire instructions to its own account and our client’s proceeds would have been gone—even if [the settlement agent] had replied, this would not have occurred because I had a hard copy of the wire instructions with me to verify with her at the closing table.  Fraud averted, but it is a powerful reminder that we are not immune from these sophisticated frauds.  I ended up getting a check to FedEx instead of following through with the wire.”

I exchanged a few e-mails with the seller’s lawyer and we eventually spoke by telephone. While the scam sprung to life pre-closing, the lawyer told me something that makes good sense and that I thought I’d pass on.   In the lawyer’s words:

• “our policy [is] that there are no post-closing changes in payment method.  Once that check leaves [our possession at] the closing, that is it (we put that one in place after we first heard about the use of mobile deposit and the fraudster who use the mobile deposit app and then returned with the check to the closing agent and asked to have the funds wired instead).”

Finally, please do not think that real estate lawyers are the only targets of this scam.  Scammers will  target any type of transaction. Whether wiring settlement funds to a personal injury client, wiring sale proceeds to a seller, or wiring money to anyone for any reason whatsoever, beware of changes to wiring instructions.