wiring instructions

With great power comes great responsibility

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Six sensational ways to stop cyber villains

Cybersecurity is job #1 for dirt lawyers. Even in our close-knit state, we hear of attacks every week. A lawyer’s office could easily be forced out of business by one of these evil attacks. In our office, we read everything printed on the topic, and I offer you the six best, simplest tips I’ve seen. The first five are from American Land Title Association, developed with the help of the FBI, and the sixth is from the South Carolina Bar.

  1. Call, don’t e-mail: Confirm all wiring instructions by phone before transferring funds. Use the phone number from the recipient’s website or business card.
  2. Be suspicious: It’s not common for the companies involved in real estate transactions to change wiring instructions and payment information. Use common sense, stay alert to things that don’t look or feel quite right in a transaction and use your “Spidey senses”!
  3. Confirm it all: Ask your bank to confirm not just the account number but also the name on the account before sending a wire.
  4. Verify immediately: Call the recipient to validate that the funds were received. Detecting that you sent the money to the wrong account within 24 hours gives you the best chance of recovering your money.
  5. Forward, don’t reply: When responding to an email, hit forward instead of reply, then start typing with a known email address. Criminals use email addresses that are similar to real ones. By typing email addresses you will make it easier to discover if a fraudster is after you.

Thank you, ALTA and FBI, for those great tips!

The best tip, by far, that I have seen comes from the South Carolina Bar.  This tip is not only excellent for avoiding cyber fraud, it’s a great way of avoiding mistakes of all kinds in real estate practices. Here it is:

  1. Give yourself and your staff permission to slow down! We know things are hot out there not only in terms of the weather but also in terms of the speed of closings. Many of us who weathered the financial downturn remember what it was like when things were hot in 2005 – 2007. Closing speed can be increased only so much without causing error after error. Remember illegal flips prior to the financial downturn?  How many of them could have been prevented if someone had stopped long enough to think or long enough to bounce the scenario off of a friendly title insurance company underwriter? The same is true of protecting your clients’ money. Stop and think and allow your staff members to spend the time to stop and think.

Thank you, South Carolina Bar, for this great tip.

And, finally, I strongly recommend insurance against cyber fraud. Check with your E&O carrier to see what it offers. If it does not offer insurance to protect against this danger, find a company that does!  Call your title insurance company for suggestions!

Beware of Cyberattacks on Free E-mail Services

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Think a client won’t sue for misdirected funds?  Think again!

domain securityE-mail services, even those with the tightest security possible, can be hacked. We have heard local stories, as close as Rock Hill and Charleston, of funds being misdirected by cybercriminals through intercepting e-mails and sending out fraudulent wiring instructions.

Law firms have taken action: encrypting e-mails, adding tag lines to emails warning that wiring instructions will not be changed, adding warning paragraphs to engagement letters, in addition to normal security efforts. Many offices now require confirmation of all wiring instructions by a telephone calls initiated internally. No verbal verification?  No wires!

Last month, an attorney in New York was sued by her clients in a cybercrime situation. This time, the property was a Manhattan co-op, and the funds amounted to a $1.9 million deposit. The lawsuit alleged that the attorney used an AOL e-mail account that welcomed hackers. The complaint stated that had the attorney recognized the red flags or attempted to orally confirm the proper receipt of the deposit, the funds would have been protected.

The old phrase “you get what you pay for” is definitely applicable in these situation. Attorneys who continue to use free email services are putting themselves and their clients at greater risk for cyberattacks. Criminals understand that free email services have low security against cyber-intrusion, so they naturally gravitate to those accounts for their dirty work.

I heard one expert say that free e-mail services are not only not secure, they are also unprofessional! Surely, lenders will soon look at this issue as they decide who will handle their closings.

E-mail Hacking Scams Hitting Buyers in SC

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Please get the word out to your clients!

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As closing attorneys, title insurance agents and business men and women, we receive daily warnings about a myriad of e-mail hacking scams. Many of these schemes involve wiring instructions and attempts to divert escrow funds to remote accounts. Piecing together the two words “wiring” and “instructions” in the subject line of an e-mail seems to entice the worst kinds of fraudsters.

Our own office was hit a year or so ago. We were escrowing funds for an agent’s large commercial transaction, and the agent received a bogus e-mail purportedly but not actually from us telling him to send the money in a different direction. Thankfully, our very astute agent had attended sufficient seminars and read enough fraud alerts to take the simple step of calling us.  Fraud averted!

American Land Title Association and others have written that fraudsters are now attacking buyers, not just businesses who hold escrow funds. And it is happening here!

Within the last few weeks we have heard of three email securityattempts of this nature in Charleston, at least one of which was successful. A buyer wired $150,000 to the wrong account on a Friday afternoon based on a bogus e-mail, spoofed to appear as if it came from the closing attorney. The e-mail said the firm was busy, and advised the recipient not to call but to respond by e-mail if there were questions. That should have been the first clue. The buyer and the banker both said they thought the e-mail and wiring instructions looked funny. But they sent the money out anyway.

Buyers have not attended the seminars nor read the fraud bulletins that have inundated all of us in the last few years. Closing attorneys and real estate agents may be the best line of defense in this situation.

Please communicate with your clients and let them know that a simple telephone call can prevent the diversion of their savings to criminals!