It started like any other closing.
Our client signed the required disbursement authorization to send their exchange proceeds to the closing agent of their replacement property. The form was complete, all internal double checks were performed, and the closing agent had forwarded the closing statement for review.
Everything seemed ready to go.
The wire instructions soon arrived from the closing agent—at least, that’s how it appeared. But when our team member reviewed the document, something didn’t look quite right. Following 1031 CORP.’s strict internal procedures, our Exchange Officer picked up the phone to verify the wire instructions directly.
That call changed everything.
It was discovered that the wiring instructions sent to 1031 CORP. were fraudulent—a classic example of a cybercriminal attempting to divert client funds into their own account. Thanks to our Exchange Officer’s diligence and commitment to following every verification step, the fraud was stopped in its tracks. Our next call was to the Philadelphia Secret Service office to provide the details of the attempted wire fraud and to share the information for the account where they tried to trick us into sending our client’s funds. Someone at the closing agent’s office clicked on a bad link that allowed the bad actor to access their network, and they emailed 1031 CORP. pretending to be the closing agent – without them knowing.
This story illustrates exactly why we take cybersecurity so seriously at 1031 CORP.—and why every precaution, every double-check, and every verification matters. Unfortunately, it was not the first and it won’t be the last time that has happened. In 2022, losses from real estate wire fraud in the U.S. were reported to be $446 million and every year, that figure has likely increased because the bad actors are continuously deploying more sophisticated schemes to help them insert themselves in the email chain of an upcoming closing.
Safe, Segregated, and Fully Insured Accounts
1031 CORP. has implemented many steps to help safeguard our clients’ funds. Your exchange proceeds are deposited into a segregated, interest-bearing account established specifically for your exchange. Each account includes your name and Taxpayer Identification Number (TIN) and is protected by the Federal Deposit Insurance Corporation (FDIC) up to applicable limits.
Depending on your transaction and preferences, your funds may be placed in one of the following secure account types:
- Exchange Bank Account – Your funds are held in a dedicated exchange account with same-day disbursement capabilities and monthly paper statements.
- Qualified Escrow Account (QEA) – A three-party agreement between you, 1031 CORP., and the bank ensures that all parties must sign for disbursements, adding an extra layer of protection. 1031 CORP. has no ability to move your funds. All withdrawals are completed by the bank.
- Insured Cash Sweep® (ICS) Account – For larger exchanges, this account spreads funds across multiple financial institutions to extend FDIC coverage beyond $250,000, ensuring every dollar is insured.
To provide peace of mind, 1031 CORP. allows you to view your account balance online at any time through the bank’s secure website, and monthly statements are mailed directly from the bank for transparency.
Multi-Layered Security and Verification
Every outgoing wire transfer and disbursement request undergoes rigorous internal review and multi-level verification to protect you from fraud and human error. Here’s how our team ensures your funds remain secure:
- Dual Authorization: Exchange funds can only be moved with your written authorization and two internal approvals. Before this step, two members of our Exchange Team review to ensure the disbursement request meets all 1031 exchange requirements.
- Callback Verification: Our Exchange Team calls the phone number you previously provided to confirm every disbursement request.
- Recipient Confirmation: Before any wire is sent, 1031 CORP. contacts the receiving party (such as your closing agent) to verbally confirm the wiring instructions.
- DocuSign & Signature Verification: We use knowledge-based authentication and signature verification to ensure the integrity of all digital authorizations.
- Fidelity Bond & Liability Coverage: 1031 CORP. maintains multi-million-dollar fidelity bond and professional liability insurance for your protection. Certificates of insurance are available upon request.
- USA PATRIOT Act Compliance: To protect against identity theft and money laundering, all exchangers must provide a signed Form W-9 and photo identification.
These protocols aren’t just policy—they’re an integral part of how we earn and maintain your trust.
Cybersecurity Best Practices: Partnering With You
While we maintain strict internal security, protecting your funds is a shared responsibility. Cybercriminals are becoming increasingly sophisticated, often impersonating legitimate companies through email and text messages. Please remember these key precautions:
- Use the 1031 CORP. Secure Portal to upload sensitive documents—never email, fax, or text your personal information.
- Verify contact information independently. If an email or message looks suspicious, do not click any links or respond to the email. Instead, call us directly at (800) 828-1031.
- Never send funds directly to 1031 CORP. Any additional purchase funds should be sent only to your closing agent.
- Avoid free Wi-Fi or public networks when transacting or accessing accounts and use multi-factor authentication for additional security.
- Use strong, unique passwords and update them regularly.
Even if an email appears authentic—with logos, names, and email signatures, it could be a spoof. When in doubt, pause and verify.
Transparency, Access, and Support
Clients have view-only online access to their exchange accounts 24/7 through the bank’s secure website. If you ever have trouble accessing your account or need assistance, contact our Banking Team at BankingTeam@1031CORP.com or (800) 828-1031.
Our Commitment: Security You Can Trust
1031 CORP. has built its reputation on accuracy, accountability, and trust. We don’t take shortcuts with your money. Every transaction we facilitate undergoes layers of verification, review, and compliance to ensure your funds are handled safely and efficiently.
Cybersecurity threats will continue to evolve, but our commitment remains the same.
Your Exchange. Our Expertise. Your Peace of Mind.
Ready to start your exchange?
Contact our experienced exchange team today and discover why investors across the country trust 1031 CORP. to protect their equity, defer their taxes, and grow their portfolios. Call 800.828.1031 or contact us online.
