Wire fraud continues to be one of the most serious threats in real estate transactions. Fraudsters are becoming increasingly sophisticated, often inserting themselves into legitimate email conversations, impersonating trusted parties and attempting to redirect funds at exactly the moment a wire is expected.
At 1031 CORP., our most recent attempted wire fraud incidents are a reminder that technology alone is not enough. Strong procedures matter, but so do experienced team members who recognize when something just doesn’t look right.
In one recent attempt, an email appeared to come from a party already involved in the transaction and requested documents and wire information. At first glance, the communication looked legitimate. But our team member noticed something important: the requested documents had already been received.
Rather than simply responding to the email, the team member looked more closely and discovered that the sender’s email address was slightly different from the legitimate address previously used in the transaction. The team member stopped communicating by email and called the known party using a previously verified telephone number.
That call confirmed the suspicion. The email was fraudulent, and someone was attempting to impersonate parties involved in the transaction.
In another recent attempt, an email appeared within an existing transaction and instructed 1031 CORP. to use new banking information for an upcoming wire. The message included a plausible explanation for the change, but our team member knew that the original wire instructions had already been independently verified.
Instead of accepting the new instructions, the team member followed 1031 CORP.’s wire verification procedures and refused to redirect the funds based solely on an emailed request. The legitimate party ultimately confirmed that the new instructions were fraudulent.
In both cases, the fraud attempt was stopped because a team member noticed something unusual and followed the process.
The Weakest Link May Be Somewhere Else in the Transaction
There is another important lesson in these attempts: a fraudster does not necessarily need to compromise the organization holding the money.
A real estate transaction can involve our exchanger, attorneys, real estate professionals, closing agents, lenders, accountants and a qualified intermediary—all communicating with one another and exchanging sensitive transaction information.
A compromised email account anywhere in that chain may give a criminal enough information to impersonate a trusted party and attempt to redirect funds. That is why cybersecurity controls within one organization are not enough.
At 1031 CORP., we operate under the assumption that an email can look completely legitimate and still be fraudulent. Independent verification creates a second line of defense when another participant's email account—or even an entire email conversation—may have been compromised.
The Most Dangerous Fraudulent Email May Look Completely Normal
We often think of phishing emails as containing obvious warning signs: strange wording, suspicious attachments or requests that don't make sense. Today's wire fraud can look very different.
Fraudsters may know the names of the parties, details of the transaction and when a closing is scheduled. They may imitate someone's writing style or insert themselves into an existing conversation. In other words, the more a fraudulent email looks like it belongs, the more important verification becomes.
That is why our 1031 CORP. procedures are designed around something stronger than recognizing a bad email: we verify before we trust.
AI Is Changing What Wire Fraud Looks—and Sounds—Like
Artificial intelligence is making an already sophisticated form of fraud even harder to recognize.
Generative AI can help criminals create polished emails that mimic normal business communications, while emerging voice-cloning and deepfake technologies can make impersonation attempts increasingly convincing.
That changes an important assumption about fraud prevention: you can no longer rely on poor grammar, unusual wording or even a familiar-sounding voice as proof that a communication is—or isn't—legitimate. It also makes independent verification more important than ever.
At 1031 CORP., verification is not based simply on whether an email looks legitimate or whether someone contacting us appears to know the details of a transaction. Our procedures are designed to independently confirm critical information through trusted contact information and established processes.
As the tools available to fraudsters become more sophisticated, the answer isn't simply getting better at spotting fake communications. It's having procedures that still work even when the fake is convincing.
We Encourage Our Team members to Question What Doesn’t Look Right
At 1031 CORP., protecting exchange funds is everyone's responsibility. Our team members are trained to recognize the warning signs of wire fraud and to independently verify wire instructions rather than relying solely on email communications.
We also want our team members to know that slowing down and asking questions is encouraged. That is why 1031 CORP. pays a $1,000 incentive to a team member who identifies and successfully stops an attempted wire fraud.
The message behind the incentive is simple: if something doesn’t look right, investigate it. Make the phone call. Verify the information independently. Never allow the pressure to complete a transaction quickly to override the responsibility to protect client funds.
The Warning Signs Can Be Small
The most concerning part of sophisticated wire fraud is that the fraudulent communication may not look suspicious.
The warning sign could be something as small as:
These recent attempts reinforce one of the most important principles behind 1031 CORP.’s wire procedures:
Never rely on email alone when money is moving.
When something doesn’t look right, verify. Sometimes one phone call is all it takes to stop a wire from going to the wrong place.
Have questions about 1031 exchanges or want to talk through a specific situation? Contact us at 1.800.828.1031 or request a complimentary consultation.