Understanding and Avoiding Fraud

Fraud is a Fact of Life

It may seem like fraud is a relatively new idea, but it has been around as long as man has walked the earth. Once people started seeing a way to gain an advantage by tricking others into believing things that were not true, fraud was born. Counterfeiting tries to convince people that fake money is real. To-good-to-be-true land deals were rampant during the expansion of the United States. People attempted to convince others that they owned a piece of land and were willing to sell it cheap. People have always tried to persuade others into believing that they are something other than they truly are. Nowhere is this more evident than in the dating world!

With the introduction of the Internet, fraudsters were given tools that extended their reach not only worldwide but also expanded their possible pool of people to defraud into the thousands or millions. To make matters worse, they could now do it much more easily, much more quickly and with a high level of anonymity. Our lives got a lot more troubling.


Why Fraud Attempts Work

One of the hallmarks of fraudulent scams is that they prey on our sense of fear and compassion. To tap into our fears, the swindle will involve creating a sense of urgency.

"Act now before you miss out on a chance of a lifetime opportunity!"

"Attention! Act now before something bad happens!"

Others are designed to make us feel bad if we don't respond.

"I'm in some troubling situation in a foreign country and need help escaping."

"Grandma, I'm in trouble and need you to send me some money."

Yet another way we are tricked into the deceitful trap is by inundating us and taking advantage of our busy lives. If one in a thousand scam e-mails gets someone to click on a link and provide sensitive information, then the scammer can increase their gains by sending out 100,000 e-mails every day. This is why we receive so many phishing e-mails... better odds for the person running the scam.

Areas of Focus

It goes without saying that the main focus of fraud attempts is for financial gain. Thus these disreputable people go where the money is. They try to spoof banks, credit card companies and other financial institutions. This includes companies that facilitate movement of finances, such as real estate companies.

It is well known that buying a home will likely be the largest transaction you make in your life. Larger amounts of money means a larger draw for scammers.

Scam Definition.jpg

How to Avoid Real Estate Scams

The most important thing to do is to know the parties you will be involved with. Know them by name and phone number. Someone can call you pretending to be a lender, but if the phone number is not one from the lender's institution, beware. Even if the number looks right, be suspicious if the caller asks you for personal information or to provide money, phone numbers can be spoofed. Never be afraid to tell the caller that you want confirmation that they are who they say they are before you divulge any sensitive information. You can do this by calling them at a known good number or meeting them in person at a known, established place of business.

In the case of e-mails, it can get more difficult because we tend to trust what our eyes tell us.  If it looks official we don't question it. If a scammer gets a hold of an official e-mail, they can duplicate the look of it, right down to the colors, images and signature.  Double check the sender's e-mail address to make sure the domain (what follows the @ sign) belongs to the company you are dealing with.  Never provide sensitive information via e-mail.  Never click on links in an e-mail unless you are sure the e-mail is from a trusted source.  Verify the link's URL before clicking on it.  You can do this by hovering over it on a computer or pressing and holding on a mobile device.

Treat text messages as a hybrid of phone and e-mail. It may look like it comes from someone official, but never act upon a financial transaction solely from a request in a text message. And never send personal information via text.

Scammers want to get in and out quickly.  The more time they have to spend on a scam the less profitable it becomes.  Avoid anyone who pressures you.  In a real estate transaction you should never be asked to wire money or otherwise be requested to provide funds except in person, typically in a meeting with the title company.  There are always exceptions to the rule, but in general, expect all monies to change hand in person.

When you are in a situation where money is involved, whether real estate or not, be vigilant and think before you act.  The harder it is to reverse an action the more you should be thinking about it before you do it.  How hard is it to get your money back once you give it to someone else?  Very hard.  Take your time.  A few extra moments of cautious action is far preferable than months or years of painful regret.