In June 2018, federal authorities coordinated a major law enforcement effort to disrupt international BEC schemes designed to intercept and hijack wire transfers from businesses and individuals. The six-month sweep called Operation Wire Wire resulted in 42 arrests in the United States and recovery of approximately $14 million in fraudulent wire transfers. The sting highlights the alarming growth of wire fraud. According to the FBI’s 2017 Internet Crime Report, the Internet Crime Complaint Center (IC3) reported losses exceeding $1.4 billion last year. More importantly to the title and settlement services industry, Business Email Compromise (BEC)/Email Account Compromise (EAC) was the top crime in 2017 with the reported loss at more than $675 million.
Both scams typically involve one or more fraudsters, who hijack legitimate business email accounts through social engineering or computer intrusion techniques to conduct unauthorized transfers of funds. Criminals committing wire fraud are growing their range of targets as well, with the homebuilding industry increasingly in their crosshairs, according to a white paper published by CertifID. The paper titled “Wire Fraud Begins to Hammer the Construction Industry,” details frauds perpetrated on homebuilders, illustrating how fraudsters prey upon the builders. Using a few sensitive, stolen details about a pending transaction, criminals send convincing yet false payoff letters, open bank accounts in the name of the targeted developer or employ a technique known as identity spoofing.