Bulletin: SLS2013012

Date:
September 03, 2013
To:
All Issuing Offices
RE:
CLAIMS AVOIDANCE - Wire Transfer Fraud Involving Compromised Email Accounts [Revised 6-02-14]

Dear Associates:

This bulletin advises you of a fraudulent scheme involving the hacking of email accounts and the misdirection of wired funds. The situation involved a split closing (where different settlement agents handled the seller’s side and the buyer’s side of the transaction), but the potential for loss exists in other closings as well.

We have been advised that the email account of an agent handling the seller’s side of the transaction was hacked or otherwise compromised. That office’s email account was used to send fraudulent wiring instructions to the office that was handling the buyer’s side of the transaction and acting as the settlement agent. The recipient of the bogus wiring instructions on the buyer’s side wired the funds as instructed. As a result, the funds that were intended to go to the agent on the seller’s side were diverted to the perpetrators. We have been advised that law enforcement agencies are investigating.

We recently became aware of another manifestation of the scheme. A real estate broker’s email account was hacked or otherwise compromised. Although legitimate wiring instructions had been in place pursuant to the transaction documents, the broker’s email was used to send new, fraudulent wiring instructions, purportedly coming from the broker, to the office handling the closing.

Please consider the following best practices when handling wire transfers:

  1. If you are sending a wire, try to call the intended recipient to confirm the accuracy of the wiring instructions prior to initiating the wire transfer, unless you know that the wiring instructions are legitimate (e.g., from prior transactions). Before calling, try to confirm that the telephone number is authentic, since this can be bogus as well. If possible, speak with someone you know personally. 
  2. If you are expecting a wire and it does not arrive, promptly contact the sender to advise them that you have not received the funds.
  3. If you are sending a wire and you receive new or conflicting wiring instructions, even if the new instructions purportedly come from someone with whom you have communicated previously, try to confirm the authenticity of the new instructions by seeking independent verification directly from a person known to you, using a different medium, e.g., by phone, before initiating the wire.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
SA2013003 SPECIAL ALERT - Bogus Email Requesting Wire Instructions
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None