Beware of Business Email Compromise Scams

Commercial real estate can be especially vulnerable.

True story. An employee of NETSTREIT, a real estate investment trust, wired $3.3 million to someone pretending to be a development partner of the company. Business email compromise scams, or BECs, targeting the real estate sector in 2022 affected 2,284 victims and led to losses of $441.1 million, according to the FBI’s Internet Crime Complaint Center. Here are three common fraud types:  

Wire Fraud
JPMorgan Chase describes a typical pattern: A criminal gains access to a known party’s email. The criminal monitors communications and waits until money is about to be moved. The criminal uses a compromised, authentic account or spoofed email address to impersonate the known party and directs the buyer to send funds to an account that the criminal controls.

Rent Fraud
Rent fraud occurs when people advertise space for lease at properties they don’t represent. Scalley Reading Bates Hansen & Rasmussen PC, a Salt Lake City–based law firm, cautions, “They might take a deposit or first month’s rent and then disappear.”  

Title fraud
Title fraud takes place when fraudsters manage to transfer an owner’s property title to themselves, often using forgery or identity theft. “They might then take a mortgage out on the property or even try to sell it,” warns the Salt Lake City firm.  

Cultivate a healthy dose of skepticism
Be wary of deals that seem too good to be true, as well as “urgent” requests to wire money. Make in-person visits to properties, and “always verify wire instructions with known, trusted parties using previously confirmed contact details,” the law firm advises.  
Adapted from “Safeguarding Against Fraud” written by Rachel Antman, a writer and founder of Saygency, LLC, and published in the winter 2024 issue of SIOR Report.