Industry sign banking kansas warranty deed computer
do I do the introduction yeah I'm a little casual today sorry about that all right look we're just concerned about security yeah so let's talk about security okay so the cameras here the powerpoints there yeah but we're gonna be up in the corner right we're gonna be up in the corner yeah okay folks welcome to the fraud session this is being recorded for night bury employees and and the public website yeah the public website yeah so this will be on YouTube will be stars on YouTube so hi my name is Sherri hippin background counsel at Nick very title I'm Craig Haskins the chief operating officer of my very title we're gonna be talking about fraud in two different segments today the first segment is what are some new scams that are out there what are criminals trying to do to try and just steal money from I mean from whose perspective from you're gonna carjack me no I am talking about real estate transactions in how criminals that are not initially in the United States that are literally overseas sitting up there in their pj pants on their computer are able to steal money from transactions in the united states transfer money overseas and it's not going to be recovered by people in the real estate transaction in the united states we're gonna talk about that first second section that we're gonna talk about yeah we are a second second section we're gonna talk about is things that you can implement with your own IT if you have your own email account not through a public rather a company server some ideas that we have that might be able to help you to not be the subject of a particular fraud that we're gonna talk about why are you picking on these folks from overseas why couldn't someone I don't know and those you know the those goofballs in like let's say Tallahassee Florida working on their degrees at Florida State University obviously going nowhere oh I'm a gator oh we're in Wisconsin but I'm a gator anyways why couldn't they be in their awful dorm rooms without air conditioning hacking in what why can they do it well they could join overseas they could certainly do it however if they keep the money domestically United States we have a great system called the FBI that's gonna come after them oh so if it's gone overseas it's a little harder to go and get the money that's right cover it so we're basically saying this is sort of from a title company perspective but also real estate agents and lenders and people involved in the real estate transaction would be interested and they probably learned something from this but this is sort of from our perspective when we mix in a few other things so I'm saying I think the title of this I mean you see right here we're gonna have a presentation that says don't trust email call to verify wire instructions in fact that's it we're done with the entire presentation don't trust email call to verify wire transfer instructions now we're gonna get into the whys so you're saying if someone calls to verify a wire instruction then 99% of this rest of this session is worthless although it's kind of it's kind of fun to watch because we're gonna tell you how some of the crooks do these things right leaving 97 percent all right let's do this all right there's our information in the bottom and then I have to tap this there we go what's at risk let's go for it money people are trying to steal the money keep going the hackers they don't care they just want your money and anyone's money and what's the easiest way to steal money oh no why I didn't pre look at these you know I'm not the best preparer but you know the good Florida Gators and the Marquette University grad students we we can wing it on the fly right that's sure well it's the easiest way to steal money a stick-up yeah I know that's pretty hard I actually have to get out of bed get dressed usually wear something dark have a gun and then go find you that's true so that isn't the easiest what's alright so should I press the button let's find out all right well if we don't tell you the answer the answer the easiest way I I kind of alluded to it cuz I said what to do a stick-up you had to get up and get dressed and go out of your house yeah the easiest way steal money is be in your bed with a computer okay that's it this is what happens we're gonna talk about you here all right what's eek-eek is email account compromised that's what we're talking about we're talking about some sort of criminal whether domestically or overseas but many times is overseas sometimes in Tallahassee Florida Donna is going to deposit malware onto somebody's computer and then pretend to be that somebody in sending out information in the real estate transaction world it's malware is deposited on there's a lot of people involved in a real estate transaction let's see let's go through that I think it's six buyers buyers sellers sellers Realtors I'm reading off the screen lawyers lenders title companies those are some realtors on both sides lawyers on both sides a typical rest anchor and a banker typical residential tries actually gonna have six to seven people in the email chain if one of those people six or seven in that email chain has their email compromised or their computer compromised so then the fraudster the criminal is going to know a number of different information about the transaction wait how would I mean in the real estate world everyone uses super secure network super encrypted type data packages and storage so I'm kidding all right I made my point let's keep going all right so the Internet Crime Complaint Center of the FBI they're just basically a complete Center where people say hey I had money stolen has identified that from July 2015 to March 2016 the each email account compromised for real estate transactions there was 925 reported losses of which thirty four million dollars was by by front away $37,000 average loss and I suggest to you that negative twenty five reports probably pretty low Craig isn't it yeah because I'm guessing and I did actually talk to you about this one I'm guessing if you've been compromised if your title company ABC in Topeka Kansas where these cities come from and someone's hacked your account and has compromised your systems and tricked one of your people into wiring some money that's probably pretty damaging if everyone knows that right the Reformation might be the reputation and and maybe you keep that on the down-low watch the 37,000 go away that's some implement that's a very expensive tuition that you've just paid to learn how to protect yourself and your company from this and maybe you don't report it so what this is this is a free seminar but for this somebody could save thirty seven thousand dollars right yes and you can go ahead and transfer that money to my PayPal account for this free seminar all right what's next uh the bigger one we're talking about eeeek which is a relatively small portion of this compromising the bigger compromising is business email compromised go to the next if you be so kind it's somebody pretending to be a CEO of a company and sending an email to somebody who's I don't know in the accounting department of that County and says hey why don't you just wire money overseas for me and the person says why wouldn't my CEO tell me to wire money overseas yeah okay no sense had this today you did did you see the I did see to the whole company an executive in our company emailed me and said hey I need to wire some money real quickly today what do you need to get this done and I'm thinking she's never ever requested money or a wire and this is odd this one I think is interesting because I don't even think the computer system needs to be hacked at all and just know our computer it wasn't it simply somebody went onto our public website met very calm and said well who are the owners of the company doesn't have it on the it doesn't have the the owners on the website I think that I think the person either knew who the owner was or pick some random names on our website and creating an email account and you can create an email account today that's abc123 at gmail.com but the display name will say very important person so it came to me looking for me looking like a very important person but behind the name very important person was some weird fake email address and sometimes they'll even create emails for example we saw one our owner is Jeff at night very calm which is actually on our website Jeff doesn't say what he does yes it doesn't some of the stuff does but so instead of Jeff at night very calm the email was Jeff at night kay and one the number one ght very calm so switching eyes two eyes two number ones jeez two queues people can create mock emails they're very very close in nature so wait so what happened in our in my situation first of all I knew she would never request money so I knew it was a scam deleted it send it to our IT to block feature anything like that from that particular email address coming in as a fake but the other thing we know is from your first slide let's say I did fall for it oh wow she needs some money she's in her hurry boy root and she's my boss I better get this done now I would probably have I've called her picked up the phone and you can huh stop now again and you've learned everything from this session if I were to call her there's a lot of people got fooled by this by the way I know there's find out how many people got fooled by this okay because every time I read The Wall Street Journal or newspaper publications on the Internet having to do with scams lots of people get burned wow that's a lot of people a lot of people 16,000 reported between that time period at two point three billion dollars of loss that's like two years in a month right that's a lot of money that's a lot of money and that's only three November 2015 this thing is getting more common every single day well let's go to the straight-up hacking and fraud so this is this is the old school right this is where people used to hack into your computer you'd fall for something they'd sit in your computer and watch your screen all day from China Russia or whatever some overseas company or overseas country and they're watching you all day waiting for you to log in to a banking site so that they can steal your login and password and this was pretty rampant in our industry in the settlement industry in 2010 2011 million dollars millions of dollars are lost but by the way the fraudster the criminal is sitting at their computer in at their home well I didn't this is actually harder scam than the next one we're going to talk about yeah this is harder to write because they actually have to do something they have to kind of monitor they have to be involved they have to see when somebody's jumping into a the online banking system and then they have to react so they have to be available at all hours of the day now this stuff wouldn't hurt our company but in many companies that are in our industry because we have you can't just one hackster as a hacker that's a good name I like it the quarter one fraudster can't get one login and password and then deplete our banking accounts it takes most title companies the good title companies have more than one authorized user to transact business and they both have key fobs and encrypted accounts and passwords and then how our company has another layer right we do we'll talk about that but that was as about 2010 I think prior to 2010 2011 it wasn't standard practice in the industry to have dual authorization and we put a couple extra layers on there we have we don't what let money go directly from us overseas we put caps on the dollar amounts that people can send every day and then we have daily three-way reconciliation yeah that just means that just means accounting every day for every dollar that comes in and out of our company the standard in the industry the standard in the industry is monthly reconciliation and we do it daily because we need to keep a good eye on every penny coming and going because security for your money is our number one priority hey here's a fun one all right this is a fun one so I told you it was it was kind of hard the frosters back in 2010 they actually had to monitor online wire transfer instruction and bank in some oh and now what the heck why don't they just ask people just give me the money why don't you just tell me the movie you want to see and it's worked there's there's like I'm gonna say 10% of the people watching this actually got that bill and if you haven't look up don't tell them let's just leave it like send me an email and I'll give you information right there all right in 2015 June night Barry started seeing some emails that came through that we said well that's pretty suspect and we had procedures in place to protect against just sending the money overseas but wanted to give you an example of what we started seeing in June of 2015 is a real one this is a real transaction okay so so you're saying this is fake this is a fake email that received it's miserable email but it's not from the people who we were dealing with Stuart and Wendy on this transaction and there were our sellers so Stuart and Wendy were selling the property in Madison they did so actually the Friday before then on Monday our closer who is Beth Gilbertson which is the correct email receives as our email address receives this email that says hey well we don't like checks we'd rather have the money wire transfer 20 yeah you remember back Friday you gave you that big check and I thought that was cool I was getting that I don't really want that check why don't you just give me the money give me the money and so okay well fine if you were at the closing table and we're ready to hand out checks and you said could you wire this money to my account for a number of reasons I'm gonna use it to buy my next house in an hour or other reasons we can accommodate and we have controls in place but waiting through the weekend and asking us so that might that's red flag number one right because you could have deposited that check in on Friday check Friday and getting us to give you the money twice well let's what about some of the language in an email that might raise a red flag our bank manager advise us wire would be faster instead of check that's true how about we have void the check that's true because you just throw away it we want to attack and trash the voided check so there are some obvious english-language struggles with this sender and I think the name on the account the recipient the proposed recipient was a well you would think of the seller of the property would get the money right well yeah that's typically how it works who's your delica enterprises develop it I don't know and you notice I didn't blur that out this particular example that because well these criminals do is they open up one bank account in your Delco enterprises inc probably a different name now probably not gonna use you Delco anymore and they send out hundreds of these emails and if one of the email hits they've made their money right one closer is fooled so how could we have prevented this and what Beth did pick up the phone and all Stewart and Wendy hey did you really just email me this and what else she did is number one no there's no phone number here these people were kind of interesting don't I think this fraudster was interesting because this fraudster in this case sent the email and then picked up the phone and actually called Beth oh wow yeah so we don't trust that we don't take incoming calls we outgoing call unsolicited requests for money and we don't use an EF phone number that would be in this email we would go back to the listing agent and say hey do you have a standalone phone number for these sellers that we can refer just pick up the phone and call and we've been communicating with Wendy and Stewart this whole time but not through a Stewart underscore whatever at mail calm we've been communicating with Stewart and windy in a different address so all of a sudden we have this new email address we've never seen with terrible English and a weird request to wire money to an account that doesn't even match the name of Stewart and Wendy but I want to point about that terrible English thing this is June of 2015 so somebody in the transaction had
a compromised computer system when maybe a real estate agent maybe maybe Stewart or Wendy very posh or the buyer could have been as well buyers someone in the seven people you named earlier has a compromised email the fraudsters just sitting in their email wading through all this boring email and because they know you're in the real estate industry they're waiting for the next closing hey we have a closing Friday yes we've got a live one so they figured it out they knew there was a closing Friday they knew that they could wait over the weekend and call Monday for their for the compromise but you were saying the the language is a little bit off here that's the language of June of 2015 the language now I saw one a couple weeks ago is much better see these people actually have made money and they've hired somebody that has English speaking as a primary language and now they have much better much better language alright alright so that's number one that's currently going on that's the seller procedural yeah that's number two okay so a proceeds fraud that started in 2015 hey how do you protect against it pick up the phone and call we've already given that answer sherry I'm just gonna keep saying it ninety nine percent and then also night Barry has a procedure in place where we have wire transfers are not touched by one person or company not touched by two people or a company but actually touched by three people our company and we have a checklist and Craig loves that I love checklist but I have checklist that our closer actually has to provide a bunch of information to that third person to make certain that we are not going to be fooled but is it true sherry that in law school the first class they teach you lawyers is checklists 101 clearly you didn't go to law school didn't high cookie law school I've got an MBA we don't need checklist because we have lawyers I'm kidding so yeah sherry is this amazing necklace and it has a lot of steps that our staff has to comply with before they can wire and and just to let you know to two people can initiate the wire but nothing the third person that hits the red button is in a different location than everyone in a bunker and doesn't know or befriend anyone in the company so the chances of three people colluding together to steal money is very tough to do plus we have procedures in place like a third party system called Rhino that we have protection we have insurances we vet the heck out of our employees and anyways so hopefully this stuff doesn't hit us it's not impossible but but and we have insurance if it whatever so we have these things in place which might be unlike some title companies alright alright so that's number two number three this is a really scary one so the fraudster the criminal is like okay now people are figuring out that the seller proceeds I can't steal well what other money in a transaction of real estate transaction in the United States so telecom B's now won't hopefully won't send out seller proceeds via wire transfer instructions without calling but who else gives money or receives money in a real estate transaction the payoff lender o X direction the I'm looking what is it it says buyer purchased funds Oh buyer oh that I'm sorry so what on the screen so the the fraudster says well I can't fool the title company as much anymore I was able to pull them for a little while who else can I fool yeah are you talking about the down payment or earnest money down payment earnest money or if it's an all-cash transaction of the buyer yeah get the buyer to wire in the wrong money that are the right money to the wrong place perfect that's what exactly what it is okay so rather than trick the title company to send it you trick the buyer because the buyers in that seven years your email chain say hey buyer here's where you need to send your money for your closing that's happening Friday I got let's go to the next one and and it worked and going but how do you stop it have the buyer pick up the phone and call or Gore yeah and here's a nice little reference here go back I can't go back you can't go back no all right then I can't go back all right one point nine million dollars buyer was fooled in November of 2015 one point nine million dollars sent to the wrong account of which the buyer was able to get back one point seven million dollars they were able to do so because they acted within 24 hours the key and this is if you get fooled whether it's our proceeds being sent up by our purchase funds coming in anything the faster you act the better the opportunity you get the money back so 1.7 million dollars we recovered by the buyer there's two hundred thousand dollars that's still missing if you will because it got sent overseas and so who did the buyer soup everyone everyone what did I get that right to figure out how to go back and I did not do that so red flags are we ready for this let's go to red flags oh that the next slide we missed it the next amount of money that people are frosted are trying to steal in a purchase transaction sale transaction the big money is the sellers proceeds as well as the mortgage Wow hands on how much equity you have right I think the bigger money is usually the mortgage payoff so now fraudsters are actually working a little bit harder than they were before they're mocking up mortgage payoff letters yeah and this is easy I'm in the email chain one of the seven emails compromised some fraudster in Russia I'm watching I now take over the compromised email I know that there's I've looked at the closing statements because I'm in your email mr. so hundred fifty thousand dollars and you can see a perps cell pay it pay off to ABC Bank wire proceeds attached fraud sir opens up a word doc creates a duplicate of that proceeds or that flag off letter and instead on the bottom where it says please wire the payoff funds to they change the information on the bottom so now the unsuspecting title company whose wiring out the payoff funds is wiring and courting these instructions on letterhead that looks really good from ABC and sends it out because they're getting a lot better right more sophisticated so we're not we do not night Barry probably best practices for all of you we do not accept unsolicited payoff statements payoff statement that just comes to our closer unsolicited no way our closer needs to call and verify did you hear that call and verify not just take a NEMA oh here's a PDF some weird email sent me that everything looks the same except the wiring instructions all right so red flags email with wire transfer instruction so we're gonna stop we're gonna pick up the phone the call visibly altered documents sale with money back to buyers I just think that's odd buyers are coming in with money last-minute changes of ownership keep going last-minute changes of liens last-minute powers of attorney hey last-minute anything yeah we don't like last-minute things there's something fishy that's another issue I'm good at last-minute things doesn't mean we like them but we're gonna sniff it out all right something's wrong something might be wrong keep going and is this English good that's good but does this be good English do you avoid the Chuck B I mean major advisor advise me to void check and why we almost care because what would you do if you were the seller and somebody wired your proceeds over seats I would sue everyone and you were the buyer and you wired your purchase funds in I'm good you're suing everybody everybody sued everybody pays because the real is that going it's not going to trial it's not going in litigation for Chuck $125,000 everybody gets sued and everybody pays to compromise and settle and just as a little hint there is a new insurance policy called a social engineering policy might be an standalone policy or an endorsement talk to your insurance agent if you're a realtor a lender title company and see if it's available for you and act quickly if you're hacked act quickly if you're hacked so that was your last and that's it for now we're gonna come back in here we're going to talk about some measures that you can take to protect your email and your computer system fantastic thank you
