Wire fraud is on the rise and it's best that all parties to a transaction must be diligent about falling victim to a fraudster's wire instructions. If you do, there is little that can be done to reverse the transaction.

Below is a true story that illustrates how wire fraud is perpetrated - read and be wary.

A Colorado couple recently lost their life savings – a $272,000 down payment – as a result of wire fraud. Now they are filing suit against the bank, the title company and the realtor alleging that none did enough to protect their financial information.

But whose fault is it, really? After all, it is the buyer who actually wires their money to the fraudsters.

Here's how the wire fraud process typically works:

1. A hacker obtains a realtor's transaction management/e-signature system login credentials by using a phishing email that looks like it’s from the transaction management system.

2. The user first types their credentials into the fake transaction management website, then are forwarded to the real one where their credentials work. They never even notice they’ve been phished. They just think they mistyped a password the first time.

3. The hacker logs into the transaction system to identify target transactions and collect information to fool participants.

4. If the agent uses the same credentials for both email and the transaction system, the hacker now has access to the agent’s email.

5. The hacker may set up an email-filtering rule so emails from the client “skip the inbox” and go right to the hacker.

6. Emails to clients can now be sent from the agent’s real email address.

7. In this case it’s not a spoofed email in which the email looks like it’s from the agent’s account but is actually from a different account.

8. Changing their email password may help, but at this point, the hacker only needs to spoof future emails—and unless the agent notices the filtering rule, the hacker still has access to those email conversations.

9. Because the hacker has information about the mortgage and title company from the transaction system, they can spoof an email from those parties, too.

10. When a client receives a spoofed email from multiple parties that confirm each other’s message, they’re more likely to trust each of those emails.

11. From that point, it’s a typical wire fraud scenario: At the appropriate time, the client is told to wire funds to an account the hacker has access to.

The consumer is the only one that can prevent wire fraud. You must confirm any wire or other disbursement instructions received by email with a phone call to your realtor or title company’s office. Do not call any phone numbers that are listed in an email. This could be a part of the scam.

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This was a guest post written by Kyle O’Connell who is an Account Executive for Coastal Title Agency in Freehold, NJ. Coastal has been in the title insurance business for over 30 years and services the commercial and residential markets. Although Coastal follows ALTA Best Practices to protect escrow funds, wire fraud can circumvent these protections. All parties to a transaction must diligent about not falling victim to a fraudulent wire scheme.