Closing Wire Fraud: How to Protect Your Down Payment in a New York Real Estate Deal

A home purchase is often the largest payment a family ever makes, and it usually moves by wire. Criminals know this. They watch for real estate deals, impersonate the people you are working with, and try to redirect your money at the last minute. The good news is that a few habits can reduce the risk. They are precautions, not legal duties, and if a wire is diverted, banks and others involved in the transaction may have responsibilities of their own. This article explains how the scam works and what to do before, during, and after you send closing funds.

How the Scam Works

The pattern is consistent. The Federal Trade Commission warns that “Scammers sometimes send emails impersonating your loan officer or another real estate professional,” often “saying there’s been a last-minute change,” and that “They might ask you to wire the money to cover closing costs to a different account.” The FTC’s advice is blunt: “Don’t do it — it’s a scam.”

The Consumer Financial Protection Bureau describes the goal the same way: scammers “attempt to divert your closing costs and down payment into a fraudulent account” (CFPB, 2019; the page is now in the CFPB’s archive). The fake message may look exactly like a real one, with the right names, the right closing date, and a familiar signature block, because the criminal may have seen genuine emails about your deal.

How Big Is the Problem?

The FBI’s Internet Crime Complaint Center (IC3) groups closing wire diversions under business email compromise (BEC), which it defines as “a scam targeting businesses or individuals working with suppliers and/or businesses regularly performing wire transfer payments.” According to the FBI’s 2025 Internet Crime Report, released in April 2026, BEC drew 24,768 complaints and $3,046,598,558 in reported losses in 2025, up from 21,442 complaints and about $2.77 billion in 2024. In 2023, the FBI recorded 21,489 BEC complaints and about $2.95 billion in reported losses. The totals have stayed in the billions of dollars each year.

Those figures cover all BEC scams, not only real estate. The report does not separate out losses tied to closings. It does describe closing-related cases, including a Missouri senior who, while “attempting to close on a property,” received “a compromised email from the ‘title company’ containing wire instructions for over $1.3 million,” and buyers who “were closing on a home when they received an email impersonating their legitimate attorneys,” after which “[a] wire was submitted at their bank for over $449,000.” In that second case, the funds were frozen.

New York ranked fourth among the states in 2025 for both the number of complaints (45,255) and reported losses (about $1.23 billion) across all internet crime types.

Before You Wire: Prevention Steps

We recommend the following precautions. None of them is a legal requirement, and they are not the only safeguards in a transaction.

1. Agree on a verification method at the start. Early in the deal, ask your attorney how closing funds will be handled and how wiring instructions will be confirmed. Save your attorney’s and title company’s phone numbers from a source you trust, such as an engagement letter or an in-person meeting.
2. Confirm each set of instructions by phone. A practical safeguard is to call a number you already know, not one in the email, text, or attachment that delivered the instructions. The CFPB advises: “Before wiring money, always confirm instructions with your trusted representatives.”
3. Treat any change as a red flag. A new account, a new bank, or a new beneficiary name is a common sign of fraud. We recommend not acting on an emailed change until you have confirmed it by phone with someone you know.
4. Use two trusted contacts. The CFPB suggests you “Identify two trusted individuals to confirm the closing process and payment instructions.”
5. Keep financial details out of email. The CFPB says “Do NOT email financial information” and to “Avoid clicking on any links or downloading attachments without first confirming.”
6. Confirm receipt. After you send a wire, call the recipient at the known number to confirm it arrived.

If You Think Your Closing Funds Went to a Scammer

Move fast. The FBI’s guidance is direct: “If you discover a fraudulent transfer, time is of the essence. Immediately, contact your financial institution and request a recall of the funds.” Then:

1. Call your bank right away, tell it the transfer was fraudulent, and ask it to request a recall of the wire. Ask whether it will also contact the receiving bank. The phone call is the urgent step; then follow up in writing and keep a copy, so there is a record of what you reported and when.
2. File a complaint at ic3.gov. The FBI says: “Regardless of the amount lost, file a complaint at www.ic3.gov.”
3. Notify your attorney and the title company immediately, by phone, so they can alert everyone involved in the closing.
4. Preserve everything: the fraudulent emails (with full headers if possible), wire confirmations, and notes of every call.

Speed can matter. The FBI reports that in 2025 its Recovery Asset Team, working through the Financial Fraud Kill Chain, handled 3,900 incidents involving about $1.16 billion in attempted theft and froze about $679 million, which it describes as a “58% Success Rate.” Those are aggregate figures; whether any particular wire can be frozen depends on how quickly it is reported and on other facts.

Which laws apply to a stolen wire can depend on how the payment was made; federal courts are divided on some of these questions, and the issue is on appeal. Banks and other parties may have their own responsibilities, and some deadlines to act are short. Our guide to drained bank accounts and unauthorized transfers explains the federal and New York rules, and a lawyer can review your specific facts.

Attorney Escrow Basics

In many New York deals, the contract deposit is held in escrow until closing. The New York State Bar Association frames this as a question to settle in the contract: “Will an attorney or broker hold the deposit in escrow under appropriately worded escrow instructions?” There is no single rule for who holds it.

When a lawyer holds client funds, New York’s IOLA statute (Judiciary Law § 497) provides for an interest-bearing account “for the deposit by an attorney of qualified funds,” meaning funds that, “in the judgment of the attorney, are too small in amount or are reasonably expected to be held for too short a time” to justify a separate account. Larger or longer-held deposits, which can include many down payments, may instead go into a separate interest-bearing escrow account. Whichever account is used, it is a sensible precaution to confirm wiring instructions by phone before you send money, even when they appear to come from a lawyer.

How We Can Help

Rausa Russo Law represents buyers and sellers in real estate transactions throughout New York State. Part of our closing work is helping set up a clear process for confirming how funds will move, so that you know in advance who sends instructions, how to confirm them, and whom to call if anything looks different. Local customs vary by county and region, and we explain how funds usually move in your transaction. For an overview of the full transaction, see our guide to buying a home in New York.

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