A Real and Serious Threat
Wire fraud is one of the most serious risks at closing, criminals intercept or spoof communications to trick buyers, sellers, or escrow into wiring funds to a fraudulent account. Because business closings involve large wire transfers, they're a prime target. These scams have cost people their life savings and killed deals. The good news: a few disciplined habits, above all, verifying instructions by phone, prevent nearly all of them.
Whether you're buying or selling, get a broker's guidance to navigate escrow and closing smoothly, and avoid the delays and pitfalls.
How Wire Fraud Works
The most common scheme is business email compromise (BEC). Fraudsters gain access to, or convincingly spoof, an email account, escrow, a broker, an attorney, and send fraudulent wiring instructions that look legitimate. Often they strike near closing, when a wire is expected, sending "updated" account details at the last minute. The victim wires funds to the criminal's account, and by the time anyone notices, the money is gone.
The Golden Rule: Verify by Phone
The single most important protection: always verify wiring instructions verbally, through a known, trusted phone number, before sending any funds. Don't use a phone number from the email, look it up independently. Confirm the account details directly with your escrow holder by voice. This one habit defeats the overwhelming majority of wire fraud, because it breaks the criminal's control of the communication channel.
Treat Changes as Red Flags
Be deeply suspicious of any last-minute change to wiring instructions, a "new" account, "updated" details, or urgent requests to wire immediately. Legitimate parties rarely change wiring instructions at the last minute, and when they do, they'll readily confirm by phone. Urgency and secrecy are hallmarks of fraud. Slow down, verify, and never let pressure rush you into wiring funds.
Escrow Safeguards and Good Habits
A reputable escrow holder has security protocols, but you should still: verify all instructions by phone, be cautious with email, confirm receipt of wires, and keep sensitive details secure. Both buyer and seller should stay vigilant through closing day, when the risk peaks. A moment of verification is nothing against the cost of a lost wire.
If You're Targeted or Defrauded
If you suspect fraud or wired funds to the wrong account, act immediately: contact your bank to attempt a recall, notify the escrow holder and other parties, and report it to law enforcement (the FBI's IC3 for internet crime). Speed matters, funds can sometimes be recovered if caught quickly. But prevention is far more reliable than recovery, so make phone verification an unbreakable rule. See closing successfully.
Note: This article is general educational information, not legal, tax, or financial advice. Escrow and closing requirements vary by state and deal — work with a qualified escrow holder, attorney, and CPA.
Frequently Asked Questions
How do you prevent wire fraud when closing a business sale?
The single most important protection is to verify all wiring instructions verbally through a known, trusted phone number, not one from an email, before sending any funds. Treat any last-minute change to wiring instructions as a red flag, be cautious with email, confirm receipt of wires, and never let urgency rush you into wiring money.
What is business email compromise?
Business email compromise (BEC) is a scam where fraudsters gain access to or spoof an email account, escrow, a broker, or an attorney, and send fraudulent wiring instructions that look legitimate, often near closing when a wire is expected. The victim wires funds to the criminal's account, and the money is usually gone by the time it's noticed.
Why is closing day risky for wire fraud?
Because closing involves large wire transfers that criminals target, and the timing is predictable, fraudsters strike when a wire is expected, sending 'updated' account details at the last minute. Both buyer and seller should be especially vigilant on closing day, verifying every instruction by phone before sending funds.
What should I do if I'm a victim of wire fraud?
Act immediately: contact your bank to attempt a recall of the wire, notify the escrow holder and other parties, and report it to law enforcement, including the FBI's IC3 for internet crime. Speed matters, funds can sometimes be recovered if caught quickly, but prevention through phone verification is far more reliable than recovery.
Protect Your Closing From Fraud
Martin Navarro helps buyers and sellers close safely, with the right precautions in place. Let's talk, confidentially and with no obligation.
Request a Confidential Consultation Call or text: 818-633-3254 · 365navarro.martin@gmail.com