In the past decade property Transactions have increasingly become a prime target for cybercrime. Instead of slowing down, the scams are becoming more prevalent, sophisticated and difficult to spot as fraudulent. With October being Cybersecurity Awareness Month, it is important for the real estate industry and consumers to speak out and share how these real estate cybercrimes can be prevented.
Wired real estate fraud – a scam in which a buyer is tricked into transferring money to a fraudster – has increased as home prices have risen. Using a technique called phishing, a fraudster collects private information through a website form, email, or phone call. They then use that information to check the consumer’s email account and identify if he is purchasing a home. If a consumer is in the process of purchasing a home, the fraudster will send false wiring instructions to the home buyer before closing, often appearing to come from a trusted representative in the transaction.
FBI facts shows that real estate transaction scams have increased over the past decade from less than $9 million in losses in 2015 to $446 million in 2022. While consumer education has increased significantly in recent years, CertifID’s State of Wire Fraud Report shows 2024 that approximately half of consumers indicate that they are not sufficiently aware of the risk of fraud with real estate transactions.
How consumers can protect themselves
Consumers can take proactive steps to protect themselves against real estate transaction fraud. Firstly, wiring instructions should always be confirmed in person or over the phone to a known number before transferring any money.
If wiring instructions are sent by email, look for changes in the expected email address, such as adding or removing one or more characters. Any instructions labeled ‘urgent’, ‘secret’ or ‘confidential’ should also be heavily scrutinized.
Consumers should also avoid emailing financial information such as bank account numbers. If a website asks for financial information, make sure the site is a trusted URL that starts with “https.”
To prevent fraudsters from gaining access to your email account, consumers should be careful when opening attachments or downloading links from suspicious emails. Keeping an operating system browser and security software up to date can also ensure suspicious emails are flagged.
What should you do if you or someone you are a victim of?
If you suspect you are a victim of real estate transaction fraud, acting quickly is critical. Contact your financial institution immediately and ask them to contact the financial institution the transfer went to.
Then contact a local FBI office, which will assist you in accessing or freezing the fraudulently transferred funds. Finally, you should file a complaint with the FBI’s Internet Crime Complaint Center at www.IC3.gov.
What the title industry does
It has long been a priority for the title industry to increase awareness and identification of real estate fraud. Through consumer alerts on websites and email communications, preparedness tools and other educational resources, the title industry is working to thwart these scams.
Beyond education, industry efforts are also working to limit its impact. According to an ALTA survey, in 2022, 26% of title companies reported that they were able to recover the total amount of money wrongly transferred due to fraud, compared to just 17% in 2021. Additionally, two-thirds of companies reported that they were able to recover more than half of the amounts had been recovered. of the stolen funds.
Collaboration between the real estate industry and federal agencies is also critical to addressing this problem. The title industry works closely with financial institutions and the FBI to recover improperly transferred funds. Furthermore, by working with industry and federal partners, it is easier to identify perpetrators and dismantle their organizations.
From placing a warning on an email signature to working with government agencies to identify fraudsters, real estate professionals can protect consumers and their hard-earned savings from bad actors.
Diane Tomb is CEO of the American Land Title Association.
This column does not necessarily reflect the opinion of HousingWire’s editorial staff and its owners.
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