How to Spot Real Estate Fraud
As fraud continues to target real estate transactions and divert settlement funds, we want everyone involved in the process to be on alert at all times. This blog provides several examples of what forms fraud can take, so you can avoid being scammed.
PHONE CALLS
"Hello, this is John Doe from Doe Title Company. How may I help you?"
"This is Sarah Seller; we are selling our property at 123 Wishing Well Way. We've switched banks due to our relocation and we are going to need to have the proceeds from our sale wired into our new bank account. Can I give you the updated wiring instructions? Do you have any forms I need to sign?"
"Certainly! I can assist you with this. Let me pull your file. One moment, please."
It seemed like a reasonable and legitimate request. A seller calling the closing company and providing updated bank account information. So, proceeds of $75,567 were wired into the new account. An account, which it turned out, did NOT actually belong to Sarah Seller. That phone call? It was a phony.?
Unfortunately, this isn't a fictitious story. It's true. The Title Company did receive wire instructions, but they were from the alleged "seller" and resulted in funds deposited into the criminal's bank account.?
The names and details in this story have been changed for privacy reasons, but it's important to understand how fraud is targeting our industry. And while phone calls and spoofed emails are still common tactics, criminals are stepping up their game.
ARTICIAL INTELLIGENCE SCAMS
Sophisticated fraudsters are now using artificial intelligence (AI) to impersonate voices of real people and create false videos known as deepfakes, making it more difficult to spot bad actors. For example, a Florida woman used AI software to impose the face of a missing California woman onto her own, so she could pose as the owner/seller during a Zoom call with a title company. Although the attempt was unsuccessful, more like it are sure to follow. Fraud detection software is available, but there are still several ways humans can spot fakes and phonies.?
TIPS FOR PROTECTING REAL ESTATE TRANSACTIONS
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Settlement Agents
It may seem repetitive or inefficient but take the time to verify calls and changes...every single time. As the steward of real estate transactions, you're entrusted with ensuring that all details are correct throughout the settlement process.
Be on the lookout for signs of seller impersonation fraud and carefully scrutinize all remote interactions, including videos and photo identification. Fraud detection software is available, but there are still several ways humans can spot fakes and phonies. ?
5 Tips for Spotting Fake Images & Videos
Buyers & Sellers
Please be patient during the settlement process and rest assured that security protocols are in place to protect you and your money. It's very rare that wiring instructions for the proceeds of a real estate transaction will change.
If you receive notification regarding a change via email, text, fax or phone, stop and verify instructions before making any changes. Contact your attorney, real estate agent or title agent at a phone number you have used to contact them before (not a new number supplied in the notification) to verify any changes. If you’re closing remotely, be sure you’re using a secure eClosing platform like Pavaso.com.
Final Thoughts
Knowing that cybercriminals and fraudsters are increasingly attempting attacks via phone and video, all parties involved in a transaction should ensure they are making and receiving phone calls from approved phone numbers on file. Confirm who you spoke to and approve the details of any change to wire instructions. Steps that may seem time-consuming and repetitive could save funds from being diverted and stolen, and protect buyers and sellers from becoming victims.