Buying a home is a life dream for many. But for too many buyers each year, it becomes their worst nightmare when they unknowingly wire their purchase funds to a scammer’s account.
The combination of big dollar real estate transactions, multiple players and rush-rush closing deadlines creates a highly attractive environment for cybercriminals. So much so, the American Land Title Association (ALTA) reports nearly 60% of companies receive sham emails attempting to alter wire instructions.
- 17% of companies have wired funds to the wrong address
- Nearly 40% of these companies transferred over $500,000
- 49% of these companies incorrectly transferred funds more than once
All told, global cybercrime damages are projected to reach $10.5 trillion annually in 2025. The good news is more and more real estate professionals are wise to the scammers’ tricks.
Troubling Sophistication
Take the rapid development of artificial intelligence (AI). AI technology seems to be everywhere these days, from property valuations and predictive analytics to customer support and fraud prevention. Some sources now predict AI-related fraud crime will approach $40 billion by 2027 in the U.S. alone.
It has real estate fraud prevention experts like Sarah Frano worried.
“AI makes it easier to quickly fabricate emails, identification, videos and voices, which can be indistinguishable from a real document or person,” warns the Vice President and Director of Underwriting Fraud Risk at First American Title. “But there are several strategies and tips that can help keep your transactions and customers safe.”
What can you do to safeguard closings and online business dealings? How should you advise home buyers? Observe these three guidelines to help mitigate wire fraud:
1. Educate Yourself. Take time to understand the tools scammers use, including:
- Spoofing and phishing emails that impersonate a trusted contact or organization
- Requests for last-minute wiring instruction changes
- Fraudulent email accounts or domains
- AI-generated voices, images, and videos that can mimic a real person’s voice, facial features, expressions and movements (called deepfakes)
2. Implement Company-Wide Precautions. Limit risk by:
- Confirming wiring instructions via independently verified phone numbers. Relying on email confirmation or phone numbers contained in an email alone is not advised.
- Using a wire verification service.
- Training your team on phishing awareness and social engineering techniques.
- Requiring multi-factor authentication and using encrypted communication platforms.
- Being wary of messages with last-minute changes or use urgent language.
- If video is involved, watch carefully for odd blinking patterns, lip movement inconsistencies, lighting perfection, and eye, hair, hands and skin texture irregularities.
3. Alert Home Buyers. A friendly word of caution is more than good business. It’s a way to win the buyer’s trust and confidence by looking out for their investment with practical tips including:
- Always confirm wire instructions directly with the recipient before sending. Never wire money based on email instructions or a received telephone call alone.
- Offer a pre-closing security briefing to educate customers on your wire protocol, the prevalence of wire fraud and red flags to be alert for in a transaction.
- Use secure communication tools, such as encrypted portals for document and communications exchanges. Avoid sending sensitive information via regular email.
Frano sums it up well. “By making your customer part of the fraud prevention strategy, we can raise their awareness, while protecting the customer’s money and dreams of home ownership.” Following these smart strategies can help build a cybersafe culture throughout your organization, put customers in homes, and keep the fraudsters out. Contact a First American Homebuilder Services Division representative today to learn more about how to protect your buyers or share the video to raise awareness.