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Real estate transactions typically involve large sums of money, which makes them an attractive target for cybercriminals who use wire fraud and business email compromise (BEC), a scheme where legitimate business email is compromised to convince unwitting victims to transfer funds, as their favored tactics.
The FBI’s Internet Crime Complaint Center (IC3) report found BEC scams resulted in losses of $2.9 billion in 2023. Industries across the nation’s economic sector are just as reliant on digital devices and online services as the rest of us and are attracting the unwanted attention of cybercriminals — this includes the real estate sector.
Recognizing the gravity of this threat, the title insurance industry has taken decisive steps to combat wire fraud, protect consumers and ensure the integrity of real estate transactions.
Title companies throughout our industry utilize an array of tools in conjunction with consumer education and staff training to combat wire fraud—an approach that is helping to mitigate losses, according to ALTA’s latest Cybercrime & Wire Fraud Study.
The study found that while more than 40% of title insurance companies reported receiving at least one email per month attempting to alter wiring/payoff instructions, only 7% of companies followed through and wired funds to a fraudulent account. With 94% concerned about the threat of wire fraud over the next year, title companies are continuing their efforts to educate employees and consumers about the risk.
Real estate wire fraud is a formidable adversary, and becoming more pervasive. As Tom Cronkright, founder of wire fraud protection company CertifID noted, “I see it happen daily, if not multiple times a day, The reality of it is these are some of the most sophisticated bad actors that have invested hundreds of millions of dollars into their own tradecraft.”
Title companies are investing time and resources to ensure a safe and secure homebuying experience for consumers. Keeping in mind the adage of “the best defense is a good offense,” title companies are working diligently to arm consumers with the knowledge they need to avoid becoming a victim of cybercriminals.
The majority (84%) use email or a combination of telephone calls and in-person meetings (72%) to inform and warn consumers about the risk of wire fraud in real estate transactions. Title companies also mail cyber risk information to consumers and post warnings on their websites.
Looking in-house, title companies proactively train employees to recognize the warning signs of wire fraud, utilize wire/payee verification software, and simulated phishing email testing of employees. All told, investments by title companies in these mitigation efforts can reach up to $25,000 annually.
Wire fraud is devastating to the victims who watch their dream of homeownership, and their life savings disappear in the blink of an eye. In its report, the FBI highlighted an individual in Connecticut who was in the process of purchasing a home. A spoofed email from the attorney instructed the buyer to wire $426,000 to a financial institution. It was realized the instructions came from a spoofed email two days after the wire was initiated. After being notified, the FBI froze the fraudulent bank account. The money was returned to the buyer due to the collaboration between the financial institution and local police. This was a fortunate outcome because it can take months or longer for homeowners to track down their money through a labyrinth of fraudulent bank accounts, if they recover it at all.
As criminal schemes grow more sophisticated, now is the time to reinforce protections to make homebuying as accessible and safe as possible. Through industry standardization, education, and collaboration with industry groups, real estate professionals, and policymakers, we can provide pragmatic and meaningful layers of protection for consumers.
Title companies will continue to be vigilant because this is about more than just protecting a transaction — it is ultimately about safeguarding the dream of homeownership.
Diane Tomb is the Chief Executive Officer of the American Land Title Association (ALTA).
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: zeb@hwmedia.com.
