AUSTIN – (By Dale King, Realty News Report) – Fraud has become a detrimental part of everyday life in the U.S.– and the real estate market is a frequent target.
CertifID, a leading wire fraud protection company, just released its State of Wire Fraud report identifying key risk factors for home buyers and sellers and calling for immediate corrective action.
Cyber Criminals Impersonate Realty Agents
More than one in four consumers have been targets of fraud in a real estate transaction, and nearly one in 20 have been victimized, CertifID reports. Such targeting, CertifID says, is often based on their location, experience and age.
Worse yet, a lack of sufficient cybersecurity protection measures “by a sector that handles trillions of dollars annually is harming American consumers, endangering businesses and enabling global cybercrime enterprises,” says the report by Austin-based CertifID.
FBI says Real Estate Wire Fraud Up 50-Fold
It also says the impact of wire fraud in real estate transactions has expanded by a factor of 50 in less than a decade, soaring from $9 million to $446 million in annual losses reported to the FBI Internet Crime Complaint Center.
Wire fraud is a faceless crime rooted in lies and deception. One particularly prevalent form that often infects the real estate industry, the report says, is business email compromise, or BEC.
Business email compromise is a type of cybercrime in which the scammer uses email to trick someone into sending money or divulging confidential company data. The culprit poses as a trusted figure, then asks for a fake bill to be paid or for sensitive information they can use in another scam.
Many home buyers and sellers don’t know that wire fraud “is a thing,” says the report. “In 2024, we saw more stories about real estate wire fraud in the news –from tens of thousands of dollars in closing funds in Texas to transactions worth millions in Florida.”
The CertifID report says that “during a fraud attempt, scammers most often impersonate real estate agents. Fifty-eight percent of victims reported that suspicious communications appeared to come from their agent. The title agent or settlement agent was impersonated the next most frequently – by 41 percent of fraudsters.”
“Interestingly, loan officers were frequently impersonated in these scams (said 34 percent of respondents), even though they have no role in guiding the transfer of funds during a closing,” the report adds. “This underscores the lack of understanding by consumers on the role of each party in their transaction and what to expect in the process.”
Cybercrime, CertifID says, has increased in the housing sector due to the often-complex closing process involving multiple parties; public availability of property and listing data and the large sums of money involved.
Other key findings in the report include:
- 52 percent of consumers are “not aware” or only “somewhat aware” of the risks of wire fraud at the start of a real estate transaction.
- Only 47 percent of consumers were informed about the risks by their real estate professionals at the start of the process.
- First-time consumers look most often (35 percent of the time) to their real estate agent to protect them from wire fraud, while experienced consumers frequently seek help from their title company or attorney.
- Overall, 79 percent of consumers are willing to pay more to work with real estate providers who prioritize their security from wire fraud.
“Cybercrime is a huge issue that a lot of companies experience,” said Cathy Treviño, former chair of the Houston Association of Realtors in a past episode of The Ralph Bivins Project podcast. “Criminals are coming in impersonating buyers, sellers, title companies, even Realtors. We are looking at this from every aspect and making sure to educate our members to understand and see the types of things that criminals are doing so they do not become victimized.”
Fraud victims bilked by phonies face an uncertain financial recovery process, CertifID says – and time is of the essence. “For respondents who became a victim, 71 percent realized they sent their money to the wrong place quickly. Seventy-three percent of these consumers were able to recover all or most of their funds. However, that left 27 percent with less than half to no funds regained.”
Also, experience matters. Consumers going through a real estate transaction for the first time are especially at risk, the report says. “‘First-timers’ fall victim to wire fraud during the closing process at a rate three times higher than experienced buyers and sellers.”
CertifID strongly suggests that “real estate professionals take extra care to educate first-time buyers and sellers about the risks.”
Senior Citizen Homebuyers Especially at Risk
Age also plays an important factor. “Older consumers are going into the real estate process less aware of the risks. Only 8 to 9 percent of those aged 44 and younger began the real estate process with no awareness of wire fraud. It’s double that, 18 percent or more, when dealing with Americans aged 55 or older. Older consumers expect their title company or attorney to protect them, much more so than any other age group.”
The CertifID report urges the private sector “to take swift action to prevent the siphoning of even more funds and the strengthening of criminal enterprises. There are steps we can all take to combat fraud and protect our companies, customers, and communities:
- Educate consumers.
- Train employees.
- Implement processes to verify all parties in a transaction.
- Invest in technology to make it harder for bad actors [to get away with crime].
- Utilize tools like insurance and recovery services to add further protection.
“It’s Our Duty,” says CertifID’s Thomas Cronkright II
“Delivering safe and secure transactions is not just good for the real estate industry. It’s our duty to consumers as they enter into the largest transaction of their lives,” said Thomas Cronkright II, co-founder and executive chairman of CertifID.
“We hope this report sparks new and continued action for all real estate and title professionals to lead their communities in the change needed to protect consumers. It is within reach.”
Feb. 6, 2025 Realty News Report Copyright 2025
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File: One in Four Consumers Targeted by Real Estate Wire Fraudsters FBI One in Four Consumers Targeted by Real Estate Wire Fraudsters HAR, CertifID