Texas and California lead the country in monetary losses reported to the FBI due to scams. Let’s take a look at some of the biggest threats we’re seeing right now and what you can do to protect yourself and your clients.
Data And Information Breach
A data breach can be where so many problems begin. This is when your private information is stolen. Make no mistake- this is a sophisticated multi-billion-dollar business run by smart professionals who are very good at what they do.
The criminals are not usually stealing this information from the title company. They’re getting it from individuals like you. This is typically a clever manipulation of the natural human tendency to trust. Once the criminal has your private information, they may hack into or monitor your computer to get your login and/or passwords to accounts. They may intercept emails and download viruses or ransomware.
Your phone and computer are the biggest risks for a breach. Do you have sensitive or irreplaceable information on your computer or phone? Most people do. Do you back them up regularly? Most people don’t. Most computer users do not have even basic cybersecurity. Scammers know this. You might as well be falling for the Prince of Nigeria scam.
A scammer can use your information to impersonate or manipulate you or your accounts. Their next step is to gain access to your information and/or computer, monitor your activity, and ultimately steal money. In a real estate transaction, they can attempt to divert buyer down payments, earnest money, mortgage payoffs, seller proceeds, etc.
Almost 97% of breaches start with emails. The most powerful way to avoid this is to be wary of every email you receive. Establish strong passwords and change them every three months. It doesn’t matter if you rotate using names of state capitals, vegetables, car models, months, … Just get a system of changing them that works for you. Only use secure Wi-Fi connections and avoid all free Wi-Fi connections in public locations for both your computer and your phone.
Wire Fraud
A 2021 survey by the American Land Title Association reports that one-third of all title company transactions have experienced a wire fraud attempt. Wire fraud is carried out by criminals who impersonate escrow officers, real estate agents, or lenders. They persuade home buyers to wire funds into their accounts during the closing process. These scams are very clever and are often carried out by criminal organizations with untraceable offshore accounts. The FBI estimates that only 12-15% of wire fraud is reported.
Wire transfer crooks hack legitimate emails or send buyer emails posing as someone involved in the transaction. They monitor a pending sale, and when the closing date nears, they send the buyer instructions to wire the closing funds to their fraudulent account. This scam is so lucrative that the fraudsters even set up fake websites that look similar to the title company or lender you’re working with, making them seem legitimate. They may create an email address that appear familiar, but one number or letter is off. It’s easy to miss the small inaccuracy or misspelling.
Always be suspicious of any email or text requesting a change to wiring instructions. Before sending money, go back to the original documents you received from your title company and call the phone number listed there to verify the wiring instructions. Never click on links or send money without verifying wire instructions with a live person. Pick up the phone and only call the number that you first received from that contact (not the latest email).
Check Fraud
The frequency of fraudulent and counterfeit cashier’s checks is rising. A fake cashier’s check may clear immediately when first deposited. However, when the bank determines that the check is fraudulent, they take the money back. This can happen days or weeks after the deposit.
Many title companies now treat a cashier’s check similarly to a personal check and require buyers to wire money to them if the amount is substantial.
… And More
There are a lot of real estate scams that we only hear about in title company offices. Rip-offs like roofer scams, fake rental house cons, moving company swindlers, etc. happen every day. The pandemic has led to a rise in cons like foreclosure relief scams that claim they can help homeowners save their homes and reduce their mortgage payments for an upfront fee. They sometimes claim to be affiliated with a government agency or housing assistance program. Remember, these guys are pros at ripping people off, and their methods keep getting more creative.
Unfortunately, buyers and sellers are the targets of scammers, and the losses they suffer keep mounting. In the end, only you can protect yourself.
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