Every spring marks the start of homebuying season – a period where home sales spike. For title professionals, homebuying season is our “busy season,” with professionals working tirelessly to ensure that property titles are clear of any liens or other defects ahead of closing day.
For many buyers, closing day represents the beginning of the next chapter in their lives – having a new place to celebrate important milestones and create new memories. For others, it represents the culmination of years of sacrifice that allowed them to save enough money for down payment.
Unfortunately, as buyers are preparing for this momentous day, wire fraud – a scam in which cybercriminals attempt to steal buyers’ hard-earned money – poses a serious threat. This homebuying season – and year-round – industry professionals must do their part to ensure home buyers understand the threat of real estate wire fraud and how they can protect themselves.
According to the National Association of Realtors’ 2023 Home Buyers and Sellers Generational Trends Report, approximately one in four homebuyers today are first-time buyers. These consumers often face a steep learning curve when beginning the homebuying process, which makes them especially vulnerable to scams.
But for even the most digitally savvy and seasoned homebuyer, wire fraud continues to pose a serious threat. Cybercriminals have become more sophisticated over the last decade and more skilled at tricking unsuspecting homebuyers into wiring their funds into a fraudulent account.
Wire fraud typically starts with a technique called phishing, where future buyers are tricked into inputting their private information or clicking a link that allows cybercriminals to steal their login information. Once hackers gain access to an email account, they will monitor messages to see if the person is a homebuyer and then use the stolen information to email fraudulent wire transfer instructions disguised to appear as if they came from a trusted real estate professional.
According to the Internet Crime Complaint Center (IC3)’s 2022 Internet Crime Report, business email compromise (BEC) – which includes real estate wire transfer fraud – has grown from $676 million in reported losses in 2017 to $2.7 billion in reported losses in 2022. As home values rise, so do the loss amounts from these scams. Additionally, the number of reported victims has slowly risen from 19,954 in 2021 to 21,832 in 2022. These numbers are probably even higher as not all fraud is reported. Consumers should report any fraud to the FBI at www.ic3.gov.
As real estate professionals, we have a responsibility to make sure our customers are aware of these scams and have the tools they need to protect themselves. Through increased consumer awareness and educational efforts, we know that there will be fewer victims.
That is why it has been a longstanding strategic priority of the American Land Title Association (ALTA) and our members to increase awareness of real estate wire fraud and educate consumers on how to best protect themselves against these sophisticated criminals. Across the country, title companies are putting consumer warnings on websites and communications and sending notices to consumers and real estate agents informing them of the scams.
At ALTA, we regularly host webinars and education sessions for real estate professionals and consumers, and we have a consumer education website, homeclosing101.org, with a multitude of resources – from instructional videos to infographics to help homebuyers protect themselves. ALTA has worked in close collaboration with industry partners, federal agencies such as the Department of Housing and Urban Development and its housing counseling network, and law enforcement to elevate the issue and share data about the scope and sophistication of the threat.
In November, the FBI released a report that summarizes its efforts to combat business email compromise (BEC) scams and real estate wire fraud by working with partners to identify perpetrators and dismantle their organizations. The report was spurred by ALTA’s efforts the past two years to get language included in various House and Senate appropriations reports directing respective agencies to report on efforts to combat and raise awareness of BEC and wire fraud, and collaborate with industry partners to address threats.
Through continued industry collaboration, we believe we can significantly reduce the number of victims each year. Our industry is proud of our leadership to raise awareness about wire transfer fraud, educate real estate industry professionals and consumers, and implement procedures to safeguard real estate funds, but we know that our work is not finished.
In the meantime, we encourage homebuyers, sellers, and real estate professionals to remain vigilant.
Diane Tomb is CEO of the American Land Title Association, the national trade association representing the land title insurance and settlement services industry, which employs more than 120,000 people working in every county in the United States.