CertifID, a fintech focused on preventing wire fraud in residential real estate transactions, announced Monday it received $12.5 million in a Series A funding round led by Arthur Ventures.
The cash injection will be used by the Michigan-based company to build out its platform and to bolster staffing levels.
Specifically, the funds will be used to launch a solution to help prevent fraud in mortgage payoffs and to hire additional talent to join the company’s fraud recovery services team, said Tyler Adams, CEO of CertifID.
CertifID, founded in 2017 by Adams, Thomas Cronkright II and Lawrence Duthler, is a secure platform that validates parties involved in a real estate transaction, thereby reducing the risk of wire fraud.
The company, which has more than 30,000 users monthly, also provides as much as $1 million of insurance coverage on every transaction. Per a company news release, so far, there have been zero insurance claims.
According to Adams, a combination of low interest rates, a sizzling housing market and more consumers using electronic transfers has resulted in wire fraud increasing at an alarming rate during the past two years.
As lenders navigate through increased competition and fraud risk, it’s crucial they find solutions that balance workflow improvement.
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Fraudsters attack by sending phishing emails to all parties involved in a real estate transaction.
“They’ll try to impersonate someone that a homebuyer trusts in that transaction. And they’ll send them information that says, hey, here’s your updated wiring instructions. And it all looks like it’s coming from a trusted party, but it’s not,” said Adams.
There have been instances where homebuyers wire hundreds of thousands of dollars to fraudsters – thinking the funds are going to a title company.
“The homebuyers will say that they sent the wire three or five days ago, per the instructions of an email. And immediately the title company will know at that point that that person has been defrauded, and we jump in and we try to help,” Adams said.
The fintech’s fraud recovery services team is in a partnership with the U.S. Secret Services to provide rapid response services for fraud victims. CertifID claims to have helped more than 190 victims of wire fraud and to have returned nearly $50 million from fraudulent accounts.
“We believe it’s really going to be a collective effort among the title companies, law firms, real estate agents and lenders to all want to help in protecting their own money and the livelihoods of the consumers that are participating in these transactions because it’s not any one party’s responsibility,” added Adams.
To prevent wire fraud, cybersecurity experts recommend implementing multi-factor authentication, patching outdated systems and educating consumers and everyone involved in the mortgage transaction about the potential for spoofed emails.