How to protect your title company from wire fraud | SkipLeadPro
In today’s evolving technological landscape, wire fraud is a pervasive risk, particularly in real estate transactions. According to the FBI’s 2022 Internet Crime Report, the problem is only worsening, with an 86% increase in monetary losses in the real estate industry since 2020. For title professionals, understanding and countering this threat is paramount. In this article, we shed light on the nuances of these cyber threats, their real-life implications and the practical steps you can take to prevent harm to your business and your customers.
Wire fraud is a crime involving schemes to defraud or obtain money, property or services through electronic communications such as telephone calls, text messages or emails. In real estate, fraudsters may impersonate agents via fake emails, giving false bank information and causing victims to send money to the criminal’s account unintentionally.
Key wire fraud types include:
Phishing is a type of online scam where criminals send an email to extract important personal information from you, such as the wiring information for your closing transaction. According to the 2022 FBI report, phishing is the most prevalent tactic used for wire fraud today, affecting over 300,000 victims.
Spoofing involves scammers impersonating a trusted source, such as a familiar email address. Fraudsters often use it simultaneously with phishing in wire fraud attacks. For example, an email resembling a known contact but slightly altered is a “spoofed” email.
BEC is a sophisticated combination of phishing and spoofing used to extract $2.7 billion from victims in 2022, a 47% increase since 2020. BEC involves fraudsters gaining access to your company’s actual email accounts, often after targeting one of your employees with a traditional phishing attack. Once inside your system, they can reach out to your customers with your employee’s legitimate email address but request them to send closing funds to the wrong bank account.
Other key insights from the 2022 FBI report include:
- A 49% surge in losses due to cybercrime since 2021, totaling $10.3 billion in 2022.
- A daily average of over 2,175 cybercrime complaints.
- Victims aged 60+ reported the most substantial losses: $3.1 billion.
- BEC attacks quadrupled from 2017 to 2022.
- 11,727 victims reported real estate transaction-related wire fraud.
Along with this concerning data, the report shares a story of a recent case of real estate wire fraud that’s all too real. In July 2022, a family in Charlotte received an email from their Realtor (or so they thought) instructing them to wire $400,000 to complete their escrow payment. Only after they sent the money did the soon-to-be homeowners and their actual Realtor realize that the email was part of an elaborate phishing scheme. Luckily for them, the FBI acted quickly and retrieved the full $400,000 from the scammers, but not everyone can be so lucky. To make sure you can spot and stop these types of attacks before law enforcement needs to get involved, you must develop an array of security measures to protect you and your customers.
If you don’t want to become one of those statistics, follow these basic security tips to keep your clients protected:
- Educate: Talk to clients about the prevalence and methods of wire fraud in the real estate industry. Explain the process of wiring money and where scams usually arise.
- Establish procedures: Create standard procedures for verifying the identity of everyone involved in the transaction and confirm that these procedures are followed consistently. Make sure to incorporate two-factor identity authentication within your procedures.
- Verify information: Utilize SoftPro 360 vendors like CertifID and Closinglock to accurately identify all parties in a transaction, safely collect banking information for outgoing wires and securely send wire instructions. It’s important to remember that these details should never be confirmed via email.
- Communicate securely: Always use secure, encrypted methods of communication such as SoftPro’s ClosingsLIVE for all financial dealings. Do not share sensitive information like account numbers or wire instructions over email or text.
- Encourage suspicion: Encourage clients to approach any request for funds with suspicion, particularly if it involves urgency or pressure to act quickly.
The above methods can help any title business protect itself from traditional cyber-attacks. As additional measures of protection, SoftPro offers ClosingsLIVE to help clients wire funds securely and partners with leading providers of wire fraud prevention services through SoftPro 360.
The security of ClosingsLIVE
ClosingsLIVE is SoftPro’s secure communication portal that gives you 24/7 access to your transaction data without the risk of sending and receiving information over email. It allows you to securely send and receive wire instructions to the appropriate parties instead of through other potentially dangerous communication methods.
Wire fraud prevention through SoftPro 360
SoftPro partners with leading cybersecurity firms to give you additional protection seamlessly from SoftPro 360. CertifID uses advanced technology to accurately identify all parties in a transaction, safely collect banking information for outgoing wires and securely send wire instructions. Similarly, Closinglock provides a secure platform where users can share wire transfer instructions, collect eSignatures and verify bank or loan payoff information while protecting themselves and their clients from wire fraud. You can order these services all without ever leaving the SoftPro platform of choice that you know and trust.
The bottom line
The increasing prevalence of wire fraud in real estate transactions demands not only heightened awareness and understanding but also proactive protective measures. In these high-risk transactions, SoftPro’s tools and integrations can provide an effective shield. Despite the ominous statistics and evolving threats, SoftPro is committed to helping your business meet any challenge along the way.