How to Protect Your Title Company from Wire Fraud | ET REALITY

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In today’s changing technological landscape, electronic fraud is a widespread risk, particularly in real estate transactions. According to the FBI Internet Crime Report 2022, the problem is only getting worse, with monetary losses in the real estate industry increasing by 86% 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 practical steps you can take to prevent harm to your business and your customers.

What is electronic fraud?

Wire fraud is a crime that involves schemes to defraud or obtain money, property, or services through electronic communications such as phone calls, text messages, or emails. In real estate, scammers can impersonate agents using fake emails, providing false banking information and causing victims to inadvertently send money to the criminal’s account.

Key types of wire fraud include:

Identity fraud

Phishing is a type of online scam in which criminals send an email to extract important personal information from you, such as wiring information for your closing transaction. According to the 2022 FBI reportPhishing is the most common tactic used for electronic fraud today, affecting more than 300,000 victims.

identity fraud

Phishing involves scammers impersonating a trusted source, such as a familiar email address. Scammers often use it simultaneously with phishing in phishing attacks. For example, an email that looks like a known contact but slightly modified is a “spoofed” email.

Business Email Compromise (BEC)

BEC is a sophisticated combination of phishing and spoofing that is used to extract $2.7 billion from victims in 2022, an increase of 47% from 2020. BEC involves scammers gaining access to your company’s real email accounts, often after targeting one of your employees with a traditional phishing attack. Once inside your system, they can contact your customers with your employee’s legitimate email address, but ask them to send closing funds to the wrong bank account.

Updates to the 2022 FBI Internet Crime Report

Other key ideas of the The 2022 FBI report includes:

  • A 49% increase in losses due to cybercrime from 2021, totaling $10.3 billion in 2022.
  • A daily average of more than 2,175 reports of cybercrimes.
  • Victims over 60 reported the most substantial losses: $3.1 billion.
  • BEC attacks quadrupled from 2017 to 2022.
  • 11,727 victims reported wire fraud related to real estate transactions.

A real life story

Along with this troubling data, the report shares the story of a recent case of real estate wire fraud that is all too real. In July 2022, a Charlotte family received an email from their real estate agent (or so they thought) instructing them to wire $400,000 to complete their escrow payment. Only after sending the money did the prospective homeowners and their real estate agent realize that the email was part of an elaborate phishing scheme. Fortunately for them, the FBI acted quickly and recovered the entire $400,000 from the scammers, but not everyone can be so lucky. To ensure that you can detect and stop these types of attacks before authorities have to intervene, you should develop a series of security measures to protect you and your customers.

How to combat electronic fraud in the real estate sector

If you don’t want to become one of those statistics, follow these basic security tips to keep your customers protected:

  • Educate: Talk to clients about the prevalence and methods of wire fraud in the real estate industry. Explain the money transfer process and where scams typically arise.
  • Establish procedures: Create standard procedures to verify the identity of everyone involved in the transaction and confirm that these procedures are followed consistently. Be sure to incorporate two-factor identity authentication into your procedures.
  • Verify information: Use SoftPro 360 sellers like certificate ID and Closing lock to accurately identify all parties to a transaction, securely collect banking information for outgoing wire transfers, and securely send wire transfer instructions. It is important to remember that these details should never be confirmed via email.
  • Communicate securely: Always use secure and encrypted communication methods, such as Closings of SoftProLIVE for all financial transactions. Do not share sensitive information such as account numbers or transfer instructions via email or text message.
  • Foster suspicion: Encourage clients to approach any request for funds with suspicion, especially if it involves urgency or pressure to act quickly.

SoftPro can help

The above methods can help any title company protect itself from traditional cyber attacks. As additional protective measures, SoftPro offers ClosingsLIVE to help customers transfer funds securely and partners with leading providers of wire fraud prevention services through SoftPro 360.

ClosingsLIVE security

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 via email. It allows you to securely send and receive electronic instructions to the appropriate parties instead of using other potentially dangerous communication methods.

Preventing electronic fraud through SoftPro 360

SoftPro partners with leading cybersecurity firms to provide you with additional hassle-free protection from SoftPro 360. CertifID uses advanced technology to accurately identify all parties to a transaction, securely collect banking information for outbound wire transfers, and securely send wire transfer instructions. Similarly, Closinglock provides a secure platform where users can share wire transfer instructions, collect electronic signatures, and verify banking or loan payment information while protecting themselves and their customers from wire fraud. You can request all of these services without having to leave the SoftPro platform of your choice that you know and trust.

The bottom line

The increasing prevalence of electronic fraud in real estate transactions demands not only greater awareness and understanding, but also proactive protection measures. In these high-risk transactions, SoftPro tools and integrations can provide an effective shield. Despite grim statistics and evolving threats, SoftPro is committed to helping your business meet any challenge along the way.

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