How many times have you heard the words “wire fraud” in the last week? If your answer is a lot, that’s actually a great thing! But, if your answer is not at all, we have a problem.
The industry has been ramping up efforts to fend off these threats over the last couple of years. However, we can’t let our guard down because there’s still a long way to go until everyone (this includes buyers & sellers) understands the gravity of the situation. Staying vigilant against wire fraud should be so top-of-mind that it comes up in every real estate conversation.
Because this issue is so important to us and our partners, Bowe Digital sat down with wire fraud expert Tom Cronkright, the CEO of CertifID, to learn more about the topic in general as well as what we all need to be keeping tabs on in the future.
Q: Why do you have a passion for wire fraud protection?
Cronkright: Back in 2015, we fell victim to wire fraud (Cronkright owns a title company in Michigan as well) and went through the experience ourselves, losing nearly $200,000. It was a sophisticated wire fraud scheme that was orchestrated by cyber criminals in six different countries. We were called to testify against one of the syndicate leaders in a criminal trial in October 2018.
Over the last three years, we’ve continued to witness the level of sophistication grow exponentially.
Q: What’s the No. 1 misconception when it comes to wire fraud and real estate?
Cronkright: One of the biggest assumptions is that someone else is going to communicate the information to the party that needs it, meaning someone else will share the threat of wire fraud with them. Each transaction participant (agent, title provider, lender etc.) needs to find a way to deliver a proper and timely notice around the risk of wire fraud so that buyers and sellers know what to look for and how to respond to a fraud attempt.
Q: What do you wish more people understood about wire fraud?
Cronkright: The level of timing and sophistication of fraud schemes continues to evolve, and the threat increases year over year. We need to take this on as industry participants and protect the consumers that have hired us to protect them and deliver a great closing experience. Educating and engaging consumers about the issue mitigates risk for all parties involved in the transaction.
Q: What are your top two recommendations for protecting yourself against wire fraud?
Cronkright: First, people need to make it a standard procedure to confirm the identity and bank account credentials before funds are moved. Secondly, industry participants need to require that all referral partners have enabled multi-factor authentication on their email accounts. Email accounts need to be secured in order to keep cyber perpetrators out of the transaction.
Q: What’s the next big thing in wire fraud? Are there any new trends?
Cronkright: Mortgage payoff scams are the fastest growing payoff vector. Fraudsters know how mortgage payoff statements are delivered from lenders to title and escrow companies. They intercept or “update” them at critical points in the transaction which make them believable.
In addition, buyers of real estate are being targeted the first week of a transaction. Large earnest money deposits and cash transactions seem to be a big target this year as fraudsters divert wire transfers to accounts under their control.
Q: What else should title companies know?
Cronkright: This is an issue that faces every consumer in every real estate transaction. They’re after the life savings of everyday consumers.
That said, the past 12 months has shown significantly more awareness around this issue which is good for consumers. Forward thinking companies are putting the time and energy into making their company and customers more secure.
As the courts start to weigh in on this issue and more lawsuits start to come out, people are starting to show what they did as a transaction participant that could’ve mitigated the loss. Participants are holding each other accountable.
Feel free to pass along any or all of this discussion on to your team, partners and customers. Looking for more resources on the topic? Check out the new Coalition to Stop Real Estate Wire Fraud. It is full of videos, facts and figures you can share too.