Written by W. Chris Saunders, IT Business Product Manager
AmTrust Title Insurance Company
It’s 3:00 PM…Do you know where your wires are? Yes, the afternoon slump (between noon and 4 PM) is a real thing resulting from a combination of falling hormone levels, circadian rhythms and digestion energy shifts. It is also the time when most outbound wire transactions occur. Putting these two things together, it becomes the number one time for even the best due diligence practices to fall short and the cyber criminals to score.
In today's digital age, the real estate industry has become a prime target for cybercriminals. With transactions involving large sums of money and sensitive personal information, the stakes are high. Understanding the various types of real estate cyber fraud and how to protect yourself is crucial for anyone involved in buying or selling property.
Common Types of Real Estate Cyber Fraud
- Wire Fraud Wire fraud is one of the most prevalent forms of cybercrime in real estate. Cybercriminals often hack into email accounts of real estate agents, title companies, or buyers and sellers. They monitor communications and, at a critical moment, send fraudulent wire transfer instructions. These emails appear legitimate but direct funds to the criminal's account instead of the intended recipient [1].
- Seller Impersonation Fraud In this scam, fraudsters pose as property owners, sometimes even using the identities of deceased individuals. They list properties for sale, collect payments from unsuspecting buyers, and disappear before the fraud is discovered [1].
- Business Email Compromise (BEC) BEC involves cybercriminals gaining access to a business email account and using it to conduct unauthorized transactions. In real estate, this often means intercepting communications between parties involved in a transaction and altering payment instructions [2].
2023 Statistical Data from the FBI
According to the FBI's Internet Crime Complaint Center (IC3) 2023 report, real estate cyber fraud continues to be a significant issue:
- Business Email Compromise (BEC): BEC scams accounted for a substantial portion of the reported losses, with potential losses exceeding $3.1 billion [3].
- Overall Complaints: The IC3 received a record number of complaints in 2023, totaling 880,418, with potential losses exceeding $12.5 billion [4].
- Wire Fraud: The FBI's Recovery Asset Team (RAT) initiated the Financial Fraud Kill Chain (FFKC) on 3,008 incidents, with potential losses of $758.05 million. A monetary hold was placed on $538.39 million, representing a success rate of 71% [4].
How to Protect Yourself
- Verify Wire Instructions Always confirm wire instructions in person or via a known, trusted phone number. Never rely solely on email for such critical information [2].
- Use Secure Communication Channels Ensure that all communications related to real estate transactions are conducted over secure, encrypted channels. Avoid sharing sensitive information via email whenever possible [2].
- Be Vigilant for Red Flags Be wary of any communication that pressures you to act quickly or contains suspicious language. Double-check email addresses for slight variations that could indicate a fraudulent sender [1].
- Educate and Train Staff For real estate professionals, regular training on cybersecurity best practices is essential. Keeping up-to-date with the latest threats and how to counter them can significantly reduce the risk of falling victim to cyber fraud [3].
- Invest in Cyber Insurance Cyber insurance can provide a safety net in the event of a cyberattack. It can cover financial losses and help with recovery efforts, making it a worthwhile investment for real estate businesses [3].
Conclusion
Real estate cyber fraud is a growing concern, but with awareness and proactive measures, it is possible to protect yourself and your investments. By staying informed and vigilant, you can navigate the real estate market with greater confidence and security.
Sources
[1]:
IC3 Annual Report [2]:
CertifID Article [3]:
FBI IC3 Report [4]:
FBI Internet Crime Report Source: Conversation with Copilot, 9/25/2024
- 2023 1INTERNET CRIME REPORT - Internet Crime Complaint Center
- 2023 ELDER FRAUD REPORT - Internet Crime Complaint Center
- 2023 FBI IC3 Report: What You Need to Know - CertifID
- IC3 Annual Report and Fraud Flyer - Internet Crime Complaint Center
- FBI Releases Internet Crime Report