Wire Fraud 101: What is Wire Fraud and How Do You Prevent It?
According to the American Land Title Association, more than 90% of title insurance companies reported the volume of cybercrime attempts increased or remained the same between 2022 and 2023. As of 2023, 86% of title companies, including Stewart Title, are using mitigation activities and services to help catch bad actors during the real estate closing process. According to the study Cybercrime & Wire Fraud, 73% of companies with over 250 closings monthly experienced an increase in cybercrime compared to 38% of those with 75 closings or less.
As scam tactics become more sophisticated, the chance of it happening to you only gets greater. Let’s take a moment to go over the basics of wire fraud and see what you can do to prevent it.
What is wire fraud?
First, what is wire fraud? The definition of wire fraud comes from how scammers use telecommunications or the internet to intercept money. For example, let’s say you are partnering with your title company to move money into your escrow account. Wire fraud can occur during this process when a cybercriminal attempts to mislead you or your title company into moving money into a fraudulent account by impersonating one of the relevant parties (such as you, the real estate agent, mortgage lender, or escrow officer.) This can happen through email or even over the phone.
If you fall victim, recovering the funds can be challenging. In 2022, only 7% of businesses reported that they were able to fully recover the amount originally lost, according to ALTA.
What can be done to prevent wire fraud?
When you are ready to begin the closing process on a house, make sure you follow several steps to help prevent wire fraud from happening to your transaction:
- Have your escrow officer’s and real estate agent’s official phone numbers on hand during the transaction – if something feels fishy, contact them using those numbers instead of what’s provided in a potentially fraudulent email or text.
- In general, any changes in the wiring instructions are a red flag. Always cross check wiring instructions in person (preferably) or over the phone using their original phone numbers.
- Most importantly, use a reputable title company that has a wire fraud prevention procedure in place.
In the event of wire fraud, time is of the essence. If you and your title company act quickly enough, the wire could be blocked and recovered. This is why it’s imperative to ensure your title company partners with a service provider, like CertifID, that uses multi-authentication tactics to help prevent this fraudulent nightmare from happening.
Want to learn more about how we help protect our customers from wire fraud? Our partnership with CertifID provides our customers with an added layer of protection – read more about this partnership here.
Looking for more tips? Check out these articles:
Stay Alert: Here are Ways Cyber Attackers Target Real Estate Transactions
5 Takeaways from the Latest FBI IC3 Report on Cybercrime
3 Tips to Safer Internet Browsing for Families
*Updated April 19, 2024