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Measuring the Cost of Real Estate Wire Fraud

CertifID has issued a report that found real estate transactions are increasingly putting U.S. consumers at risk. The State of Wire Fraud report, based on proprietary data from CertifID’s wire fraud protection and recovery business, found that consumer real estate payments represent the most frequent target of wire fraud in 2022, with cybercriminals targeting buyer cash-to-close payments in particular.

Following an increase in virtual closings during the COVID-19 pandemic, and a peak in U.S. home sales and median home prices in 2021 and 2022 respectively, cybercriminals have increasingly sought to exploit real estate payments. Not only has the volume and value of real estate transactions increased, creating more opportunities for fraud, but the criminals themselves have become progressively more sophisticated and global in nature, making apprehension difficult. According to the Financial Crimes Enforcement Network (FinCEN), the real estate industry filed $893 million in losses during 2020-2021.

CertifID’s findings indicate that the success rates in recovering fraudulent wire transactions for home buyers and sellers were one-third that of real estate firms, likely because consumers are typically unable to recognize fraud early enough or know what steps to take in recovery.

“Real estate transactions represent some of the largest transactions a consumer will ever make, so losses due to fraud can be devastating,” said Tyler Adams, Co-Founder and CEO of CertifID. “Consumers need to understand the importance of protecting their transactions; they need to be more aware and educated on how to recognize fraud; and they need to know what immediate next steps to take if disaster strikes and recovery is necessary.”

Consumer impact findings from the report based on CertifID’s Fraud Recovery Services (FRS) division include:

  • 74% of wire fraud recovery requests came from consumers in 2022
  • $106,557 was the average wire fraud loss for consumer recovery cases in 2022
  • Of the recovery requests for wire fraud in 2022, 41% were buyer cash-to-close transactions, 24% were mortgage payoffs, and 11% were seller net proceeds
  • Wire fraud recovery success rates for consumers were one-third that of real estate firms

“Attacks on real estate transactions represent a growing payments risk that isn’t being properly addressed,” said Thomas Cronkright, Co-Founder and Executive Chairman of CertifID, and Owner of Sun Title Agency. “Hundreds of consumers a year come to CertifID in an effort to recover stolen funds–their situations are heartbreaking. At CertifID, we do everything we can to help victims get their money back fast. With increasingly sophisticated fraud tactics, from fake property ads to seemingly legitimate payment requests, more needs to be done to educate and protect customers from payment fraud.”

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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