Staying Ahead of Seller Impersonation Fraud

How to layer on the protection and outpace fraudsters

Seller impersonation fraud is gaining national attention. As fraudsters get more sophisticated, it’s important to stay up to date on the realities of the threat and the prevention methods you can use to protect your clients and your business.

The threat

According to the FBI’s latest IC3 report, real estate fraud resulted in victim losses of $400 million in 2022. Seller impersonation is one of the leading strategies; in fact, according to a partner’s survey, 73% of real estate firms reported seeing an increase in seller impersonation fraud attempts since the start of 2023. If those numbers seem too big to comprehend, check out a few of the real-life examples: CT man finds a $1.4M home being built on his family’s land, AZ resident’s retirement plan railroaded by fraud, Land fraud nightmare in Houston.

Fight back, with layers

While there isn’t a “silver bullet” to protect any of us from fraud, there are layers of security we can implement that, hopefully, create enough friction to dissuade fraudsters.

Verify identities
Nearly all fraud relies on impersonation. It’s important that no matter who you’re working with, you’re verifying identities. This requires a combination of processes:

• Continue with the industry best practices. Go through the traditional methods of reviewing state or country issued ID’s, request to meet in-person and request additional proofs of ownership such as a deed. Unfortunately, fraudsters have figured out how to falsify nearly every physical form of identification, which is why we encourage adding a technology layer.
• Level up with technology. Engaging a fraud prevention partner, like CertifID, adds the strongest layer of protection through two-factor authentication, multiple device verification and knowledge-based questions to verify an identity.

Make it a team effort
You work with many individuals on any given transaction. If everyone is aware of the fraud risks and takes simple measures to protect the client, the risk of fraud goes down for everyone. In particular:

• Work with your real estate agent partners. Share the recent data points, news stories and personal experiences. The more aware your partners are to the red flags, the less likely you are to receive a transaction that could be fraudulent.
• Remind everyone in the transaction. Talk to your teams and the lenders you engage with. If everyone is aligned about the realities of fraudsters, you’re all more likely to prevent the worst.

Stay security fit
Understanding the how and why of fraudster behavior enables you and your team to understand potential weaknesses.

• Stay up to date with the latest fraud tactics. Knowing how fraudsters operate and what tools they use to access systems is the first step in protecting your business. Make sure to check out stewart.com/insights to learn the ins and outs of the latest threats.
• Review your security measures. Most of us know the basics of preventing business email compromise and the like, but it’s a good practice to review those with your team on a regular basis. Ensure everyone is aware of the red flags and potential weaknesses.

Trust your gut

It’s too often we hear “I had a feeling something was off.” Don’t ignore your instincts. Iinstead:

• When in doubt, verify again. If you’re questioning something or someone, go back and verify their identity. A little extra precaution, even if it's more work for the client, could be the difference between successfully completing a transaction and losing thousands to a fraudster.
• Go slowly. Fraudsters prey on the pressures to close a transaction. Getting a transaction closed by the end of the week does not outweigh the risk of fraud. Take your time and complete your transactions with all the precautions and none of the urgency that often leads to mistakes or overlooked (fraudulent) details.

Fraudsters are not going to stop, and neither are we. We’re here to help you not only provide the best experience for your clients, but also protect and grow your business. Whether you need ideas on how to add more security layers or which partners to engage with to increase your protection, let us know.

Looking for more tips? Check out these articles:

Eerie Warnings to Heed: A List of Threats Lurking in Real Estate Transactions
The Evolution of Cyber Crime Tech and What It Means for Your Business
Passwords Are Key to Cyber Security