Wire fraud protection firm CertifID released its 2024 State of Wire Fraud report, detailing a comprehensive examination of wire fraud in the real estate sector.
The report, which delves into the latest threats to real estate wire transactions, the impact on consumers, and consumer awareness, comes as multiple government agencies have tracked real estate fraud’s rise and $446 million in resulting annual financial losses.
“Cybercrime rings have taken aim at U.S. real estate transactions at an alarming rate,” said Katie Pierce, assistant to the special agent in charge, Global Investigative Operations Center at the U.S. Secret Service, “Consumers and their real estate service providers need to take extra precautions in every transaction, including verifying identity and banking details, to ensure payments are made securely and safely.”
CertifID data shows roughly one in 10 Americans being targeted for real estate fraud with median consumer losses in such schemes exceeding $70,000 per incident as a result of stolen buyer down payments and seller net proceeds.
Real estate professionals provided little to no information or discussion about the risks of wire fraud, according to 60 percent of consumers. More than half of consumers (51 percent) reported they were not adequately aware of wire fraud risk before closing.
The report also detailed increased risk for consumers aged 65 and older, who were found to be the least aware of real estate fraud than any other age group, with 63 percent being only somewhat or not aware at all of the risks. Furthermore, this age group was the least likely to have received substantial counseling from their real estate agent, as 75 percent reported minimal to no education on fraud risks. Because this group represents the largest segment of all-cash buyers, real estate fraud represents a significant and costly risk, CertifID added.
Report authors added that a lack of counseling highlights a major disconnect in whom consumers believe should be responsible for educating them about the risks of real estate wire fraud with 71 percent of consumers reporting they expect their real estate agent, title company, attorney, or other participant in the transaction to take the initiative.
“The real estate industry has a lot of work to do when it comes to educating consumers and putting guardrails in place that protect real estate transactions,” said Tyler Adams, co-founder and CEO at CertifID. “This report highlights the particularly high risks in real estate transactions which involve multiple parties being impersonated, unsuspecting consumers, large sums of money, and lack of strong protections. It’s imperative that the industry comes together on behalf of the consumer, to step up its effort to fight fraud, and to create a safer customer experience.”
In 2023, low inventory and reduced transaction volumes increased pressure on buyers, sellers, and agents to close quickly. Meanwhile, fraudsters have become increasingly skilled at leveraging public records, breaching broker and title agency systems, and deploying AI-enabled tactics to impersonate real estate professionals using email, text, social media, and phone calls.
These trends have collectively created the ideal conditions for the success of real estate fraud scams seen today.
To access the 2024 State of Wire Fraud report, click here.