CertifID and Fed Law Enforcement Warn of Rise in Vacant Property Fraud

Today, wire fraud recovery/prevention company, CertifID and federal law enforcement, have issued a security advisory on the latest wire fraud threat impacting the real estate industry.

In recent months, an alarming increase in incidents have been reported to the company involving the listing and sale of vacant land and properties that are free of mortgage liens. These scams involve bad actors posing as owners of these vacant lots or properties.  

According to the National Association of Realtors (NAR), home sales continued to fall for the 10th month consecutively in November. As a result, cybercrime rings have turned to new tactics to make up for the lower housing market transaction volume that they can target.

Leading tactics that cyber criminals have leveraged to perpetrate these frauds include Business Email Compromise (BEC). The FBI 2022 Congressional Report on BEC and Real Estate Wire Fraud cites BEC as the leading source of victim loss reported to their Internet Crime Complaint Center (IC3), totaling $2.4B in 2021.

“This recent trend involving seller impersonation is particularly concerning, as the real property owner is typically not aware nor in a position to prevent the fraud, until it is too late,” said Thomas W. Cronkright II, Executive Chairman of CertifID. “Unfortunately, it’s just the latest evolution of wire fraud that affects title companies, law firms, lenders, realtors, and home buyers and sellers. Our company has received hundreds of cases and helped recover over $52M for victims in the last two years alone, by partnering with the US Secret Service.”

Here’s how the scams typically work:

• Public records are searched to identify real estate that is free of mortgage or other liens. These often include vacant lots or rental properties. The identity of the landowner is also obtained through this public records search. 
• Posing as the property owner, the scammer contacts a realtor to list the property for sale. All communications are through email and digital means, and not in person.
• The listing price of the property is typically below current market value, to generate immediate interest in the property.
• The scammer quickly accepts the offer, with preference for cash sales. 
• At the time of closing, the scammer refuses to sign documents in person and requests a remote notary signing. The scammer impersonates the notary and returns falsified documents to the title company or closing attorney involved in the transaction.
• The title company or closing attorney transfers the closing proceeds to the scammer. The fraud is typically not discovered until the time of recording of transferring documents with the applicable county.

How to protect yourself:

• Independently search for the identity and a recent picture of the seller. 
• Request an in-person or virtual meeting, to see their government issued identification. 
• Be on alert with a seller accepting an offer price below market value in exchange for the buyer paying cash and closing quickly.
• Never allow a seller to arrange their own notary closing. Use a trusted title company or closing attorney to coordinate the exchange of closing documents and funds.

CertifID Fraud Recovery Services are available to any consumer or business who needs assistance at https://reportafraud.org/.

For a copy of the U.S. Secret Service issued advisory, visit this site.