$221M Lost to Wire Transfer Fraud in 2019

Incidents and losses due to real estate wire fraud continue to increase, according to the FBI’s 2019 Internet Crime Report.

The report shows there were 11,677 victims in 2019 with $221 million in losses. This compares to 11,300 reported victims and $150 million in losses in 2018.

“The title and settlement industry has improved its digital hygiene and implemented many procedures to combat this fraud,” said Diane Tomb, ALTA’s chief executive officer. “But no matter how much money we spend, criminals will continue to target consumers. This is why we must continue to educate people about how they can protect their money when purchasing a home or refinancing a mortgage.”

To raise awareness and educate consumers, ALTA in 2019 launched the Coalition to Stop Real Estate Wire Fraud. In 2019, the coalition ran a digital advertising campaign placing online ads in nine markets. The campaign delivered more than 22 million ad impressions to potential home buyers.

“The recently released data from the FBI shows that our coalition is needed,” Tomb said. ““Wire fraud is one of the biggest battles the real estate industry has faced. But the Coalition isn’t simply watching it happen; we’re in the fight—we’re on the front-lines. With increased statistics victims and losses, there is definitely work to be done. Only a percentage of victims report their losses to IC3, so we expect to see numbers rise as we continue to encourage those in the real estate transaction to report any wire fraud activity. The number of coalition partners more than doubled between October and December 2019 as companies and organizations began to see the importance of raising awareness about mortgage closing scams.”

According to the FBI, only 15 percent of all wire fraud incidents are reported.

Overall, the FBI reported that IC3 received 467,361 complaints in 2019—an average of nearly 1,300 every day—and recorded more than $3.5 billion in losses to individual and business victims. The most frequently reported complaints were phishing and similar ploys, non-payment/non-delivery scams and extortion. The most financially costly complaints involved business email compromise, romance or confidence fraud, and spoofing, or mimicking the account of a person or vendor known to the victim to gather personal or financial information.

Donna Gregory, the chief of IC3, said that in 2019 the center didn’t see an uptick in new types of fraud but rather saw criminals deploying new tactics and techniques to carry out existing scams.

“Criminals are getting so sophisticated,” Gregory said. “It is getting harder and harder for victims to spot the red flags and tell real from fake.”

While email is still a common entry point, frauds are also beginning on text messages—a crime called smishing—or even fake websites—a tactic called pharming.

“You may get a text message that appears to be your bank asking you to verify information on your account,” said Gregory. “Or you may even search a service online and inadvertently end up on a fraudulent site that gathers your bank or credit card information.”

Individuals need to be extremely skeptical and double check everything, Gregory emphasized. “In the same way your bank and online accounts have started to require two-factor authentication—apply that to your life,” she said. “Verify requests in person or by phone, double check web and email addresses, and don’t follow the links provided in any messages.”

During a Feb. 11 hearing before the House Financial Services Committee, U.S. Rep Brad Sherman (D-Calif.) asked the chair of the Board of Governors of the Federal Reserve System why the U.S. doesn’t institute payee matching requirements for banks. Sherman raised the same question during a hearing in 2018. In addition, ALTA Past President Dan Mennenoh ITP, NTP offered the same solution about payee matching requirements during a Congressional hearing on data security in 2017.