Fraud Update: Closing Scams Now Make Up Nearly Half of Cybercrime Losses

The word "Fraud" written in red ink on a piece of legal paper surrounded by some U.S. paper currency. Captioned: Closing Scams Now Make Up Nearly Half of Cybercrime Losses

What’s a closing scam? Consider the Colorado home buyer who, a few weeks back, opened an email from the title company. It contained precise instructions for wiring the closing money. The amount requested — about $80,000 — matched the amount the title company had already discussed. Everything looked legit.

Two days later, the title company was requesting the money. Why hadn’t it been received? Because those wiring instructions weren’t from the title company after all. Criminals had insinuated themselves into the company’s email accounts, impersonated the title agent, and diverted the funds.

When a buyer is stung by fraud, money is hard to get back, says the American Land Title Association (ALTA). This buyer was fortunate. Redfin’s Title Forward escrow and settlement subsidiary sprang into action. Title Forward brought in CertifID Funds Recovery Services and the Secret Service. The buyer recovered the 80K.

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Fraud Watch: Real Estate Scams and the Millennial Home Shopper

According to the Federal Trade Commission, tech-savvy folks aged 40 and under are far from immune to scams and frauds. And most scams that hook them begin in an email. And the coronavirus economy is creating even more opportunities for fraud risk.

Image of a person looking nervously at a computer. Captioned: Real Estate Scams and the Millennial Home Shopper

A bogus email can appear to be a message from an ecommerce or business site, or even from the government. Millennials are twice as likely as people age 40 and older to report falling for a scam while browsing messages or social media posts and clicking on one of the advertisements. There are phony giveaways, the sale of tickets to fake events, and undelivered or counterfeit items. Young adults are also the targets of education, employment, and investment scams.

Some of these tricks can be life-changing. While online shopping fraud might involve just a few hundred dollars or less, millennials also face real estate scams, such as organized wire fraud and mortgage relief ploys.

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Real Estate Law Enforcement: Catching Up to Deed Fraudsters

Silhouette of a person running with a briefcase. Captioned: Real Estate Law Enforcement Catching Up to Deed Fraudsters

Some years back, the state of Georgia, under the Georgia Code (GA § 44-2-43), made stealing houses by recording fraudulent or counterfeit real estate deeds a felony, incurring 1-10 years in prison. Witnesses who help perpetrate Georgia deed fraud are subject to the same potential penalties. 

Georgia is not alone in its resolve. The FBI reports that real estate fraud ranks among the fastest-growing U.S. crime categories. Now, laws are catching up to the fraudsters, deed recorders are starting to alert people to filings on their homes, and cities are helping people confront the con artists.

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Elders and Real Estate Fraud: A Burgeoning Problem

Image of an elder couple sitting on a park bench with their backs to us and a tree filled parked in the foreground. Captioned: Elders and Real Estate Fraud

Evelio and Milagros Esteban are in their 70s and they’ve been homeowners for years. But recently they ran into trouble paying their mortgage. That was when they mistakenly transferred their home deed to another Miami resident, who offered to help them rent out their home. Thinking they were signing a Section 8 housing application — which would help them rent out space affordably to low-income people — they in fact signed a quitclaim deed.

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Viral Fraud: More Deed Crime Targets in the Coronavirus Economy

Well-known schemes are being repackaged for the time of COVID-19. Here’s an overview of how real estate fraudsters are approaching their targets — and how to avoid becoming one.

Image of an open lock hanging on a closed door latch.

Scams flare up during natural disasters and financial crises, so we can expect a spike in deed fraud in 2020 and beyond. Battered by the pandemic, facing snowballing debts and possible defaults, many people are now considering risks they would have rejected in the past. Deed fraudsters can be counted on in times like these to aggressively seek new opportunities.

Any wiring directions or changes to money transfer requests over the phone or by email should arouse suspicion today. Rather than act or answer, recipients should call the company and deal with a real person. And rather than use phone numbers supplied in messages, recipients should take the extra step of visiting the company’s website, copying the published number, and calling that number. Personal details should be volunteered only after the identity of the party making the request if verified, or by physically going to the company’s office.

Of course, COVID-19 itself is making in-person meetings less possible or at least less palatable. Part of the fraud risk involves the way online transmission of our personal and financial data can be so easily and rapidly handled.   

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The Quitclaim Deed and Fraudulent Real Estate Transactions

Image of a safe fashioned in the shape of a house with hand reaching to open- article discussing quitclaim deeds and their role in fraudulent real estate transactions.

Quitclaim deeds show up commonly in fraudulent real estate transactions. This type of deed fraud can impact elderly people, buyers purchasing real estate from strangers without warranty, renters who are paying someone who is not a legitimate owner, and anyone involved who might buy, sell, or own property.

Here, we examine how it happens and how to detect it.

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