$1.8 Billion Lost Due to Business Email Compromise in 2020
March 18, 2021
As the country battled the COVID-19 pandemic during 2020, a record number of internet fraud complaints were reported to the FBI.
According to the FBI’s 2020 Internet Crime Report, the Internet Crime Complaint Center (IC3) received 791,790, complaints with reported losses exceeding $4.2 billion last year. This is up from $3.5 billion in reported losses in 2019.
Business email compromise (BEC) schemes continued to be the costliest, with 19,369 complaints resulting in losses of $1.8 billion. While this is a 19 percent decrease in BEC victims compared to 2019, Andy White, CEO of ClosingLock, pointed out the total amount lost increased 5 percent year-over-year and the average loss per victim increased 29 percent year-over-year.
“While the recovery of assets has also increased during this time period, it still lags behind the staggering losses incurred in 2020,” White said. “It’s also important to remember that these statistics are only based on the internet crimes that were reported to the IC3. Many victims do not file FBI reports.”
In 2020, there were 13,638 victims of real estate fraud with $213,196,082 in reported losses. This compared to 11,677 victims resulting in reported losses of $221,365,911 in 2019.
“The title and settlement industry continues to lead the charge raising awareness about wire transfer fraud and implementing procedures to safeguard real estate funds,” said ALTA CEO Diane Tomb. “Unfortunately, criminals will continue to modify their tactics and prey on unsuspecting consumers. Working with our partners involved in the real estate transaction, along with government officials, we will continue to educate people about how they can protect their money when purchasing a home or refinancing a mortgage, so they continue to trust and have confidence in our digital world.”
Real estate wire fraud is a sophisticated scam targeting individuals or companies making or accepting wire transfer payments during the homebuying process. As a result, victims unknowingly send wire transfers to the accounts of criminals who are pretending to be real estate and title industry professionals involved in the transaction. The FBI estimates only 12-15 percent of all wire fraud is reported.
“As a title company, it might not be a legal obligation to protect your customers, but there’s a moral duty to take the necessary steps to secure the closing process,” White said. “Customer education can only go so far when scammers are becoming increasingly sophisticated in their schemes.”
The top three crimes reported by victims in 2020 were phishing scams, non-payment/non-delivery scams and extortion. Victims lost the most money to business email compromise scams, romance and confidence schemes, and investment fraud. Notably, 2020 saw the emergence of scams exploiting the COVID-19 pandemic. The IC3 received over 28,500 complaints related to COVID-19, with fraudsters targeting both businesses and individuals.
The FBI encourages businesses and consumers to immediately report suspected internet fraud with the IC3. ALTA has created a two-minute video explaining how to submit a wire transfer fraud complaint with the FBI Internet Crime Complaint Center (IC3). Filing a complaint allows the FBI to process a case more effectively than calling a local field office. The video details the eight sections of the online form that needs filled out. Submitting complaints helps inform the FBI that wire fraud is a significant problem.
“IC3 has continued to strengthen its relationships with industry and others in the law enforcement community to reduce financial losses resulting from BEC scams,” said Paul Abbate, deputy director of the FBI. “Through the Recovery Asset Team, IC3 worked with its partners to successfully freeze approximately $380 million of the $462 million in reported losses in 2020, representing a success rate of nearly 82 percent.”
ALTA founded the Coalition to Stop Real Estate Wire Fraud to educate consumers about the threat of wire fraud transfer scams. Businesses and organizations have partnered with the Coalition to offer tips to help consumers protect their money during the homebuying process.
ALTA provides many resources to raise awareness about wire fraud.
Contact ALTA at 202-296-3671 or communications@alta.org.