ICYMI: Wall Street Journal: The Startups Safeguarding Real Estate Against Schemers and Scammers
August 15, 2019
In a new must-read, the Wall Street Journal’s Beth DeCarbo reveals the pervasive issue of real estate wire transfer fraud, and the industry leaders and start-ups trying to confront the issue. Tom Conkright is one of thousands of the real estate wire transfer fraud victims, and he wants to be the last. Working in tandem with another victim, the duo created CertifID, “an online portal that authenticates identities of parties in a real-estate transaction and securely sends wire-transfer instructions,” DeCarbo reports.
DeCarbo also highlights the Coalition to Stop Real Estate Wire Fraud, which launched in June: “Working with Community Mortgage Lenders of America, the Real Estate Services Providers Council and the American Escrow Association, ALTA hopes to educate industry professionals and consumers about the threat.” To learn more about the Coalition to Stop Real Estate Wire Fraud, visit stopwirefraud.org.
DeCarbo’s story is excerpted below and available online in full here.
Tom Cronkright learned the hard way that the real-estate industry needs better ways to protect itself and consumers from wire-transfer fraud.
His Grand Rapids, Mich.-based Sun Title company received a certified check for $185,000 in the mail toward the purchase of a $670,000 property. The check was deposited in the bank, and the funds, minus a $5,000 fee, were wired to the seller the next day.
Five days later, he learned that the check had bounced—and both the buyer and seller vanished. Sun Title had been scammed.
Mr. Cronkright, along with Sun Title’s President Lawrence Duthler, were among the first victims in a wave of wire-fraud schemes that for the past five years has devastated the real-estate industry. Last year, there were at least 11,300 victims of real-estate wire fraud who lost a total of nearly $150 million, according to the FBI’s Internet Crime Report released in April.
A second fraud attempt the following year spurred Messrs. Cronkright and Duthler to take action. This time, a fraudster hacked a real-estate agent’s email account and sent false wire-transfer instructions to a buyer. Luckily, a bank manager spotted the spoofed email address and stopped the transfer.
Mr. Cronkright says fixing the problem came down to one thing: “proper identity verification.”
The men created CertifID, an online portal that authenticates identities of parties in a real-estate transaction and securely sends wire-transfer instructions.
... In June, the American Land Title Association, a trade group for title companies, launched the Coalition to Stop Real Estate Wire Fraud. Working with Community Mortgage Lenders of America, the Real Estate Services Providers Council and the American Escrow Association, ALTA hopes to educate industry professionals and consumers about the threat.
What’s missing are standard industry practices that use the latest technology to avert real-estate fraud. Agents, lenders and title and escrow companies across the U.S. all manage transactions differently, and states have their own rules. As a result, consumers have no way of knowing if home sales are handled securely.
Contact ALTA at 202-296-3671 or [email protected].