As consumer credit cards accounted for 32% of payments, and debit cards for another 30%, cash accounted for only 16% during the first quarter of 2023, the Fed reported. Within that context, in today’s digital age, the real estate industry faces an ever-growing threat from cybercriminals due to this digital migration. As a title insurance agency, we’ve witnessed the devastating impact of wire fraud and other cyber-attacks on real estate transactions. The FBI reported that in 2023 alone, there were 13,638 Internet crime incidents in the real estate industry, resulting in more than $213 million in losses.
The Increase in Cyber Crime
This marked a significant increase from previous years, highlighting the urgent need for heightened cybersecurity measures. One of the most prevalent schemes targeting real estate closings is Business Email Compromise (BEC). In these attacks, cybercriminals intercept email communications between parties involved in a transaction, often posing as legitimate participants to redirect wire transfers to fraudulent accounts.
The sophistication of these attacks has grown, with criminals now using AI technology to clone voices and images, making their fraudulent communications even more convincing.
Protection
To protect clients from these threats, implementing robust security measures is crucial. Start by educating all parties involved in transactions about the risks of wire fraud and the importance of verifying any changes to payment instructions through trusted channels.
Utilize secure, encrypted communication platforms for sharing sensitive information, and consider implementing multi-factor authentication for all accounts involved in real estate transactions.
The Growing Role of Title Insurance
Title insurance can play a vital role in protecting against fraud. While traditional policies primarily cover issues that occurred before the purchase, some newer policies offer protection against fraudulent deeds filed after the transaction.
This additional layer of security can provide peace of mind to homeowners and help mitigate the financial risks associated with title fraud. As real estate professionals, we have both legal and ethical responsibilities to safeguard our clients’ interests. The American Bar Association’s Model Rules of Professional Conduct require attorneys to make reasonable efforts to prevent unauthorized access to client information
This extends to implementing appropriate cybersecurity measures and staying informed about evolving threats. In an industry where large sums of money change hands regularly, the stakes are too high to ignore cybersecurity. By staying vigilant, educating ourselves and our clients, and leveraging the protections offered by comprehensive title insurance, we can work together to create a more secure environment for real estate transactions. Don’t leave your clients’ investments and your reputation vulnerable to cyber threats. Contact our agency today to learn more about how our title insurance products and cybersecurity expertise can help protect your real estate transactions. Let’s work together to build a safer, more secure future for the real estate industry.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single-family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.