Title insurance professionals reported cyber criminals attempted to trick employees to wire funds to a fraudulent account in a third of all real estate and mortgage transactions, according to ALTA’s 2021 Wire Fraud and Cyber Crime Survey. However, training and education seem to be working as funds were only wired to a fraudulent account in a little over 8% of these attempts.
Nationwide, 76% of title agents reported wire fraud attempts were the same or increased in 2020. Fraud attempts and losses were up nationwide due to the pandemic, according to the Federal Trade Commission.
The survey of nearly 550 title agents nationwide was conducted in March 2021 by ALTA’s Research & Analytics Work Group. It asked agents about their experience with cybercrime and wire fraud.
“The title and settlement industry continues to lead the charge raising awareness about wire transfer fraud, educating their staff and implementing procedures to safeguard real estate funds,” said Diane Tomb, ALTA’s chief executive officer. “Unfortunately, criminals continue to modify their tactics and prey on unsuspecting consumers. Working with our partners involved in the real estate transaction, along with government officials, our members 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.”
A full recovery of lost funds was only possible in 29% of cases. In 40% of the cases, less than 10% of the funds were recovered. Of companies that recovered funds, 58% started the process by contacting their bank. This highlights the need to quickly work with the financial institution involved in the wire and to report all criminal activity to the FBI’s Internet Crimes Complaint Center.
Funds wired by an employee to a fraudulent account were only recovered less than a quarter of the time. This highlights the need to quickly work with the financial institution involved in the wire and to report all criminal activity to the FBI’s Internet Crimes Complaint Center.
On a broader scale, the FBI reported that through its Recovery Asset Team, the IC3 worked with its partners to successfully freeze approximately $380 million of the $462 million in reported losses due to all types of wire fraud in 2020.
“IC3 has continued to strengthen its relationships with industry and others in the law enforcement community to reduce financial losses resulting from BEC scams,” the FBI said.
While the availability of cyber insurance with phishing coverage has grown in the past few years, only 20% of companies that suffered losses were made completely or partially whole by insurance.
Of those who took the survey, 81 percent work at companies with 10 or less employees. Creating and hiring staff solely focused on cyber security can be difficult for smaller organizations.
Resources ALTA has created several resources to help these organizations:
ALTA Outgoing Wire Preparation Checklist: Use this checklist as a best practice for verifying outgoing wire information.
ALTA Rapid Response Plan for Wire Fraud Incidents:The standard ALTA Rapid Response Plan for Wire Fraud Incidents has been developed by the ALTA Information Security Committee. Download and customize:
How to Complete an IC3 Report Video
ALTA Wire Fraud Infographic: ALTA has produced this Rack Card explaining Wire Fraud that includes the steps a consumer should take to avoid becoming a victim of wire transfer fraud.
Wire Fraud Tips Video: Share this one-minute video with homebuyers so they know how to protect their money.
ALTA Wire Fraud Video:This two-minute video provides four tips on how consumers can protect their money and offers advice on what to do if they have been targeted by a scam.
More resources can be found here.
Also, ALTA’s Marketplace can help companies navigate many cyber-related vendors and services.