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How to Spot Seller Impersonation Fraud

How to Spot Seller Impersonation Fraud

Mariah McQueen

As new types of real estate fraud continually surface, there is a growing need for taking proactive measures to ensure the protection of both yourself and your customers. One particularly insidious form of deception that has grown this year is targeting vacant lots, with as many as 56% of title companies experiencing this new type of fraud in the past six months.  In this blog, we recap our recent discussion with Tyler Adams about the latest additions to the unfortunate list of scams – seller impersonation fraud.

A Little Bit About Our Guest

Tyler Adams is the co-founder and CEO of CertifID, a software company dedicated to stopping fraud through identity verification. Tyler and his company are leading the way to safer real estate transactions for all parties involved.

What is Seller Impersonation Fraud?

Seller impersonation fraud is a deceptive scheme where fraudsters fake the identities of legitimate property owners with the intent to sell properties they have no legal rights to. To emphasize the gravity of the situation, 73% of real estate firms have reported witnessing an upswing in such fraudulent attempts.

The operations of these fraudsters are methodical and deceptively simple. They start by combing through public records to pinpoint properties devoid of mortgages or other liens.

The fraudsters often gravitate towards vacant lots, rentals, or other properties. These records not only give them potential properties but also reveal the identity of the rightful landowner. The next step is to reach out to real estate agents, presenting themselves as the property owners and seeking to list these properties for sale.

To avoid detection, the fraudsters limit all communications to email and electronic channels, avoiding face-to-face interactions. They often weave a narrative of being remote sellers, which explains their virtual presence. If left unchecked, this intricate web of deception culminates at the closing stage of a sale, leaving the legitimate property owner and potential buyer entangled in a complex legal and financial mess.

What are the Major Red Flags for Seller Impersonation Fraud?

While seller impersonation fraud is sophisticated, it’s not invincible to a discerning eye. Here are some of the key red flags that something is amiss:

Mysterious Online Origins

If the “seller” materializes solely through an online search or a lead service and shares no prior association or connection with the real estate agent, it’s a cause for concern.

Listing Property Below Market Value

A property listed significantly below its market value is a tantalizing bait many can’t resist. However, you should question whether it is a genuine distress sale or a trap being set by impersonators.

Quickly Accepting Offers Without Negotiation

If the “seller” seems too eager to accept offers without batting an eyelid or negotiating terms, it’s a reason for suspicion.

Overt Preference for Cash

While preference for cash sales aren’t uncommon, a “seller’s” overt preference for cash over other transaction methods is a red flag.

Dodging Face-to-Face Interactions 

If the “seller” consistently evades in-person meetings, especially critical ones like notary signings, and instead pushes for a remote notary of their own choice, it indicates that not everything is as it seems.

Seller Impersonation Fraud vs. Payoff Fraud

As many in our industry are aware, seller impersonation isn’t the only menace. Tyler notes that seller impersonation is the ‘hot fraud of this year with more sophistication’. The most common one besides seller impersonation is payoff fraud.

In payoff frauds, scammers mimic the lender’s side, persuading agents to send money their way. Tyler notes that his company, through its solution, PayoffProtect, intercepts an average of three such frauds per week. He further says that, given the average payout of a whopping $250,000, it’s no wonder fraudsters are upping their game in this type of fraud.


How Can Title Companies Prevent Seller-Impersonation Fraud?

Here are a few proactive steps you can adopt to guard against seller-impersonation fraud:

Dig Deeper into Speed

Real estate agents, often eager to close deals, might inadvertently speed through vital steps. As a title professional, recognize this urge for speed and take a moment to probe deeper. Ask pertinent questions to ascertain the reasons behind the rapid pace, because it could be a mask for deception.

Trace the Lead’s Origin

Before diving deep into the transaction process, ask the real estate agent to clarify the origin of their lead. Have they verified the seller’s identity? Was there an in-person or video call meeting? Understanding the lead’s genesis can shed light on its legitimacy.

Initiate a Direct Dialogue with the Seller

Instead of relying solely on the real estate agent, contact the seller directly and embark on an intake process. Request copies of their ID for verification, but don’t stop there. Delve deeper by asking for documents a fraudster is unlikely to possess, such as the original title commitment, closing disclosure, or recent tax payment receipts.

Leverage Technology 

Employing technology is a powerful strategy in the ongoing battle against seller impersonation fraud. Advanced software and digital tools like CertifID can enhance the security of real estate transactions, ensuring that no one’s time is needlessly wasted. 

One of the key advantages lies in their ability to swiftly and accurately verify the identity of sellers and other transaction stakeholders. By leveraging digital solutions, title professionals can establish the authenticity of individuals involved in the transaction process early on, reducing the risk of falling victim to fraudulent impersonation. 

Furthermore, technology enables secure communication channels, safeguarding sensitive information and ensuring that confidential details, such as wire instructions, remain impervious to interception. In essence, technology not only streamlines the verification process but also fortifies the defenses, making it significantly more challenging for fraudsters to infiltrate and exploit real estate transactions.

Create a Culture Where It’s Okay to Slow Down

A significant pitfall ensnaring title agents is the internal pressure prevailing within their companies. Add to this the weight of client expectations, and the outcome can often be a rush to complete tasks without due diligence. This hurried approach can inadvertently leave gaps that fraudsters are all too keen to exploit.

That’s why you should champion a culture where slowing down is not only acceptable but encouraged. Encouraging your team to take the necessary time to review, verify, and validate can make all the difference. Engage your team in regular educational discussions, emphasizing their pivotal role in ensuring each transaction is both smooth and safe.

Key Takeaway

Vigilance is your strongest ally in preventing seller impersonation fraud. By staying informed, adapting processes, leveraging the right technology, and investing a bit of extra effort in research, we can all contribute to its prevention. Seller impersonation fraud is not invincible; it can be thwarted with the right knowledge and proactive measures in place. We can all do our part to ensure the integrity and security of real estate transactions.

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Mariah McQueen Marketing Generalist

Mariah McQueen is a Marketing Generalist at PropLogix who is passionate about protecting homebuyers and enjoys writing about subjects valuable to the title industry. She currently lives in Orlando and enjoys practicing Jiu-Jitsu, traveling, and playing the piano.