Top 5 Wire Fraud Prevention Myths

We are breaking down some of the most common fraud prevention myths that could expose your business to wire fraud risks.

Top 5 Wire Fraud Prevention Myths

We are breaking down some of the most common fraud prevention myths that could expose your business to wire fraud risks.

Top 5 Wire Fraud Prevention Myths
Written by:

Katie Stewart

Read time:

8 minutes

Category:

Wire Fraud

Date:

Dec 9, 2022

As a real estate professional, you already know that wire fraud is a real and terrifying possibility in today's digital world. 

In fact, according to the 2022 ALTA survey, one-third of all wire transfers initiated in 2020 were targeted with a potential wire fraud scam, and 86 percent of title and settlement company respondents saw cyberattack levels stay the same or increase in the last year. Some title and settlement companies have turned to other methods to protect their transactions, such as real-time payments or overnighted checks. However, these methods can still leave your business and customers exposed to significant risk.

In other words, it is not a matter of if your transactions will be targeted, but when

Although you may be taking many of the right steps to protect your business and your clients, those steps may not be enough to counter the attacks of today’s cybercriminals. At CertifID we come across some common misconceptions around what actions will actually provide the protection we all want. 

Busting the 5 Top Wire Fraud Prevention Myths

Let's break down some common fraud prevention myths that, unless addressed, can still leave you vulnerable.

Myth 1: We use encrypted email.

Enforcing encrypted email is an important step in protecting your business. However, this security chain is only as strong as its weakest link. 

For example, if another party in the transaction is not using encrypted emails—such as the home buyer, seller, or other independent agents or business partners—it can leave your sensitive information and wiring instructions at risk of being intercepted or manipulated.

In fact, losses relating to business email compromise (BEC) increased by 33 percent over the previous year, with the per-incident loss increasing to $120,277 in 2021. In total, BEC accounted for nearly 35 percent of all losses reported to the FBI’s IC3 Report in 2021.

Myth 2: We only send secure fax wire instructions.

Although there are many fax services available today, fax is not as protected as you may think. 

Although some services providing fax transmissions have additional security features woven into their communications, in other cases—especially with free services—fax data is sent with no cryptographic protections. Not only that, but also the logistics of using fax services mean that one cannot always verify who is on the other end of the line. 

Myth 3: We use certified checks.

Checks are traditionally considered a secure way to transfer funds at the end of closing because of the controls banks and notaries typically provide. However, this method can still leave your business at risk.

Unfortunately, fraudsters have been known to impersonate notaries in hopes of getting checks sent to them. So always verify the identity of a recipient before sending money, no matter the means. 

Additionally, consider the added costs to your business of overnighting checks as a standard practice. Depending on your transaction volume, overnighting checks can quickly add up. You may also find that checks won’t work in all your transactions, leaving you with the need to support safe wire transfers.

Myth 4: We only work with a few lenders we are very familiar with.

Familiarity with other real estate professionals does have its advantages, helping streamline processes and complex closings. However, relying on this as a security method is a recipe for risk.

During the rush of a busy closing, it can be easy to overlook a slightly altered phone number, email address, or fax number after being lulled into a sense of comfort while working with a familiar name. As a result, sensitive information could end up with the wrong person.

You might even be relying on a proverbial Rolodex (whether in spreadsheet form or otherwise) to perform name and account matching and validation, but this does not translate well to securing wired transactions. In addition to being a manual, time-intensive process to verify identities for a single transaction, maintaining a complete and updated spreadsheet of contact information is nearly impossible

The result?

Your business can quickly be outpaced by new threats that manipulate the gaps in a manual process and allow criminals to gain a big payday. 

Myth 5: We are considering moving to real time payments.

Some companies are evaluating new emerging payment types, such as real time payments. While considering new payment types is a great way to evaluate the benefits of new technology, leveraging them too soon before all the potential risks are known can leave your business exposed.

For example, real time payments don't solve the need to verify that you have the correct identity and account details of the recipient (that they are who they say they are), before you send a payment. What's more, it could actually make the potential losses from fraud worse, in that it could be even harder to get the funds back with certain new payment types than with a traditional wire. 

Finally, customers may not be comfortable utilizing a new payment type without a lot of education and explanation, which could potentially slow down the closing process.

CertifID: The Proven Leader in Wire Fraud Protection

As a busy real estate professional, it can be difficult to stay on top of the latest threats and best practices to thwart would-be criminals. 

That’s why more businesses like yours are choosing to protect their transactions from evolving forms of wire fraud with CertifID’s industry-leading platform. 

CertifID not only reduces the risk of falling victim to all types of wire fraud, but also can integrate into your existing workflows.

Ready to talk about your wire fraud protection plan? Reach out and schedule a demo. We’re here to help.  

And, stay informed with these key related resources.

P.S. In the October 2022 session of To Catch a Fraudster, Cheri Hipenbecker from Knight Barry Title had this to say about the new mortgage payoff wire fraud protection solution: “Our staff loves it because it takes [their time] from 20 mins to 2 hours.. down to 20 seconds.”

Katie Stewart

VP of Customer Success

Katie's background combines both IT and education. Her degree is in Management Information Systems, and she spent her first four years in the workforce as an IT business analyst. Katie took a career turn and joined Teach for America and worked in inner-city schools in Indianapolis as a math teacher and eventually an assistant principal. Today she combines her IT nerdiness and love of teaching, helping customers find success every day.

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