Wire Fraud in Commercial Real Estate: How We Protect Our Clients

As a commercial real estate officer at Fidelity National Title, we have witnessed firsthand the complexity and significance of real estate transactions. One of the most pressing issues we have encountered in recent years is the rise of wire fraud. This form of cybercrime has become a serious threat, particularly in the commercial real estate sector, where the transactions involve substantial sums of money. In this blog post, I want to shed light on wire fraud, discuss what our company does to protect our clients, and provide actionable steps consumers can take to safeguard their funds during a commercial escrow.

Understanding Wire Fraud in Real Estate

Wire fraud in real estate typically involves cybercriminals gaining unauthorized access to email accounts or other digital communication channels used during a transaction. They manipulate the information to trick parties into wiring funds to fraudulent accounts. These schemes can be sophisticated, often involving fake websites, forged documents, and convincing impersonations of real estate professionals.

The stakes are incredibly high in commercial real estate transactions. A single fraudulent transfer can result in the loss of hundreds of thousands, if not millions, of dollars. This not only affects the parties involved but can also disrupt the entire transaction, leading to legal complications and financial distress.

How Our Title Company Protects Clients

At Fidelity, we take wire fraud very seriously. We have implemented several layers of security measures and best practices to protect our clients’ funds and ensure the integrity of every transaction. Here are some of the key steps we take:

Secure Communication Channels
We use encrypted email services and secure portals for sharing sensitive information. This helps prevent unauthorized access to communication between our clients and our team. Additionally, we encourage the use of multi-factor authentication (MFA) for all parties involved in the transaction.
Verification Procedures
Before any funds are transferred, we have a rigorous verification process in place. This includes verifying the identity of all parties involved through multiple forms of identification and confirming the details of the wire transfer instructions through a secure channel, such as a phone call using a known, trusted phone number. This dual verification ensures that any changes in wiring instructions are genuine and not the result of a phishing attempt.
Employee Training
We regularly train our employees on the latest wire fraud schemes and cybersecurity best practices. This training includes recognizing phishing emails, understanding the importance of secure communications, and following strict protocols when handling wire transfer instructions. Our team is our first line of defense, and their vigilance is crucial in preventing fraud.
Cybersecurity Technology
We invest in advanced cybersecurity technology to monitor and protect our systems from unauthorized access. This includes intrusion detection systems, firewalls, and anti-virus software. We also conduct regular security audits and vulnerability assessments to identify and address potential weaknesses in our systems.
Consumer Education
We believe that informed clients are safer clients. As part of our service, we provide educational resources and guidance on how to recognize potential fraud and protect themselves. This includes information on how to verify wire transfer instructions and what to do if they suspect fraudulent activity.

Actions Consumers Can Take to Protect Their Funds

While we do everything in our power to safeguard our clients’ funds, it’s essential for consumers to be proactive as well. Here are some steps you can take to protect yourself from wire fraud during a commercial real estate transaction:

Verify All Communications
Always verify any communication related to wire transfers. If you receive an email or phone call with wiring instructions, call your real estate agent, attorney, or title company directly using a known, trusted phone number to confirm the information. Never rely solely on contact information provided in the email or message itself.
Use Secure Communication Channels
Whenever possible, use secure communication channels for sharing sensitive information. Avoid sending wire transfer instructions or personal information via email. Instead, use encrypted email services or secure online portals provided by your real estate professionals.
Be Skeptical of Last-Minute Changes
Be wary of any last-minute changes to wiring instructions or other critical information. Fraudsters often create a sense of urgency to rush you into making a mistake. Always verify such changes directly with a trusted source before taking any action.
Enable Multi-Factor Authentication (MFA)
Enable multi-factor authentication (MFA) on your email accounts and other online services. MFA adds an extra layer of security by requiring you to verify your identity using a second factor, such as a text message code or a fingerprint scan, in addition to your password.
Monitor Your Accounts
Regularly monitor your bank accounts and other financial accounts for any unauthorized transactions. If you notice any suspicious activity, report it to your bank and your real estate professionals immediately.
Report Suspicious Activity
If you suspect that you have been targeted by wire fraud, report it immediately to your bank, your real estate professionals, and the FBI’s Internet Crime Complaint Center (IC3). Prompt reporting can increase the chances of recovering your funds and preventing further fraud.

The Importance of Vigilance and Collaboration

Wire fraud is a significant threat in the commercial real estate industry, but with vigilance and collaboration between all parties involved, it can be effectively mitigated. At Fidelity National Title, we are committed to protecting our clients through robust security measures, thorough verification procedures, and continuous education. However, it’s essential for consumers to remain proactive and take steps to safeguard their own funds.

By staying informed, using secure communication channels, and verifying all instructions, you can significantly reduce the risk of falling victim to wire fraud. Remember, when it comes to protecting your hard-earned money in a commercial real estate transaction, it’s better to be safe than sorry.

And, as always, if you have any questions about your commercial real estate transactions, contact Michele at michele@seiboldgroup.com to learn how we can help protect your investment.