We recently sat down with Landmark Title Vice President of Escrow Operations Tiffannie Hobgood to discuss the rising dangers of artificial intelligence (AI) in real estate fraud. She specifically addressed the dangers of seller impersonation and what real estate professionals and buyers need to know to avoid falling victim.
Tiffannie has more than 30 years of experience working in the title and escrow industry and is a proven industry leader. She strongly believes in continued education, which prompted her to earn professional designations as a Certified Senior Escrow Officer, Certified Escrow Instructor, Senior American Settlement Industry Professional and Arizona Land Title Professional. Tiffanie consistently attends industry events to stay on top of real estate trends and advancements and regularly hosts events in Arizona geared toward educating other real estate professionals about the advancing dangers of fraud in real estate. Her involvement in state and national associations also shows her dedication to the settlement industry. Tiffannie is a past president of the Arizona State Escrow Association and currently serves as the technology chair and state director. She has also served for multiple years at the national level for the American Escrow Association and is the immediate past president.
Here are her valuable insights:
What is seller impersonation fraud?
Seller impersonation fraud is a form of fraud that involves someone impersonating the seller of a property and, if successful, securing the proceeds from the sale.
How significant of a problem is it in real estate?
Seller impersonation fraud should be a big concern for anyone working in the real estate industry and is an issue property owners need to be more aware of. According to the Federal Bureau of Investigation Internet Crime Report 2023, more than $2.9 billion were lost to business email compromise (BEC) and this number is rising every year.
Advances in technology are also fanning the flames of BEC and wire fraud, which targets a variety of industries including real estate. AI is now mainstream, allowing fraudsters to easily impersonate real estate professionals through email, text, voice and video communications. Not to mention, the process of transferring money is now faster than ever and completely digital, significantly reducing the recovery window for fraud victims. Real estate is the second-highest affected industry in value of attempted wire fraud, and it is estimated that one in four U.S. consumers are targeted with suspicious communications during a real estate transaction.
How is AI impacting seller impersonation fraud in real estate?
It’s still best to meet in person and carry out the identity authentication process, but sometimes we handle transactions for clients in other states or countries. When this is the case, we must take extra steps to ensure we are working with a real person, and they are who they say. It used to be that a quick phone or video call could verify that we were dealing with an actual person, but with the advances in AI deepfakes, this isn’t the case anymore.
When it comes to AI deepfakes on video calls, there are signs we teach our employees to watch out for and discreet tests they carry out if they suspect an AI deepfake. Even though they are getting more advanced every day, AI deepfakes still tend to stay pretty still and look more like floating heads on the screen. Getting potential clients to move around on the video call is important. This can help us identify whether they are using a green screen and see if their movements look human. Sometimes we will have them show us the house, or even just ask for documents that they have to move around to retrieve. It’s also important to ask for an ID during the call so you can verify it matches what’s on file. If they don’t have an ID to provide on the call, that’s a big red flag.
What are some steps Landmark Title is taking to avoid seller impersonation fraud?
The entire team at Landmark Title takes this subject very seriously. We take many steps to verify and vet that we are working with the true owners of the property being purchased every time. One way we aim to prevent seller impersonation fraud is by utilizing programs like CertifID. CertifID is the top wire fraud prevention solution in the nation. Through their secure platform, CertifID helps us verify identities securely prior to exchanging any sensitive information. Clients will get a secure link to CertifID where they can validate their identity through a series of steps, and then exchange bank account information encouraging a safe transfer of funds.
According to the 2024 State of Wire Fraud Report, customers prevented $2.4 billion in suspected fraud through CertifID in 2023 and this number increases every year. Vetting sellers and verifying identities currently weighs heavily on the title companies handling the transactions, so we have to do a thorough job. Platforms like CertifID help us do that.
What is the best way to communicate during a real estate transaction?
Email has been a communication staple in the title and escrow industry for years, but as hackers and impersonators evolve, so must our communication practices. At Landmark Title, when dealing with wiring instructions or other sensitive and private items, we communicate through a third-party communication portal. Spoofing and spying happen when fraudsters are watching emails or other communication. The fraudsters then attempt to impersonate the title company, real estate agent, lender or seller and send fake wire instructions, which appear to have come from the title company or Seller. This is why many title companies and others in the real estate industry are making the switch to communication portals instead of traditional methods of communication. All files and communication shared on the third-party platforms can be organized and stored within the portal and only authorized users can gain access. Users must also carry out two-factor authentication to log in to the platform.
That being said, there are still many cases where a third-party portal is not utilized during the transaction process. Email and phone communication are still used every day. Buyers should make the effort to know the email addresses of important stakeholders they will be working with and be careful not to divulge any sensitive information unless they know the email they are answering comes from a trusted source. When it comes to discussing key information about a transaction, verbal communication is always best. Always double-check that the phone call is coming from a known, trusted phone number and that the voice on the other end of the line belongs to the person you are supposed to be talking to and sounds human. A known, trusted phone number is a phone number you know beforehand and can be traced back to the agent or title professional handling the transaction.
One of the first things buyers should ask when vetting a title company is what kind of communication tools they have integrated within their title and escrow systems and what protocols they have in place for traditional communication methods. This is a great way to tell how seriously a title company takes fraud prevention.
There is often communication fatigue during a real estate transaction with the near endless requests for paperwork and documentation. Fraudsters attempt to take advantage when we are under stress and deadlines, but we can’t let our guard down when we get busy. That’s prime time for a fraudster to swoop in and take advantage. Always follow all the protocols and safety measures in place and never cut corners – the risk is not worth it.
At Landmark Title, we are always here to help, and we take our responsibility of keeping all parties informed and protected seriously. Never hesitate to reach out with any questions during your transaction. Seller fraud is a scary possibility in real estate transactions, but it is our goal to help guide all parties through a safe and secure transaction. Learn more about our residential and commercial title services and get in touch here.