Are your clients at risk of fraud?
The real estate industry has seen an increase of fraud cases over the last several years. According to the FBI's Internet Crime Report the real estate sector saw $213 million in losses and 13,600 victims in 2020. Whether by check or wire fraud, homebuyers are at risk of losing everything if their real estate transaction becomes compromised.
The risk of wire fraud
Wire fraud occurs when money is sent to the wrong account. Wiring money to the wrong account can happen from something as simple as a typo or as sinister as scammers inserting themselves in to the transaction. Criminals typically begin the wire fraud process by reaching out via email posing as someone involved in the homebuyer's transaction (for example a closing agent). The emails usually include false wiring instructions that, if followed, send the homebuyer's money to the criminal's account, rarely to be recovered.
The risk of check fraud
Checks have been around for centuries, so you may think this traditional payment method is safe to use. However, checks contain sensitive banking information printed clearly on the front. That piece of paper is only as secure as where it ends up. Check fraud occurs when someone makes an effort to obtain money illegally using paper or digital checks by writing a bad check from their account, forging a check in someone else’s name or using a completely fake check.
In real estate, check fraud often occurs during the process of collecting, scanning, and emailing the paper check for record keeping. Criminals gain access to scanned checks by intercepting emails. From there, they'll use the account information printed on the check to connect to and empty the homebuyer's bank account.
Protect your clients from fraud
The most effective way to protect your clients from fraud is to stop using checks and wires for real estate transactions, and switch to digital payments.
Earnnest, the largest digital earnest money platform in the U.S., provides your clients with a safe, secure, and private way to send earnest money deposits. Our fully digital payments platform doesn't use wire transfers or paper checks and we never store banking information, so your clients' private information remains secure. Plus, our platform uses banking-level encryption as an added layer of protection. We verify all accounts on the front end, which means homebuyers' savings end up in the correct account every time. With Earnnest, you can rest assured that you and your clients are in good hands.