Is Your Real Estate Deal a BEC Scam Target?
Business Email Compromise (BEC) scams linked to real estate have hit record-breaking levels of financial losses in 2022, and are a rising concern for both industry professionals and potential homeowners alike. These types of scams, which employ social engineering techniques alongside a technological component, have surged for the second consecutive year, as reported to the Federal Bureau of Investigation (FBI).
In a typical BEC scam, fraudsters impersonate an individual involved in the real estate transaction, such as a seller, buyer, or even the real estate agent. Using this fraudulent identity, they may send an email to the other party involved in the deal, asking them to redirect funds, usually the mortgage payments, to a different account—often claiming there has been a last-minute change in plans. These convincing impersonations and manipulations are causing significant financial damage to the unsuspecting victims.
The FBI received 2,284 complaints related to this type of scam in 2022. Although this fell short of the peak of 2,593 cases in 2018, it is the second-highest annual figure ever recorded. More concerning, however, is the financial toll these scams have inflicted. Losses associated with BEC scams in 2022 totalled a staggering $446.1 million, compared to $430.5 million in 2021 and $242.9 million in 2018.
This steep increase in losses can be attributed to the fraudsters' ever-improving tactics and the vulnerabilities emerging from the increasing use of technology within the industry. Their deceptive methods now even include creating convincing fake federal or state identification information, and automated calls designed to extract personal information from consumers.
The situation is made even more dire by the fact that, according to industry experts, these figures may be underreported. This is due to a combination of victims not realizing they have been scammed until it's too late and some choosing not to report the crime due to embarrassment or fear.
Interestingly, the increase in BEC scams has also been linked to the rise in real estate costs in recent years, indicating the broad impact of this crime. As fraudsters become more successful in their operations, the losses suffered by victims are likely being factored into property prices, contributing to their upward trend.
While the situation is concerning, industry experts believe that it can be mitigated. This involves increasing awareness of the problem, improving preventative measures such as real-time verification systems, and better equipping teams with the right tools to combat these scams.
In a world where technology and digital communication are integral to everyday transactions, including real estate, the threat of BEC scams is real and growing. It is essential for anyone involved in real estate transactions to be aware of this threat, stay vigilant, and use the available resources to protect themselves and their investments.