Real Estate Journal — Insurance/Title — October 12 - 25, 2018 — 15A


M id A tlantic

I nsurance /T itle

By Jeremy Yohe, American Land Title Association Wire fraud threat continues to grow, targets home construction


email communications, verify- ing instructions with buyers using known phone numbers, and asking banks to match both the recipient’s account number and payee information when sending wires. We issue warnings to our customers on websites and at the bottom of every email. What is so frus- trating is there is no amount of money we can spend to protect our customers from being tar- geted by these criminals.” Jeremy Yohe is vice presi- dent of communications for the American Land Title Association. 

n June 2018, federal au- thorities coordinated a major law enforcement ef-

lenders, originators, investors, even, if indirectly, Realtors, are all on the hook in the long

(R-Ill.) recently asked the Federal Reserve System to take a more proactive role in

testimony, Mennenoh sug- gested two areas to help pre- vent wire fraud. First, he said all parties involved in the real estate transaction need to help educate customers about the dangers and how to protect their data and money. He also suggested that financial insti- tutions should match not only the account number but also the payee’s name when there is a wire transfer. “As an industry we have im- proved our digital hygiene and taken an array of steps to com- bat this fraud,” Mennenoh said. “This includes using secured

fort to disrupt international BEC schemes designed to intercept and hijack wire t r a n s f e r s f r om bus i - nesses and individuals. T h e s i x -

“While the title industry—thanks in large part to the American Land Title Association’s continued efforts to raise awareness—may be a key flashpoint for the earli- est cases of wire fraud, all parties are vulnerable,” said Thomas Cronkright II.

run. We strongly believe all elements of the greater hous- ing, real estate and mortgage industry need to join the fight against wire fraud as it contin- ues to grow.” U.S. Rep. Randy Hultgren

preventing wire fraud involv- ing real estate transactions. Hultgren pointed to congres- sional testimony about wire fraud given last year by ALTA 2018 Past President Dan Men- nenoh ITP, NTP. During his

Jeremy Yohe

month sweep called Opera- tion Wire Wire resulted in 42 arrests in the United States and recovery of approximately $14 million in fraudulent wire transfers. The sting highlights the alarming growth of wire fraud. According to the FBI’s 2017 Internet Crime Report, the Internet Crime Complaint Center (IC3) reported losses exceeding $1.4 billion last year. More importantly to the title and settlement services industry, Business Email Com- promise (BEC)/Email Account Compromise (EAC) was the top crime in 2017 with the re- ported loss at more than $675 million. Both scams typically involve one or more fraudsters, who hijack legitimate business email accounts through so- cial engineering or computer intrusion techniques to con- duct unauthorized transfers of funds. Criminals committing wire fraud are growing their range of targets as well, with the homebuilding industry in- creasingly in their crosshairs, according to a white paper published by CertifID. The paper titled “Wire Fraud Be- gins to Hammer the Construc- tion Industry,” details frauds perpetrated on homebuilders, illustrating how fraudsters prey upon the builders. Using a few sensitive, stolen details about a pending transaction, criminals send convincing yet false payoff letters, open bank accounts in the name of the targeted developer or employ a technique known as identity spoofing. “While the title industry— thanks in large part to the American Land Title Asso- ciation’s continued efforts to raise awareness—may be a key flashpoint for the earli- est cases of wire fraud, all parties are vulnerable,” said Thomas Cronkright II, one of the authors of the white paper. “Today, we’re seeing where builders can be targeted. But

sales actually occur has already forced a reexamination of the percentage rent model, Harris notes. “It is possible that certain leases could one day be priced based on the cost, expressed as a calculated ratio, of persuading a customer to buy a product or service,” he writes. “Alternately, rent could be calculated on a price-per-lead basis in which some retailers literally pay just for the footsteps into their stores.” Were that to happen, ecommerce and brick-and-mortar retailing could finally have their incentives fully aligned. But big changes always create challenges, Harris notes. “The increase in rents could appear drastic to tenants, but justifiable to landlords who have made huge investments in their properties and data capabilities,” he explains. Some of the resulting efficiencies could turn out to be counterintuitive as well. Today, for example, landlords have every reason to push for larger store sizes. But under this alternative rubric, property owners want to increase the number of tenants and may be happy with smaller stores as long as the ultimate customer fit between tenants is cohe- sive. “It will be interesting to see whether contracts between landlords and tenants will one day closely mimic traditional marketing agreements,” Harris concludes. “With time such a change could remake—and perhaps even renew—the retail landscape.”

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