Scammers are targeting a new generation of homebuyers
With homebuying season in full swing, homebuyers are deciding to make one of the biggest purchases of their lives. If the pandemic has taught us anything, it’s that a safe and comfortable home environment is crucial.
That’s why, despite rising housing costs, U.S. homeownership had the largest annual increase on record at the beginning of the pandemic. As more people worked remotely and spent more time inside, many Americans wanted a new place to call home.
The share of millennial homebuyers–people aged 23 to 41–has steadily increased over the past several years. According to a study from the National Association of Realtors, millennials made up 43% of homebuyers in 2021, up from 37% the previous year. Almost two out of three millennials between the ages of 23 and 31 found the home they ultimately purchased on the internet.
However, as interest in homeownership continues to rise, it has never been more important to ensure that millennial homebuyers are equipped with the knowledge to help them succeed. While the homebuying process is now easier to navigate thanks to virtual tours and meetings with realtors, real estate-related cybercrimes are also on the rise.
Unfortunately, bad actors often take advantage of first-time homebuyers, who are not as familiar with the nuances of the closing process. Earlier this year, the FBI’s Internet Crime Complaint Center released its 2021 Internet Crime Report, which found that in 2021, reported losses from real estate-related cybercrimes totaled $350,328,166, an increase of 64% over 2020.
One of the most common real estate-related cybercrimes is wire transfer fraud: a sophisticated tactic used by cybercriminals to trick unsuspecting homebuyers into wiring their down payments and closing costs to a fraudulent account. These cybercriminals usually find information about upcoming real estate closings by hacking into unsecured email accounts, often the potential homeowner. Posing as legitimate representatives of financial institutions, criminals then email homebuyers fraudulent wire transfer instructions.
With home prices up nearly 19% last year, bad actors are jumping at every opportunity to trick homebuyers into wiring their hard-earned cash. However, while we cannot stop every cybercriminal from scamming innocent homebuyers, we know that through increased awareness and educational efforts, there will be fewer victims.
The American Land Title Association (ALTA) provides several resources on our consumer education website about how to protect yourself from phishing attempts and step-by-step instructions for what to do if you or someone you know is targeted by a cybercriminal.
Even if an email appears to be legitimate, we urge all homebuyers and sellers to confirm the wire instructions they receive with their title company, either in person or by calling the phone number on the company’s website. It is critical that the title company handling the funds independently verifies each wire sent.
If you suspect you are the target of a wire fraud attempt, notify your financial institution immediately, contact your local FBI office, and file a complaint with the Internet Crime Complaint Center.
Luckily, we know that educational efforts by real estate professionals and industry groups are working. The number of victims of real estate-related cybercrimes fell in 2021, with 15% fewer victims than in 2020. However, with more money at stake due to rising home prices, homebuyers must remain vigilant in 2022.
As the title industry continues to advocate for increased awareness of this issue to combat these scams, we invite you to join us in spreading the word. Together, we can make sure that fewer and fewer victims fall prey to these schemes.
Diane Tomb is the CEO of the American Land Title Association.
More must-read commentary published by Fortune:
- Why a nurse’s recent homicide conviction could make America’s hospitals even less safe
- The plastic elephant in Amazon’s boardroom
- Scary headlines about food shortages are misleading. Here’s why
- Career hoarding is on the rise—but it comes at a cost
- A recent case could undermine the rules that have been protecting taxpayer money from fraud since the time of Lincoln
Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.