How to Protect Yourself from the Rise of Real Estate Fraud Part 2

“Welcome to the Golden Age of Scams” read Time Magazine’s September 18, 2024 headline.  “U.S. consumers lost a record $10 billion to fraud in 2023, according to the Federal Trade Commission, a 14% increase over 2022. That tally is almost certainly an undercount. More than three-­quarters of victims, don’t report to authorities that they’ve been defrauded.”

While it may be a golden age for scammers, it has become the dark ages for victims.  And while it is true society has always suffered from sinister criminals, the extreme escalation of deceptive entrapment has been breathtaking.  Hucksters have morphed into hackers.  Snake oil salesmen have evolved into scammers.

Perhaps exacerbating the problem lies within the ease by which nefarious actors move about undetected.  In times past we barred the doors and shuttered our windows to keep insidious intruders out.  Today we invite them into our living rooms through an errant mouse click.  They plunder our finances and destroy our future.  They are cunning.  We are either careless or, perhaps clueless.   

First Story: Real Estate Fraud Part 2

Margrit Pritchard, an elderly California woman suffering from dementia vanished in May 2018. Perplexed by her sudden disappearance, her family never received word about her whereabouts.  Five years later and over 3,000 miles from home, her picture appeared.  Only it was used in an AI real estate scam.

It was Margrit’s picture alright, but it had been hijacked by a woman claiming to be Margaret McCartney.  MS McCartney alleged owning a vacant lot in Hallandale Beach, Florida.  The real estate ruse started with a dubious-looking West Virginia Driver’s License supposedly issued to Margaret McCartney but featuring the photo of the missing Margrit Pritchard. 

Not convinced of the driver’s license validity, representatives from Florida Title and Trust made a follow-up phone call.  “Is this Margret McCartney?”  The title company explained that to proceed with the listing, they would need to conduct a live video call with her. 

“I’m hard of hearing,” Margaret replied, “I can’t do that.”  The forceful pushback reinforced the title company’s suspicions.

But days later “Margaret” emailed the representatives and consented to a Zoom call to prove she was real.  “Good morning,” read the message.  I am available now.”

Lauren Albrecht, President of Florida Bank and Trust noticed something unusual about the video. While the face resembled the photo of the woman on the West Virginia driver’s license, the body seemed rigid and fixed. ”It seemed eerily unresponsive.”  When Lauren asked “Margaret” to raise her right hand and swear in, nothing happened.

It became clear to Lauren and her colleagues, “We were witnessing a deep AI fake.”  They voided the transaction.

To watch the YouTube video from the original report, view it here.

To find out how to protect your property from fraudsters, please read my previous blog, “How to Protect Yourself from the Rise of Real Estate Fraud Part 1” found here.

Second Story: Real Estate Fraud Part 2

The most common real estate fraud takes place during the wiring of funds.  I tell my clients all the time, “DO NOT, UNDER ANY CIRCUMSTANCE, EVER, EVER accept any changes to the wiring instructions you receive from the title company. Why? Wire fraud is now a common occurrence in our industry.  Then I tell them, “The only exception to this rule is if I call you.  That’s it.  Otherwise, never accept a change.”

Recently I had to change my instructions.  Why?  Read what happened this summer to a first-time West Coast buyer.

“On the night before my closing, I received an email from the title company.  It looked exactly like the other ones I received.  The logo, font, formatting, aesthetics, signature line – everything was precisely the same.  The officer, who I had been dealing with, provided new instructions for wiring my money. They also said my realtor would be calling to verify everything.”

“About fifteen minutes later, I received a text from my agent asking if now was a good time to talk?”  “Sure,” I replied. 

Then she called.  She confirmed the details I received in the email. It sounded just like her except something seemed a bit off.  She sounded so formal.  Now if you know my agent, she is anything but stuffy.  I passed it off.  Maybe she had a long tough day.”

Fortunately, for the would-be victim, he called the title company the next morning before phoning his lender.  “I didn’t sleep well the night before.  When I woke up, I had a knot in my stomach.  I thought maybe it was nerves.  To calm myself, I called.  Good thing I did.”

 How did it all go down?

 #1: A scammer hacked into a California title company's database and stole the details of the upcoming closings.  The first victim explained what followed. 

#2: “Looking back, while everything was perfectly the same, I failed to catch one small difference.  It was in the email address line.  There was a .net instead of a .com.

#3: “And the text from my agent?  The scammer spoofed her phone.” (Note: To learn more about Caller ID Spoofing, check out this article from Lifewire.)

#4: “Oh, and the phone call from her?  The fraudster recorded her voice.  He then used AI to set me up using her voiceprint.”

My New Instructions to Clients:

#1: If you receive a text from me and it looks dubious, do not text back.  Instead, start a new text using my phone number.  This will bypass the spoof. Or call me.  But again, do not reply to the original text.

 #2: I am now setting up a password with my clients.  If something seems suspicious, use it.  For instance, in the case mentioned above, if you heard me say something like, “I want you to change…” ask for the password.

As I stated earlier, scammers may be crafty, but we do not have to be careless or clueless. Be alert. Be on guard. Protect yourself.