The Wall Street Journal - 16.08.2019

M2| Friday, August 16, 2019 THE WALL STREET JOURNAL.

A SAMPLING OF STARTUPS WORKING TO AVERT WIRE-TRANSFER FRAUD

Lawrence Duthler, left, and Tom

Cronkright, creators of CertifID

and partners in Sun Title, a title

company in Grand Rapids, Mich.

tate transaction and securely

sends wire-transfer instructions.

CertifID is one of a number of

startups that have emerged to

protect buyers and sellers from

Association, ALTA hopes to edu-

cate industry professionals and

consumers about the threat.

What’s missing are standard in-

dustry practices that use the lat-

est technology to avert real-estate

fraud. Agents, lenders, and title

and escrow companies across the

U.S. all manage transactions dif-

ferently, and states have their

own rules. As a result, consumers

have no way of knowing if home

sales are handled securely.

Mr. Cronkright, the CertifID

chief executive, thinks any solu-

tion should be multilayered and

involve all of the players in a real-

estate transaction. “The industry

needs to be aware that there’s a

problem,” he says. “I think if any-

one subscribes to any single solu-

tion in cybersecurity, that’s not

going to work.”

COUNTING HOUSE|BETH DECARBO

The Financial Fraud Fighters

Wire-transfer fraud is rampant and hitting the real-estate business hard. A new industry is emerging to help stop it.

BRIAN KELLY FOR THE WALL STREET JOURNAL

HOW TO AVOID

GETTING SCAMMED

In July, the Consumer Finance

Protection Bureau published a

fraud alert for wire transfers

of earnest money, down pay-

ments, closing costs and loan

payoffs. Here’s how you can

avoid a wire-transfer scam:

Never follow wire-transfer

instructions sent via email.

Verify the closing instructions,

including the account name

and number, with your trusted

representatives either in per-

son or by using a predeter-

mined phone number. Simi-

larly, never email financial

information.

Pay attention to email ad-

dresses related to the trans-

action. A legitimate address

like [email protected] could

be confused with a spoofed

email like [email protected]

or [email protected].

Keep computer security

patches and antivirus soft-

ware up to date. Change your

passwordevery90daysand

enable two-step authentica-

tion on your email account.

Suspect a scam? Contact

the bank immediately and re-

quest a wire recall. To recover

large, international wire trans-

fers, ask the bank to contact

the local FBI office and request

a Financial Fraud Kill Chain.

count numbers are encrypted be-

fore the transfer request is sent.

This portal is currently available in

a handful of states.

ZoccamLaunched nationally last

year, this mobile app lets the real-es-

tate agent send a picture of the

buyer’s personal or certified check di-

rectly to the title company. No ac-

count information of the sender or

recipient is stored on the app, which

makes it less likely that funds can be

mishandled or misdirected. The app

is available in 44 states, says Ashley

Cook, founder and CEO of Zoccam.

ModusThis title and escrow com-

pany created a portal for real-estate

agents and their clients to trans-

fer earnest-money deposits.

The buyer logs into the

Modus website and con-

nects directly to her

bank using her online-

banking username and

password. The buyer

then transfers the funds

directly to the intended

recipient via the portal so

that no bank account and

routing information is exchanged

between parties in the transaction.

The portal launched in July 2018 for

users in Washington state, with

plans to go national over time, says

Alex Day, the chief executive.

TrustFundsThis company has cre-

ated a portal that is integrated into

the Multiple Listing Service, says

Lynn Leegard, the co-founder and

president. Once a seller accepts a

buyer’s offer, the agent emails a se-

cure earnest-payment form to the

buyer. The buyer uses the portal to

enter her bank-account information

and the amount to be sent to the

receiving bank’s account. All ac-

Tom Cronkright
learned the hard
way that the real-
estate industry
needs better ways
to protect itself
and consumers
from wire-transfer fraud.
His Grand Rapids, Mich.-based
Sun Title company received a cer-
tified check for $185,000 in the
mail toward the purchase of a
$670,000 property. The check was
deposited in the bank, and the
funds, minus a $5,000 fee, were
wired to the seller the next day.
Five days later, he learned that
the check had bounced—and both
the buyer and seller vanished. Sun
Title had been scammed.
Mr. Cronkright, along with Sun
Title President Lawrence Duthler,
were among the first victims in a
wave of wire-fraud schemes that
for the past five years has devas-
tated the real-estate industry. Last
year, there were at least 11,300
victims of real-estate wire fraud
who lost a total of nearly $150
million, according to the FBI’s In-
ternet Crime Report released in
April.
A second fraud at-
tempt the following
year spurred
Messrs. Cronk-
right and Duthler
to take action.
This time, a
fraudster hacked
a real-estate
agent’s email ac-
count and sent false
wire-transfer instructions
to a buyer. Luckily, a bank man-
ager spotted the spoofed email
address and stopped the transfer.
Mr. Cronkright says fixing the
problem came down to one thing:
proper identity verification.
The men created CertifID, an
online portal that authenticates
identities of parties in a real-es-

11,300

number of victims of

real-estate wire fraud

last year

real-estate fraud. They

aim to verify identi-

ties of people in a

transaction, conceal

bank-account infor-

mation and avoid

traditional email,

which is susceptible

to hackers. But the

best fix may involve

multiple portals, apps

and encryption devices.

“Every time we come up with a

way to combat fraud, the cyber-

criminals come up with another

way to get around it,” says Ashley

Cook, chief executive of Zoccam, a

mobile app that helps securely de-

posit buyers’ earnest-money pay-

ments.

Many real-estate professionals

still handle sensitive business

matters using paper, email and

phone calls, leaving themselves

and their clients vulnerable to

fraud. Sales contracts, tax returns,

and wiring instructions

all contain informa-

tion that is readily

bought and sold

among criminals on

the Dark Web—on-

line sites in which

users are untrace-

able and anonymous.

“The actual money

side of transactions was

pretty manual until a couple

of years ago,” says Marilyn Wil-

son, managing partner of WAV

Group, a marketing and PR firm

that advises real-estate agencies,

Multiple Listing Services and tech

companies.

In June, the American Land Ti-

tle Association, a trade group for

title companies, launched the Co-

alition to Stop Real Estate Wire

Fraud. Working with Community

Mortgage Lenders of America, the

Real Estate Services Providers

Council and the American Escrow

$150

MILLION

amount lost

to real-estate wire

THE HACKERS’ PLAYBOOK fraud last year

$

Real-estate agent

clicks on a hacker's

malicious email link

that installs malware.

Hacker takes over

the agent’s email

account and sends

fraudulent wire

request to home buyer.

Home buyer

unwittingly sends

funds via wire transfer

to a bank account set

up by the hacker.

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