The American real estate market is highly competitive for consumers and real estate service providers, from lenders to home inspectors and settlement companies. When the stakes are this high, organizations must maintain compliance standards while also being proactive about preventing fraud.
Every title company works hard to protect real estate transactions from fraud, but evolving buyer expectations and the growing sophistication of fraudsters mean that settlement companies have to adapt to stay ahead and gain a competitive edge.
Compliance vs. competitive edge
All title companies must adhere to practices and procedures to identify and prevent fraudulent activities during real estate transactions, as determined by their state.
Compliance with these standards is mandatory. However leveraging technology to offer more robust fraud prevention will keep transactions safer and can differentiate your business to real estate agents and clients in a competitive market.
Client perceptions of security
Security risks from wire fraud to seller impersonation put client information and funds at risk, which can lead to financial or reputational harm to everyone involved in the closing process. That’s why it’s imperative to provide high-end security that keeps information exchanges and financial transactions secure.
Title companies that offer proactive fraud prevention stand out to clients. This comprehensive security enhances your value proposition and communicates trust to everyone with a stake in any home closing.
Tools that set you apart
More robust security helps you stand out in the competitive real estate market. But what does that mean? What are the security tools that go beyond basic compliance?
Some of these tools may include:
- ID verification: Identity fraud is one of the most common security risks that title companies must manage. Identity thieves may use forged documents or fake IDs to transfer someone’s property deed or title into their name, allowing them to sell the property to a third party illegitimately. Instant, accurate ID verification protects all parties from identity fraud.
- Secure payment processing: The next generation of buyers expects to be able to make secure and streamlined payments without risking their funds. Forty-six percent of Americans didn’t write a single paper check in 2023. Digital payments via desktop or mobile app are increasingly preferable options to help you stand apart as a modern, client-focused business.
- Document exchange: Business email compromise (BEC) is a sophisticated scam that targets real estate transactions. It involves gaining access to email accounts and using social engineering to trick people into sending money to scammer-controlled accounts. Two-way secure document sharing and secure system communications help prevent unauthorized access to communication channels.
- Elevated data protection: Conduct due diligence with any third-party vendors you work with to ensure they meet the highest security standards, such as SOC 2 Type 2 compliance and 256-bit AES encryption.
Education
Title companies play a key role in the real estate industry. While companies don’t hold the titles themselves, they’re the record-keepers that authenticate the legal transfer of property. Titles are not easy to duplicate or defraud, but as fraudsters become more sophisticated with their tactics, the issue of fraud becomes more complex. And the consequences are huge.
Wire fraud prevention is a team sport. All stakeholders in the real estate industry have a role in maintaining strong security standards. Since title companies are on the front line of protecting real estate transactions, they play a vital role in educating the rest of the industry on the risks in today’s marketplace.
Title companies that take a proactive approach to fraud prevention can educate real estate agents, attorneys, lenders, and buyers on how to reduce the risks of fraud and other security issues. By providing guidelines, hosting educational seminars, and sharing informational resources from the American Land Title Association (ALTA) and The Title Report, title companies can inform their clients and other industry professionals. Awareness is one of the first and best steps to preventing fraud.
Practical tips to prevent fraud
Adopting strong security measures and taking a proactive approach to fraud prevention is a smart move for any title company. Going beyond shows you’re committed to protecting your clients and their personal data and funds.
Here are some practical tips to help make security a core part of your company’s mission and communications strategy:
- Marketing: Integrate your fraud prevention and security stance into your marketing and branding, showcasing the security measures you’re taking to protect your clients and highlighting any technology or third-party vendors you’ve partnered with.
- Regular audits: Perform monthly security audits to ensure your security system is fully patched and operating as expected.
- Success stories: Capture success stories and case studies as your new commitment to security achieves wins. Create whitepapers and incorporate case studies on your website to communicate exactly why your security stance is an important value add to customers.
Conclusion
In today’s digital world, security has to be a top priority, regardless of the industry. Settlement companies that go beyond essential compliance to deliver more robust, proactive fraud prevention and security services for clients will keep real estate transactions more secure and have a competitive advantage in the marketplace.
By making security a core part of your marketing and mission, you can communicate to clients that their security is top of mind and their business is in good hands with your company.
Closinglock is trusted by hundreds of title companies and law firms to power and protect real estate transactions from the escalating threat of fraud while improving workflow efficiency. Its wire fraud prevention software includes identity verification, document exchange, and eSigning to keep transactions secure, all in one platform. Closinglock is the only company that offers the “Venmo of real estate,” which allows buyers to conveniently send their deposit or cash-to-close funds via their desktop or mobile device, and is covered up to $2.5 million under the industry’s highest insurance policy. Request a demo today.