According to a recent American Land Title Association (ALTA) report, 28% of title companies experienced at least one seller-impersonation fraud (SIF) attempt in 2023. Like many in the industry, Amanda Mitchem, Internal Operations Manager at Capital Title Insurance Agency, has seen this type of fraud play out in real time and become one of the business’s biggest fraud threats.
“We’ve always been aware of payoff fraud,” she says. “It’s been around for a while, and we all know it’s a problem. But vacant land fraud is just now really exploding, and we’re starting to see it more and more.”
What is vacant land seller fraud?
Compared to other types of real estate fraud, vacant land is an easy target because it’s not owner-occupied, and the information fraudsters need is openly available. They search public records to identify lien-free vacant land or properties. They will then fake their identity to pose as the title owner and approach real estate agents looking for a quick all-cash sale, typically well below the property’s fair market value.
Obtaining a fake ID, complete with a social security number, can be done in minutes on the dark web. If they can successfully impersonate the seller long enough to get through the closing process, they can walk away with the proceeds of the sale—and it can take months for anyone to realize.
Before using Closinglock, Capital Title checked IDs and looked for red flags, such as clients who only communicate electronically and insist on a remote closing.
However, as fraudsters became more sophisticated in their tactics and vacant land fraud became more prevalent, the company recognized that it needed a more secure system to ensure it was protecting its business and its clients, especially after a very close call that was almost successful.
“We needed something to verify our clients’ identities, especially on vacant land transactions,” she says. “It’s almost become rare for us to find a vacant land transaction that’s not fraudulent now.”
In fact, after implementing Closinglock, Capital Title caught seven consecutive vacant land seller fraud attempts totaling almost $2.1 million.
Mitchem says that Closinglock identity verification has been hugely helpful in allowing her team to pause, do the research, and ensure that all parties involved are who they say they are.
Closinglock Identity Verification collects multiple data points, including the user’s social security number, the barcode of the photo ID, and the IP address. Within minutes, the software checks the data against trusted, non-public data sources that cannot be leveraged by bad actors. The requesting agent receives a report almost instantly, which provides an overall result and then details which checks passed, failed, or need further review.
Capital Title clients must undergo ID verification for every vacant land sale, so Mitchem and her team know that any fraud attempts will be quickly thwarted. And she says that this step alone can be enough to deter fraudsters.
“They think, ‘That’s too much work, let’s move on to the next one in the pipeline.’ says Mitchem. “But other times, we’ve had them upload their fake IDs for us through Closinglock, and the reports come back fraudulent.”
According to the ALTA report, 85% of those surveyed said vacant land was the most targeted type of real estate fraud last year. While Mitchem feels confident about the safeguards in place with Closinglock, she recognizes that fraudsters are constantly evolving and devising new schemes.
“It’s not one person sitting in their basement and hacking everyone,” she says. “It’s a whole business set-up where that’s their whole job and pipeline. We’re finally getting wise to it. But that just means that they probably have a department there thinking about the next thing they’re going to do. That’s why it’s great to have a partner in Closinglock.”
Request a demo with a member of our team to learn how Closinglock can streamline operations, improve efficiencies, and protect your business and clients from fraud.
About Closinglock
Closinglock is a fraud-prevention software revolutionizing the transfer of funds and information in the real estate industry. Title companies can send wire instructions, securely exchange documents for e-signing, and receive payments from one secure platform.