Technology has become a new normal, offering individuals and businesses unprecedented ways to connect to an ever-expanding digital world. Unfortunately, these innovations have also opened the door to criminals who now have a variety of methods with which to scam consumers and businesses alike.
One of the latest threats comes in the form of payoff fraud, where scammers swindle law firms and title agents out of money by impersonating the parties intended to receive funds from a settlement. Here’s everything you need to know about payoff fraud to help protect yourself from the newest form of wire fraud scams.
What is Payoff Fraud?
In a payoff fraud scheme, scammers disguise themselves as a potential lender or title company in order to trick individuals or businesses into sending them money. Usually, these funds are obtained from the settlement process after refinancing or the sale of a property.
Although individual buyers and sellers have generally been the intended targets of fraudsters in the past, there has been a recent increase in payoff fraud perpetrated against businesses. Scammers know that there are large sums of money involved in mortgage payoffs, and they will try a variety of tactics to pocket that money themselves.
How is Payoff Fraud Committed?
Multiple methods such as emails or faxes with fake payoff statements can be used by fraudsters in order to extort money from their intended targets. By worming their way into the middle of these transactions, cybercriminals are able to trick their victims into wiring money their way instead of the intended recipient.
Fake Login Pages
By replicating an authentic website or entry portal, scammers are able to trick their victims into entering private information such as usernames, passwords, or even social security numbers. These pages are often reached by clicking on links that appear in falsified emails meant to appear as if they are from an official bank or title company.
False Identities
While some payoff fraud is committed over the internet, it’s not uncommon for fraudsters to contact potential victims over the phone or via fax. There are a variety of apps that, although intended to protect user privacy, can be utilized by criminals to hide their identities. Affected parties are often tricked into thinking they are talking to someone they are not and then coaxed into wiring funds to another party.
Lax Security
Without proper security, it is also possible for hackers to gain access to a legitimate website or email account in order to reroute victims to their own page. Even fax machines are not a completely foolproof method of communication, as unencrypted messages and data can also lead to passwords being compromised.
How Can Payoff Fraud Be Prevented?
Unfortunately, catching cybercriminals after the fact is difficult, if not impossible. Payoff fraud scams businesses out of millions of dollars each year, so it is important for title companies to know how to protect themselves:
Employee Education
Arming employees with the knowledge to identify scams before they occur is a crucial first step to preventing payoff fraud. Although fraudsters utilize a variety of methods to swindle their victims, employees should be on the lookout for warning signs such as altered contact information, new instructions for wiring money, and the threat of consequences if immediate action isn’t taken.
Communicating With Involved Parties
Once every party is identified at the beginning of a settlement, communication with everyone involved is key. Follow ups should always occur after a transfer is initiated to ensure it went through. For even more security, it is always best to meet with lenders in person or in an office setting.
Utilizing Protective Technology
Because the fraud industry continues to grow at a rapid pace, it is often difficult to keep up with the latest tactics scammers simply by remaining vigilant. While cyber attacks can be thwarted using firewalls or virtual private networks, there are also tech companies and websites available to help protect businesses from the threat of payoff fraud.
Closinglock Can Help You Stay Safe
Closinglock is a simple and affordable solution for securely sharing wire instructions, including payoff information. Closinglock’s Instant Payoff Verification system can identify fraudulent payoff instructions in real-time, before any funds are sent. With Instant Payoff Verification, title companies can seamlessly verify payoff account numbers without having to place time-consuming phone calls. Closinglock also boasts a seamless user interface, as well as numerous integrations so why not contact us today? We look forward to keeping your business safe.