Industry Alert: CertifID Sees Increase in Buyer Cash to Close Fraud

Key Takeaways:

• The percentage of buyer cash to close (BCTC) fraud reported to FRS has increased dramatically over the past three quarters.
• Buyer cash to close fraud occurs when a scammer impersonates a real estate professional and tricks a buyer into sending their funds to a fraudulent account.
• While recovery is possible, it depends on many factors, including how quickly the fraud is detected.
• Businesses and consumers must stay vigilant and educated about this emerging threat.

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Amid the macroeconomic challenges of today’s real estate market, agents and clients face additional threats of real estate wire fraud. 

Recently, our Fraud Recovery Services (FRS) team has observed a concerning trend. Over the last three quarters, while various forms of transactional fraud have been reported, buyer cash to close fraud has surged, representing a growing percentage of total fraud cases. 

As stewards of fraud prevention, we aim to share our findings and provide actionable insights to safeguard your transactions. Here’s what you need to know about this recent alarming discovery.

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What is buyer cash to close fraud?

Buyer cash to close fraud is one of the cruelest forms of real estate wire fraud. It creates significant financial and emotional loss. Thankfully, through our partnerships with the U.S. Secret Service, we’ve successfully recovered over $18M in buyer cash to close fraud cases for victims. However, recovery depends on many variables, including when the fraud occurred and when it is reported.

How does buyer cash to close fraud happen?

Buyer cash to close fraud involves tricking the buyer into sending their money to a fraudulent account when finalizing a home purchase. Typically, scammers — through social engineering or business email compromise — pretend to be a real estate or title agent. Here’s how the fraud plays out:

1. As the closing day approaches, the scammer sends the buyer fake instructions for wiring their closing funds. The communication often looks legitimate, mimicking the format, language, and logos the buyer expects from real communications. 
2. The scammer will often press the buyer to act fast and discourage the buyer from discussing it with others, claiming it’ll delay the transaction.
3. If the scammer is successful, the buyer will wire funds to the scammer’s account instead of the legitimate escrow account. 
4. By the time the fraud is discovered, the scammer has typically withdrawn the funds, making recovery difficult or impossible.

Often, the fraud isn’t noticed until the real estate agent or closing attorney asks for the funds the buyer believes were already sent. By this point, the delay has given the scammer a better chance to escape with the stolen funds.

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What we discovered

As part of our intake process for fraud recovery services, we ask for important information about the case, including who was involved, the date of the incident, and other helpful insights. 

The data indicates an alarming trend: buyer cash to close fraud reports jumped to 37% of all frauds reported to our company in March.

This compares to an average of 12% of submissions for six months prior to March (where even the highest month during that six-month period never reached more than 21%). 

This elevated level of buyer cash to close fraud has continued into April, where this type of fraud has made up 33% of the total fraud reported to CertifID.

What this means 

Buyers in today’s market are increasingly in the crosshairs of fraudsters. As the spring homebuying season continues, you must vocalize the dangers of real estate wire fraud with your customers early and continuously in the closing process.

Many buyers, eager to take advantage of new inventory, will be moving quickly to close the deal. In addition, fraudsters know how aggressive the home-buying process can be today and will use that chaos to infiltrate your transactions. 

This means an increased surface area of risk, a higher potential for human error, and, ultimately, a greater chance of fraud.

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How to protect yourself from buyer cash to close fraud

Preventing these types of scams involves carefully verifying all communications and banking information. Fraudsters rely on misdirection and creating a false sense of urgency. If you slow down and take the time to evaluate any suspicious activity, you’re less likely to fall victim.

Consumers

As a buyer, you should know the dangers of wire fraud and how it presents itself. Fraud can take many forms, but the tactics are often the same: get you to act quickly, with fear of repercussions, without verifying information. 

You should always independently verify wire transfer instructions directly with known and trusted contacts, such as your title or real estate agent.

Real estate professionals

As a title agent or closing attorney, you should continue to educate your consumers about wire fraud — or start immediately if you haven’t already. 

According to recent findings from our 2024 State of Wire Fraud report, 71% of consumers believe you, as their real estate professional, are responsible for informing them about wire fraud. With this recent data on BCTC, the importance of educating your clients has never been greater.

Consider also adding a wire protection solution to your security stack. As a business, you handle many transactions, making independently verifying each transaction difficult in your day-to-day operations. 

CertifID can secure your transactions by helping you safely send, collect, or confirm wiring instructions with your clients. This ensures that all parties have the correct information before transferring funds. 

Contact us to learn more about detecting and preventing these types of fraud.

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We can help at every stage of the transaction

Even if you do everything right, the unthinkable can still happen. Fraudsters are getting better and better at masking their scams behind elaborate backstories. 

If you fall victim, contact us immediately at reportafraud.org. We will continue to share data as it becomes available. We encourage you to bookmark our Resources page, sign up for our newsletter, or follow us on LinkedIn for the latest real estate wire fraud news.