Real estate scams are on the rise in Michigan

Tom Cronkright
| The Detroit News

Scams are on the rise and there is no doubt that more and more people are becoming victims. Last year, Michigan residents lost $152 million dollars due to financial scams. According to a recent FBI report, the Internet Crime Complaint Center (IC3) received a record 880,418 complaints, with reported losses exceeding $12.5 billion. This represents an alarming 10% increase in complaints and a 22% increase in losses compared to 2022.

Policymakers in Washington DC are finally responding by asking banks to implement consumer protections against bank fraud. While this indicates momentum in the right direction, the path to reducing wire fraud is difficult and will require the participation of multiple stakeholders.

We all know that giving away passwords and access to our devices is an obvious scam. That’s no longer the way people lose money to fraudsters every day. With advances in technology, scammers are using seemingly harmless but increasingly sophisticated means to extract money from unsuspecting victims, using tactics such as social engineering, which is the manipulation of people to enable crime.

For example, you may receive an email in which someone posing as your title agent provides you with information that only he or she has. The email address may vary so slightly that you may not notice the difference and consider it credible. Such scams indiscriminately target people of all educational backgrounds and ages, but leave the most vulnerable populations at risk.

Scammers are using leaked data, generative AI and porous communications to create increasingly sophisticated ways to extract money from unsuspecting victims. In fact, I fell victim to scammers and it almost cost me my business. My Grand Rapids company, Sun Title, transferred $180,000 to a fraudulent account. It took almost two years for us to recover 78% of the money because there was no clear process for recovering money due to fraud, and unfortunately there still isn’t one. Over the years we continued to be targets of banking fraud and developed a product to protect ourselves.

While we hear about scams every day, real estate fraud in particular isn’t talked about enough given the exceptionally high dollar amounts involved, with an average home sale price of $420,357 in the US. For reference, the real estate industry has generated $446 million in revenue. business email compromise (BEC) losses reported to the FBI last year. Moreover, real estate fraud is more common than you think: one in twenty consumers has the chance of becoming a victim of fraud during a real estate transaction.

In many cases of bank fraud, banking institutions continue to claim that they are not liable to refund customers due to an exception in the law. The need to protect consumers is urgent, and a recent letter from the Senate Committee on Banking, Housing and Urban Affairs signals a step in the right direction. Sens. Sherrod Brown, D-Ohio, and Jack Reed, D-Rhode Island, are urging the nation’s four largest banks to implement more significant consumer protection measures.

While bank protection can deter fraudulent activity, it is not a panacea. It is important to be vigilant and avoid being scammed. As with disputing bogus credit card charges after the money has been transferred, it can take months or years to recover it. In the case of real estate, that could be your savings.

That is why it is important to exercise increased vigilance with bank transfers. Additionally, it is a must to scrutinize the institutions involved in substantial purchases, such as the sale of a home or real estate. Asking your real estate agent about the risks can help reduce the chance of scams, given their crucial role in the home buying process. In the case of real estate, 71% of consumers believe it is the responsibility of companies to educate them.

The letter from the Senate Banking Committee calling on banks to take responsibility is not a panacea. Consumers must adopt lifestyles that prioritize greater vigilance, and the business community must work together to educate consumers. A framework to curb the billions lost each year will require consumers, stakeholders and institutions at all levels of our society to do their part.

Tom Cronkright is co-founder and executive chairman of CertifID, a company that protects real estate fraud.

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