Seller Impersonation Fraud

Seller Impersonation Fraud in Real Estate

Fraudsters are impersonating property owners to illegally sell commercial or residential property. Sophisticated fraudsters are using the real property owner’s Social Security and driver’s license numbers in the transaction, as well as legitimate notary credentials, which may be applied without the notary’s knowledge.
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Fraudsters prefer to use email and text messages to communicate, allowing them to mask themselves and commit crime from anywhere.
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Due to the types of property being targeted, it can take months or years for the actual property owner to discover the fraud. Property monitoring services offered by county recorder’s offices are helpful, especially if the fraud is discovered prior to the transfer of money.
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Where approved by state regulators, consumers can purchase the American Land Title Association (ALTA) Homeowner’s Policy of Title Insurance for additional fraud protection.

Watch for Red Flags

Consider Heightened Scrutiny or Halt a Transaction When Property:

Is vacant or non-owner occupied, such as investment property, vacation property, or rental property
Has no outstanding mortgage or liens
Has a different address than the owner’s address or tax mailing address
Is for sale or sold below market value

Consider Heightened Scrutiny or Halt a Transaction When a Seller:

Wants a quick sale, generally in less than three weeks, and may not negotiate fees
Is refusing to attend the signing and claims to be out of state or country
Is difficult to reach via phone and only wants to communicate by text or email, or refuses to meet via video call
Demands proceeds be wired
Refuses or is unable to complete multifactor authentication or identity verification
Wants to use their own notary
Wants a cash buyer

Take Precautions

Contact Seller Using Independent Sources

Contact the seller directly at an independently discovered and validated phone number
Mail the seller at the address on tax records, property address, and grantee address (if different)
Ask the real estate agent if they have personal or verified knowledge of the seller’s identity

Verify the Seller's Identity

Send the seller a link to go through identity verification using a third-party service provider (credential analysis, KBA, etc.)
Run the seller’s email and phone number through a verification program
Ask conversational questions to ascertain seller’s knowledge of property information not readily available in public records
Conduct additional due diligence as needed

Manage the Notarization

Require the notarization be performed by a vetted and approved remote online notary, if authorized in your state
If remote online notarization is not available, the title company should select the notary. Examples include arranging for the seller to go to an attorney’s office, title agency, or bank that utilizes a credential scanner or multifactor authentication to execute documents

Use the Public Record

Compare the seller’s signature to previously recorded documents
Compare the sales price to the appraisal, historical sales price, or tax appraisal value

Control the Disbursement

Use a wire verification service or confirm wire instructions match account details on seller’s disbursement authorization form
Require a copy of a voided check with a disbursement authorization form
Require that a check be sent for seller proceeds rather than a wire

File Fraud Reports

IC3.gov
Local law enforcement
Secretary of state for notary violations
State law enforcement, including the state bureau of investigation and state attorney general

Fight Fraud with Industry Partners

Educate real estate professionals in your community, such as county recorders, real estate agents, real estate listing platforms, banks, and lenders
Host educational events at the local or state level
Alert your title insurance underwriter of fraud attempts

Seller Impersonation Fraud