Cyberattacks Against Industry Mount

Efforts to Recover Stolen Funds Improve Over Past Year

By Jeremy Yohe

CYBERATTACKS targeting title and settlement companies remained the same or increased over the past year, according to a recent ALTA survey.

Results showed that 86% of respondents said the volume of cyberattacks either increased or remained the same last year when compared to 2020.

The survey of 569 title agents nationwide was conducted by ALTA’s Research & Analytics Work Group. It asked agents about their experience with cybercrime and wire fraud.

“Cyber incidents continue to evolve rapidly in number and sophistication,” said Diane Tomb, ALTA’s chief executive officer. “As criminals continue to modify their tactics and prey on unsuspecting consumers, the title and settlement industry continues to lead the charge in raising awareness about wire transfer fraud, educating their staff and implementing procedures to safeguard real estate funds.”

The survey showed 46% of respondents reported their employees receive at least one email per month attempting to change wire or payoff instructions.

While attacks remained elevated, the survey showed an overwhelmingly better recovery success in 2021 compared to the prior year’s survey. In 2020, 78% of respondents did not recover any diverted funds. According to the 2022 survey, 94% reported some amount of recovery and 17% recovered all of the diverted funds in 2021.

“This is a testament to the processes and procedures followed by title and settlement companies, along with coordinated efforts by financial institutions and law enforcement, to improve the odds of recovering funds,” Tomb said. “Continually working with our partners involved in the real estate transaction, along with government officials, we must continue to educate homebuyers about how they can protect their money when purchasing a home or refinancing a mortgage, so they continue to trust and have confidence in our digital world.”

ALTA’s advocacy team recently secured a win on the crucial legislative priority of wire fraud in real estate. Report language ALTA requested was included in the 2022 Omnibus Appropriations Bill, which was recently passed by Congress and signed into law. This language directs the FBI to release a public report on the threat of business email compromise (BEC) scams and to increase collaboration with industry and other private sector partners.

Cyber Losses Hit $6.9B in 2021

ALTA continues to advocate for greater awareness because of the mounting cyber losses as U.S. consumers lost $6.9 billion to internet crime in 2021, according to the latest report from the FBI’s Internet Crime Complaint Center (IC3).

The FBI received 847,376 cybercrime complaints in 2021, an increase of 7% from the year before. That amounts to one complaint every 37 seconds. Losses relating to BEC and email account compromise (EAC) increased by 33% over the previous year, with the per-incident loss jumping from $92,932 in 2020 to $120,277 in 2021. BEC and EAC scams accounted for nearly 35% of all losses reported to the IC3 in 2021. Real estate/rental cybercrime losses reached $350 million in 2021, up from $213 million in losses in 2020. The number of victims, however, decreased to 11,578 in 2021 from 13,638 in 2020.

“Companies in the title and settlement industry continue to follow policies and procedures to help safeguard real estate funds,” Tomb said. “Unfortunately, cyber criminals continue to get smarter and are focused on larger amounts to divert to fraudulent accounts. Homebuyers paying cash for properties may have a higher risk of being tricked into sending funds to fraudulent accounts.”

With the median price of a home in the U.S. now exceeding $350,000, according to the National Association of Realtors, cash buyers are wiring large sums of money to title and escrow companies for closing. Cyber perpetrators are aware of these market dynamics and are deploying scams to trick home buyers into wiring closing funds to fraudulent accounts.

“We are eager to continue working with federal agencies on this issue and help the title insurance industry deal with the onslaught of these scams that harm consumers,” Tomb said. “These efforts build on ALTA’s strategic priority to address threats to our customers’ privacy and investment.”