Warning from FCT: AI totally transforming real estate fraud

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New AI-powered tools allow fraudsters to impersonate their targets, warns a title insurance company

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Fraud continues to be a growing concern in the real estate industry with new schemes emerging and fraudsters becoming more sophisticated, a new report from title insurance company FCT has revealed.

The Oakville-headquartered firm’s Fraud Insights Report released earlier this month concludes that artificial intelligence (AI) is transforming impersonation and fraud.

Its authors note that this year, “is set to be the start of a significant surge in refinances as high mortgage volumes from 2021 come up for renewal. Even if the percentage of fraudulent transactions stays the same, the volume will increase along with legitimate transactions.

“Professionals and organizations involved in refinancing should be on the lookout even during these routine-seeming transactions: a fraudster can make an equity withdrawal as part of the refinance and walk away with the proceeds.”

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Remote transactions, the report states have always posed risk for fraud, “but the threat has completely transformed thanks to new AI-powered tools that fraudsters can use to effectively impersonate their target.”

Daniela DeTommaso, president of FCT and a co-author of the document, said that between an “increase in fraud attempts and a declining market, it’s no surprise that as people start to struggle financially, people become desperate, and as technology becomes more readily available, we are definitely seeing a rise (in incidents).

“Correspondingly, we are increasing our mitigation strategies to counter that. We’re constantly investing in new tools to try to mitigate against this, but we are definitely seeing an (increase) in, identity theft and identity impersonation and fraud.”

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And, she adds, “with the sophistication that we’re seeing with deep fake video calls to AI generated voice scans to someone being able to buy a printer for $5,000 that literally replicates to the human eye a piece of ID, it’s becoming increasingly difficult to spot.”

Key trends, according to the FCT report are as follows:

• AI is transforming impersonation and fraud: An example involves AI text-to-speech tools that can make a call appear to come from whatever phone number a fraudster chooses.
• In-person fraud is on the rise: That “person sitting across the desk with an intact and legitimate-looking ID showing their photo can be an imposter. Fake ID documents have (become) sophisticated enough that in-person no longer means fraud free.”
• ID theft is just the start: “Fraudsters can use small pieces of compromised information about their target to leverage more of that person’s information from financial institutions, businesses or government services, until they have enough to impersonate them.”

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DeTommaso warns that the type of fraud taking place in real estate transactions “runs the gamut. It is in the financial services space, but also in the real estate space – it could be anywhere where someone is using someone else’s identity to either obtain a mortgage to redirect funds in a transaction. We have even seen where people have sold other people’s homes without their awareness.”

When it comes to how aware the average consumer is about the problem, she says, most have a “cursory level of awareness about identity theft and realize the importance of not sharing certain information and safeguarding their ID … but I doubt that there is a deep understanding of how sophisticated this type of fraud is becoming.”

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