Real Estate Fraud On The Rise As Technology Advances
By ERIN FLYNN JAY
As more high-value transactions move online, real estate fraud has become increasingly sophisticated, leveraging advanced technologies to exploit vulnerabilities in traditional identity verification methods.
“Cybercriminals are now utilizing generative AI to create highly convincing deepfakes, altering photos and personal information to produce realistic fake IDs in a matter of minutes,” said Jay Krushell, co-founder and chief legal officer at Treefort Technologies in Canada. “These tools allow fraudsters to impersonate homeowners and, in extreme cases, even sell properties without the rightful owner’s knowledge.”
The impact is staggering — FBI data reveals nearly 10,000 victims of real estate fraud in 2023 alone, with losses exceeding $145 million — underscoring the need for advanced identity verification systems to combat increasingly complex fraud tactics, safeguard the integrity of real estate transactions, and protect homeowners from this type of crime.
“Facial biometric verification technology ensures individuals are who they claim to be by remotely verifying both identity and liveness in real-time,” said Krushell. “Tools like iProov’s facial biometric technology with dynamic liveness, which is used by Treefort, confirms that a user is the right person, a real person, and is authenticating in that exact moment.”
Mortgage fraud often starts with fake IDs, and traditional verification methods, like manual review or document verification, struggle to detect these in an online environment.
“By implementing a multi-layered approach that combines a trusted government-issued identity document authentication with facial biometrics and a liveness component, we were able to reduce fraud by over 80%,” said Krushell. “Using advanced algorithms, these systems can identify cues and detect attacks like digital injection, where AI is used to map another face onto a fraudster’s, in real-time.”
This approach strengthens security by using AI-driven systems to fight increasingly sophisticated fraud, providing businesses and consumers with a reliable defense against identity theft.
In Canada, companies like Treefort have developed advanced identity verification solutions that integrate multi-factor authentication, including facial biometric verification, to combat sophisticated fraud tactics.
“These solutions are tailored to meet Canadian regulatory requirements and have been effective in preventing identity fraud in real estate transactions,” said Krushell. “While similar technologies exist in the U.S., the specific integration and regulatory alignment seen in Canadian solutions may not be fully implemented in the American market, just yet.”
Michael Schmied, joint founder and senior financial analyst at KrediteSchweiz in Switzerland, said one of their clients came to them with concerns after noticing discrepancies in a seller’s documentation. They were trying to secure financing for a $750,000 property purchase but felt something was off.
“The seller couldn’t provide consistent answers about the ownership history of the property, which immediately raised red flags,” said Schmied. “We compared the property records the seller provided with data from government archives and found something startling — the real owner had no intention of selling.”
The fraudulent seller had created convincing fake deeds and forged bank statements, hoping to lure the buyer into completing the deal quickly. After uncovering the truth, Schmied worked with their client to report the fraud to the authorities.
“They were thankful they hadn’t proceeded with the purchase,” said Schmied. “This experience was a stark reminder of how sophisticated scams can be, and how vital due diligence is when it comes to property transactions.”
Brady Bridges, Broker/Owner with Reside Real Estate in Fort Worth, TX, has encountered instances of home seller impersonation fraud.
In one notable case involving a vacant property in the TCU area, Bridges said the impersonator presented forged documents and convincingly claimed ownership. The fraud was uncovered during the title verification process when discrepancies in ownership records raised red flags.
“This experience highlighted the critical role of title companies in verifying ownership and the importance of scrutinizing sellers who are evasive or rush the transaction process, as these behaviors often indicate fraudulent intent,” said Bridges.
To help safeguard against such schemes, he advises property owners to keep their records updated with the county appraisal district, monitor their property status regularly, and frequently check on vacant properties.
Tariq Kahn, digital marketing head at WellPCB, a manufacturing company based in China, has also encountered scams involving seller impersonation using advanced verification and AI tools.
One of his cases was a “seller” who said he was out of the country and could not do video calls due to connectivity. Kahn said the first thing that attracted suspicion was that the property was a piece of land that was priced well below the market price and was unoccupied.
“They pushed me to sign fast and wanted to pay cash on the barrel,” said Kahn. “Knowing all the signs, I did my homework. I asked for a clear photocopy of an ID and demanded prior closing documents and a receipt for the most recent tax payment. The scammer’s reluctance to give these added to my suspicion even more.”
To verify the fraud, Kahn employed the reverse phone lookup, interviewed the neighbors, and asked them a question about a structure that was not present on the land. In cases where the scammer gave the wrong information, then it was obvious that he or she was not the rightful owner.
Kahn advises going through all the checks, like demanding video conferencing, document authentication, and using services like CertifID for further scrutiny.
“If the fraud is substantiated, the case should be reported to the FBI’s Internet Crime Complaint Center (IC3) and the rightful owner of the property,” he said. “Preventative due diligence is how we make sure we and our clients do not fall victim to these elaborate scams.”