Episode Transcript
[00:00:00] Speaker A: Foreign.
Welcome to the Bottom Line Me podcast. I'm your host, Ann Allard. Today's topic is one that is constantly on everyone's mind and that is wire fraud.
Not just real estate professionals, but everybody. But in, in our business, we're facing a new reality. Wire fraud is no longer what I would call a manual crime.
It's automated now AI enhanced and increasingly difficult at times to detect.
So joining me today is Tom Cronkright, co founder and executive chairman at Certified Certified is a leading fraud prevention company that safeguards real estate transactions from wire fraud and cybercrime.
They recently released a three year state of wire fraud study and Tom is here to share some of the findings, things that they discovered and what this means for our industry and hopefully give us some tips and ideas on how we stay ahead of the curve here. So Tom, welcome back to the Bottom Line podcast. It's so good to have you back.
[00:01:17] Speaker B: You as well. Thanks for, thanks for having me back and I'll just, I'll pile at 1. Thanks for the awareness on such an important topic.
[00:01:26] Speaker A: It certainly is.
[00:01:27] Speaker B: Well, if there's anything, yeah, more important or should be top of mind as we go into this next year of transactions protecting, you know, buyers and sellers. And I think that's at kind of an 80,000 foot view. That's, I think where we find ourselves as an industry is moving not only the continuation of a marketable title and the insurability from seller to buyer, but now we're, we're really in the consumer protection business because it's the life savings that just continues to be at risk in the real estate transaction. So you had mentioned AI.
Just a quick flyover as well on that.
AI is just changing the landscape. It's, it's providing more tooling, better timing, harder to detect. These social engineering scams and particularly the idea of like voice cloning in deep fake is just allowing the bad actors to use more convincing strategies and techniques where the consumer especially believes that they just got to a voicemail from their real estate agent or their escrow officer and now they got to look at an email and that email says to wire money to this account, but it's not the account that is intended for closing. So that's going to be a continued threat vector that we'll see evolve and it's not going away, unfortunately.
So they'll continue to kind of press into that.
You can see it by the stats like just the level of deep fake and voiceover AI in real estate continues to increase.
We'll see that And I think the other thing they're doing is the fully synthetic identity. So you ask somebody for a driver's license and it used to be. Well, they would have to have it in advance or there would be this delay. Everything can be synthetically and digitally created right now and can pass the scanners while doing it. So just something we're going to have to keep our eye on. You had mentioned the state of wire fraud report, and I just want to dive into that.
[00:03:44] Speaker A: So, yeah, we're all anxious to hear what you know.
Before you do, I have one question. I'm curious why a three year study was there. What's behind that?
[00:03:56] Speaker B: Well, it's more the combination of the last three years. So this idea of like, we started in 24, we updated in 25, and we like further evolved it in 26, so we can start to see just how the problem continues to shape around the country.
So, for example, in 2024 we saw roughly 800,000 transactions. Well, by 2026, that essentially doubled the 1.5 million transactions.
So if you think about 4 million existing home sales took place last year, we had visibility to roughly 1.5 million transactions. So it provides a scope, a really significant, I think, scope of the trends and how things are evolving in this landscape. So the three years, this ends up being kind of a.
What have we found in 25 versus 24 and calendar year like 23, if that makes sense.
[00:05:03] Speaker A: Yeah, it does. I was just curious.
[00:05:05] Speaker B: Yeah, the IC3 report from the FBI was really interesting this year because not only did cybercrime reported cybercrime top 20 billion, but if you cut the data down and look at the actual real estate growth year over year, real estate reported cybercrime grew twice as fast as cybercrime as a whole.
So they're very much focused on the investment scams and they're really focused on the real estate scams, you know, and you know, we topped a million complaints for the first time ever.
So this is the first time since the IC3 has been reporting on this. And you look, you know, going back to 50,000 complaints the first year to a million now last year, and that still and is, is just a fraction of what's going on.
What's interesting. Yeah, what's interesting about the consumers that we pulled this year is that just over eight out of ten of them were personally involved with or knew somebody involved in an actual cyber fraud.
So.
Yeah, so. So if you think about it like this isn't some anecdotal, like some anecdotal issue or some, I like to call it the boogeyman. Like they know, the consumer knows that there are threats out there that they either have experienced or had somebody very close to them in some grand.
The other interesting thing is that in the transaction. So the state of wire fraud is where we look back essentially on year 2025 and say, okay, for those that were in the transaction, the real estate professionals, the home buyers and sellers, you know, what did you experience?
Six out of 10 of them felt that their funds could be at risk in the real estate transaction last year.
[00:07:05] Speaker A: Six out of 10.
[00:07:07] Speaker B: Six out of 10, yeah.
And roughly half of them delayed funding because of those concerns.
So if you have a, if you have eight, 80% of people know it's a risk.
60% of those same know that, hey, it could be a risk in my transaction. And half of them are delaying some request for funding because of it. What that signals to me when I look at that data is that the industry should not force the consumer to make a choice between convenience and security.
Right. Especially your first time home buyers. A lot of them don't have a checkbook, they've never wired funds, they don't know what a certified check is necessarily. And I think we can meet them both at convenience and at security. And they shouldn't have to decide which one is more important to them or which one fits in a better box for the title industry to do a safe settlement.
[00:08:05] Speaker A: Yeah.
[00:08:08] Speaker B: From what the title industry saw, again, it's all increasing.
Six out of 10 said, you know, they saw more fraud, seven over. Seven out of 10 said the attacks are becoming more sophisticated and each quarter, roughly 60% of the industry saw something on a quarterly basis. Something significant on a quarterly basis.
Right. So we, we kind of saw the thing as an industry as well.
We have a fraud recovery services team at certified and the loss stats continue to go up in each vector as well. So the median loss of our team supporting consumers that lost funds, and this is a think about a 20-24-7365 call center for victims.
The median loss for seller proceeds was just over 340,000.
The median loss for mortgage payoff was roughly 390.
The buyer cash to close was almost 240. And just a few years ago that number was like 85.
And the reason is, I can't speak for every market as a title agent here In Michigan, about 25% of our residential transactions are made in cash and then they'll take a mortgage out after they've secured and closed on the property.
So I Think with a tight interest rate environment, with a tight inventory environment, I think that that cash offer with few contingencies is still winning the day and then they'll look to finance after. That's why we're seeing higher cash to close numbers. Yep, interesting.
[00:09:52] Speaker A: Tell us what else you found in, in the, in the study and what might have surprised you.
[00:09:58] Speaker B: Even seller impersonation was the most concerning for the title industry. That, that didn't really surprise me.
What what did surprise me really centered around what consumers expect.
So the prior year study consumers expectations centered around education and awareness around the issue.
This year it kind of up leveled to insurance and guarantee against the fraud itself.
So they're saying not only and do I want to be protected, somebody better guarantee this doesn't happen.
I need some form of wrapper around this thing that it won't happen and they're willing to pay for it.
Which again whether or not they have to pay for it, if they're saying hey I expect this thing and I'm willing to participate if economically I have to pay for it, that's like a pretty strong signal layered on another signal saying this, this is really, really important.
One in five still is not aware of the fraud existing at all in the transaction.
1 of 5, 1 out of 5 has had 0 information about wire fraud, the threat of wire fraud, the thought of losing funds in a transaction from any of their advisors. And I think that's just, that's an unacceptable level right now.
[00:11:25] Speaker A: Well, yeah, absolutely.
[00:11:27] Speaker B: Probably one of the other most interesting stats came when we asked well how would you feel if you had a loss in a transaction?
And roughly 6 out of 10 said well even if I was made whole, I wouldn't do business with any of those companies again.
[00:11:48] Speaker A: Well, yeah, understandable. Yeah, yeah.
[00:11:51] Speaker B: But then on very much a contrary footing, roughly 7 out of 10 said but I would be strongly influenced to work with people that could guarantee I'm protected.
So if you look at these two and if you look at how far those, those bookends are apart, right. I got like a, a negative 56% saying even if I wasn't ultimately harmed, but it happened, you know, something still went wrong and I wouldn't trust them again to. I would make a buying decision if it was clear that I would be protected. 7 out of 10 saying that I call that security arbitrage.
[00:12:30] Speaker A: Well, it has to speak to some of the education that's gone on that people are beginning to understand that this is real and that education is important, but guarantees are more important when you're talking about your life savings, 100%.
[00:12:48] Speaker B: And I think that's what's interesting that the industry can step into is to say, look, whether or not you believe or you think they're aware that fraud's out there, they're aware.
Whether or not you believe that. You should have a conversation.
You should have a conversation and start looking for ways that you can articulate either directly to the consumer or through your referral partners, your real estate professionals, your mortgage lenders, your builder developers, that you can protect their email, you can protect their data, and you can protect their funds.
Right. And I think that of anything this study really bubbled up what the consumer expectation is and how that landscape quickly shifted over just the last 12 to 24 months. Because it was, it was pretty significant, I think when you. Any other questions? Aran? Otherwise I might look at to like, what, what do we do? Right.
[00:13:50] Speaker A: So how was exactly where I was going to go.
[00:13:52] Speaker B: So, yeah, so how, how we think about success hasn't necessarily changed. Like it's, it's putting together the people, the process and the technology to be able to protect every buyer, every seller, every transfer, every communication at scale, every time. And one of the things that we've done in our agency that was highly effective is we had launched what we call an unapologetically secure campaign.
And what that started with is educating our internal teams on how to make themselves more secure.
So you think about, excuse me, you think about this idea of like multi factor authentication.
What does your home network setup look like? How are your kids connecting, like doing the work and educating your employees on what good cyber hygiene and protection looks like?
Then we launched out into the marketplace and said, okay, referral partners, real estate agents in particular, how do you secure your email? How do you make sure your email hasn't been compromised?
Do you, could you clearly articulate in a minute or less how funds move from a buyer to the escrow account and from the escrow account to a seller or to a mortgage that's being paid off.
And if not, then those are points of conversation that we need to have.
And then you go through that with them and then you give them the tooling to go out and sell against that, have security as another offering that the real estate professionals can win more business from. Right. So, and if, if I'm on the side of it and I'm, I'm a real estate agent and I'm, I'm trying to list your house and you're interviewing, let's say, three agents for the Same listing.
I'm going to be able to say not only can I run a competitive process, my marketing is top notch. I know how to, to run highest, best and get you to the table.
But the other thing I'm going to do it is really with my partner in my title provider is I'm going to make sure that all the communications, your personal information, your funds are protected, guaranteed, protected this entire time.
[00:16:11] Speaker A: And that's just marketing opportunity that.
[00:16:13] Speaker B: Yeah, it really is.
And it's something that is very tangible because again, if they know it, then we have the ability to explain how we're going to address that.
That concern that might not come up in a normal conversation, but we could bring that up from a practical standpoint. And we'll get into this in the webinar is just what does a tech stack look like for a title company?
And we'll get into like, there's three types of companies right now, those that have put in the work and they're ready to win and they put in the measurements at scale, all the layers of security and training and incident response and all that.
And on the other side, it's not going to happen to me. They're led by optimism bias. They're led. You know what I mean? Like, I'm in a small town, I know everybody. This sounds like a bigger agency issue or a bigger town issue.
And then there's that middle group that's just starting the process and we're going to get into fairly deeply, like, what does that roadmap look like?
Because you had mentioned, like, well, what do you do?
It's again, it's a combination of like really trained and alert and kind of skeptical people through training, not in a bad way.
Processes that are up to date, up to date with AI, up to date with not assuming that if I hear Ann's voice in my voicemail, I have to act on that because I didn't initiate the call it came in. Right. And they can spoof phone numbers so it looks like it's coming from you.
And then how does the, how do the layers of technology enable you to detect and see things that you just couldn't from? You know, being a human, not AI driven. These layers of technology is absolutely phenomenal right now. Certified in others. I mean, we couldn't live without our tech stack and our agency. We just wouldn't be able to. We wouldn't be able to do what we do
[00:18:16] Speaker A: well. And I think, you know, you've probably said this a million times and I've heard you Say it, that is, that it's not if it will happen, it's when will it happen. That, that everybody is going to be exposed to some degree or at some level and that the key from what I'm hearing you say is you have to keep it top of mind and keep, you know, it can't ever get put, you know, bracketed or because you think you have to close a transaction quickly or you have some demands or an interest rate is expiring, all these things.
It's that, that years ago, I think a lot of agents, you know, those were the main concerns. But now it becomes how do I make sure this is secure? And that at the end of the day the money travels from where, from where it should have traveled from to where it needs to go.
[00:19:08] Speaker B: So, yeah, all true. I mean, all true. And I think I'll kind of pull the thread on my earlier point.
I think the industry is at this inflection point where we have to do this and we have best practices, we have technology available, we have to carve out the time for the people and the update on the process because it has risen to the level of consumer protection. Even Alta's new, you know, kind of mantra is fraud's unaffordable.
Like this is a consumer protection issue. You know what I mean? And it, and it just transcends.
Yes. We're not saying property rights aren't important in the insurability and protection of that are any less important. It's not. We just inherited this other thing called their life savings that we also have to manage because we don't do that. Right. We don't have a closing. Right. And we don't. Exactly.
[00:20:03] Speaker A: Exactly. Yeah. I mean, I, I guess, you know, at the end of the day, you have to question. I know in a bigger company like where you and I are, a lot of those systems are in place and the checks and balances are there and we hear repeatedly to question, don't click on the link, double check all of those things. But for smaller mom and shop type businesses, this is, I think it's more challenging because they don't have the access like we do to hearing these things 247 or on a, on a, I mean we, we go through training all the time on how to stay ahead of this and how to detect things. But any suggestion on, for the, for the, the smaller operation that probably doesn't have the sophisticated systems like we do,
[00:20:54] Speaker B: you have to start with an incident response plan. And I hate to say that, but you got to start with the End if you're not a member of Alta, join Alta. You know, connect with your rep from a title perspective and you, you have to start with an incident response plan because it's going to take a minute to put in the layers in the training to start to feel the defense walls kind of come up around the org and the people in it.
So Alta's got a great incident response plan. It's part of pillar four and it's, it's. Well, it's just a framework if you will. It's not entirely inclusive and you'd be able to customize it. But starting with that, the next thing I would start with is making sure the, the antivirus on all platforms and all systems and then email security.
Got to make sure you don't have a bad actor sniffing around in your email and that you have multi factor token based layers of multi factor to get into the account. You can even geofence those tokens like we do so that you can't receive a token outside of the country. And you can just, you ratchet these things and you say oh those are simple. Some of these are very, very simple. Very little friction and it just keeps bad people out of it. And then whether it's know before or using mimecast or Barracuda, but just start with some social engineering training, right? Like what are we talking about here? We're talking about an email that looks like it's coming from the most trusted party that you've been dealing with or brand like in Amazon or Home Depot or Starbucks. Seems super innocent. They click on a link oh, that didn't seem to go anywhere. And all of a sudden they're asking for a credential or two. And then behind the scenes the email and the applications are exposed to bad actors.
Platforms such as Certified will provide the guarantee in the wrapper around all incoming outgoing funds. Mortgage payoffs like that's the biggest threat still from a dollar loss perspective, payoff protect that we created is just it's lights out. Like this is a set and forget use it and we can handle with every single payoff that's going in and out. Commercial hard money, residential direct lender, servicer, doesn't matter.
And then from there, I mean I think maybe that, you know what's interesting as an agency owner as well is I play like quasi CISO by day right now and that was why I got into the business.
So surrounding yourself as well with some type of a managed service provider that can at least provide the security layers and the updates and keeping you up to date in real time. Microsoft's not releasing a patch because they're finally fixing some bug in Word.
They saw something get exposed and then you patch that exposure because it's a vulnerability to your system in their ecosystem. Right.
So whether it's Premier one and there's others out there, I mean there's just. We have a really, really good group of vendors and partners that care deeply about this industry and some of the Alto Premier providers and your rep would be able to tell you as well.
But those are some of the. There's a lot that I just went over and there's a lot more to do but for me it's incident response, email security, you know, your application security and then your social engineering training to start with.
Just start down that path and we'll be providing in the webinar a full like copy of the tech stack. Like here are the vendors, here are the categories, here are your. Here's where to start to look. And I'm not a spokesperson for these people. It just happens to be, I'm very familiar with, with how the layers of security.
Here's what it looks like.
One plus one plus one starts to equal six or seven or eight, not three or four.
And these are still human beings on the other end. Yes, they're AI enabled but if you're the most secure house on the block with the lights and the security dogs and fencing and cameras versus the neighbor that has just their screen door open, which you see what I'm saying? I mean as a very simple analogy, but it's true. You can put it off where they, they'll just gonna move on and they're gonna hit somebody else. And they will, believe me. They will.
[00:25:44] Speaker A: Yeah, they will. Well, Tom, this is really a great conversation. If someone is interested in a copy of the report, is it available on your. On your website?
[00:25:56] Speaker B: Yeah. You go to certified C-E-R-T-I-FID.com and you go to our resources and it's right there. It's free downloadable report. Would love to not only pull it down, read it, but have a conversation with your team, have a conversation with your community about what you're seeing. We were not trying to prove any hypothesis. We never have in the three years of the study.
This is just like get some feedback, make sure that the data is correct and let's socialize that out as one. Some, some areas to improve upon as a company or an industry, but a ton of information to educate Such a great lunch and learn for real estate Agents and your teams. Well, just going over, let's just have a conversation about this.
[00:26:47] Speaker A: That's a great suggestion. Download it and then have a. Don't just download it. Look at it and put it in the drawer. Have a conversation.
[00:26:54] Speaker B: Yeah, just be honest about it. Be, be vulnerable about it as an owner, as a manager or as, you know, hey guys, look, referral partners, we need your help. You know, if your emails aren't secure, then, then the consumers, like we're, then we're less secure and we're trying to make everybody secure here. You know, we can't do it alone. Yeah.
Yep.
[00:27:16] Speaker A: Well, and I was going to ask you for the bottom line, but I think you just gave it to us. You know, get that report and have a conversation. I think that's a great bot.
[00:27:25] Speaker B: I think that's it. And look for it every year. We'll continue to make the investment to educate the community deeply on what we can do, what the consumers are expecting and yeah, get it. And go out into your internal or your external communities and just start having a conversation.
[00:27:41] Speaker A: Awesome. Well, Tom, thank you so much for spending some time with me today. This is very enlightening, I'm sure, not only for myself, but for all of our listeners. And for those of you that are interested, the webinar is being hosted by Old Republic Titles.
It's going to be on May 7, 11 o' clock Eastern Time. If you haven't received any notice, reach out to your older public title sales rep and I'm sure they'll be happy to get you registered for this great webinar. So, Tom, again, thank you so much for taking some time to share this information with us and to our audience. Thank you again for joining us as always, and until we meet again, let's all continue to learn, grow and prosper.
Thanks.
