New Study Finds Increase in Seller Impersonation Fraud

(Illustration courtesy of ALTA)

Seller impersonation fraud is a growing concern in the real estate industry, a new report finds.

In 2023, 28% of title insurance companies experienced at least one seller impersonation fraud attempt, a new study conducted by ndp analytics for the American Land Title Association found. Two in 10 title companies experienced attempts in April alone.

“Seller impersonation fraud affects both title insurance companies and their customers,” the report said. “This type of fraud occurs when fraudsters impersonate property owners to sell property they do not own. Because fraudsters typically target non-owner-occupied properties, it can take months or years for the actual property owner to discover the fraud.”

The study noted the title industry is well prepared. Nearly all title companies surveyed–91%–currently provide or plan to provide education and resources to train employees on fraud.

The study also found that seller impersonation fraud often is caught before transaction closes. Forty-six percent of companies said identifying and preventing fraudulent transactions before closing was at least somewhat common, compared with 26% after closing. In 2023, 16% of title companies that had seller impersonation fraud attempts paid claims.

Other key takeaways include:

Common characteristics of seller impersonation fraud include notarization issues and use of a property owner’s legitimate non-public personal information, the report said. Per the study, the most common notarization issues were fake notary credentials (43%) and use of real notary credentials without permission (31%).

Red flags can include vacant land transactions, requests for use of an unknown notary and all-cash transactions. Requests for all-cash transactions and mail-away signings using an unknown notary carry a higher risk of fraud: 88% and 86% of companies identified these actions, respectively, as at least somewhat common red flags, the report said.