Multiple Lines of Defense: Combating Fraud in the Digital Closing Era

Suzanne Singer is director of sales and marketing at remote online notarization (RON) and eClosing provider NotaryCam, a Stewart company.

Fraud has become one of the most pressing risks in real estate and financial services. From deed theft and vacant land scams to AI-generated deepfakes, criminals are deploying increasingly sophisticated tools to exploit weaknesses in the transaction process.

Despite these growing risks, many professionals still cling to a familiar perception: that an in-person notarization is inherently more secure than its digital counterpart. Face-to-face interaction may feel safer, but mounting evidence suggests otherwise. In fact, modern digital processes often provide stronger, multi-layered defenses against fraud that in-person methods simply cannot match.

Debunking the “In-Person Is Safer” Myth

Traditional notarizations rely on a notary’s ability to visually inspect identification documents. That step, while important, has clear limitations. High-quality fake driver’s licenses can appear authentic enough to fool even trained notaries. In some cases, criminals can even present IDs that are completely fabricated but pass a cursory glance.

By contrast, digital transactions combine credential analysis, knowledge-based authentication and other identity checks that are designed to verify identity. Instead of a single notary’s visual judgment, these methods rely on advanced data-driven systems. This multilayered process makes it far more difficult for fraudsters to manipulate the system.

The persistent belief that in-person notaries provide greater protection often stems from a misunderstanding of how digital safeguards operate. Standing across from someone at a desk does not inherently guarantee that the individual is who they claim to be. Digital verification introduces objective, measurable checks that go beyond the human eye, offering a stronger baseline of security for all parties involved.

Technology and Human Oversight: A Dual Defense

Digital platforms have introduced powerful tools that now form the first line of defense against fraud. Credential analysis is an algorithmic authentication of government-issued photo IDs completed by a third-party that validates embedded security features and other required attributes are present and authentic. This verification helps catch sophisticated fakes that would pass a visual inspection. Two-factor authentication adds another safeguard by requiring signers to answer knowledge-based questions in real time, creating an unpredictable hurdle that fraudsters cannot easily anticipate.

Behind the scenes, IP tracking and location data verify where a signer is situated during a transaction, while detailed audit trails, often including video recordings stored for a decade or more, provide a record that can be relied upon in the event of a dispute. Together, these measures deliver a level of protection that extends well beyond the capacity of most in-person notarizations.

Even with such robust tools, fraudsters continue to adapt. Advanced technology can still be manipulated, which is why human oversight remains indispensable. Notaries who specialize in digital transactions develop a keen eye for irregularities that machines might miss. Asking a signer to hold up an ID during a live video session, for instance, can reveal the use of an AI-generated mask or filter. Requiring someone to recite their address or date of birth is a simple but effective way to expose an imposter who does not know critical personal information. These moments underscore the irreplaceable value of trained human judgment.

The real strength of digital notarization comes from combining both elements: machine precision and human intuition. Automated systems perform rapid, objective checks, while experienced notaries provide live verification that considers context, behavior and subtle cues. This layered approach represents the “multiple lines of defense” that the industry increasingly relies on, creating a more secure process than either technology or human review could provide on its own.

The Role of Regulation

Remote Online Notarization (RON) laws are continuing to evolve across the United States, and many states now mandate strong standards of authentication. Requirements such as credential analysis, two-factor authentication and secure storage of transaction records are becoming baseline expectations. For industry participants, these measures represent essential safeguards against financial crime in addition to compliance obligations.

For lenders, title companies and financial institutions, the consequences of fraud extend well beyond financial loss. Ensuring that identity verification processes meet or exceed regulatory standards is therefore both a legal necessity and a business imperative.

The regulatory environment also reflects a broader industry shift toward proactive fraud prevention. Legislators and regulators recognize that identity is just as critical to a loan as income, employment or asset verification. Without confidence that a borrower or seller is who they claim to be, the rest of the transaction’s foundations crumble. Treating identity as a central component of compliance helps strengthen the system against increasingly sophisticated attacks.

Lessons From Real-World Scenarios

The effectiveness of these safeguards is not hypothetical. In real estate, vacant land transactions have become a frequent target of fraudsters, who pose as owners and attempt to sell properties without detection. Requiring sellers to complete credential analysis and multi-factor authentication has proven effective in intercepting these schemes before they can close.

Deed theft has also gained headlines in recent years, with criminals fraudulently selling or mortgaging homes they do not own. In these cases, digital tools such as audit trails, IP tracking and recorded verification sessions make it significantly harder for such schemes to succeed. The presence of a long-term video record alone provides powerful protection, as fraudsters know their deception will be preserved as evidence.

Beyond real estate, the financial services sector offers additional lessons. Credit card issuers and lenders have long used layered identity verification to curb fraud in new account openings. The real estate industry can draw from these practices to enhance its own defenses, building systems that are robust enough to withstand the same types of threats.

Building a Culture of Vigilance

Fraud prevention is not solely a matter of technology. Organizations adopting digital notarization must also foster a culture of vigilance that emphasizes human oversight and responsive support. Preventing fraud means preparing for moments when red flags appear and ensuring that trained professionals are available to intervene.

That kind of readiness depends on education and experience. Advanced fraud training equips notaries to recognize red flags that machines alone cannot catch, from AI-generated identities to subtle behavioral cues. Ongoing instruction also ensures that notaries remain current on emerging tactics and know when and how to escalate concerns. Providers that make such training a requirement raise the overall standard of protection across the industry.

Maintaining accessible support is a key part of this strategy. When questions or concerns arise during a transaction, the ability to quickly reach a human representative can make the difference between stopping fraud in its tracks and allowing it to proceed. Fraud prevention should be seen as a shared responsibility between platforms, notaries and institutions.

Organizations should also view identity verification as an ongoing process rather than a single checkpoint. From the way knowledge-based authentication is administered to the duration of record storage, every decision contributes to a stronger or weaker security framework. By layering both human and technological protections, companies can build defenses that adapt alongside evolving threats.

Raising the Bar

Fraud in real estate and financial services will continue to evolve. Protecting against it requires a comprehensive strategy that blends advanced technology with trained human oversight.

Far from being less secure, digital notarization and closing processes—when implemented with robust safeguards—are proving to be among the strongest defenses available. The question for industry stakeholders is no longer whether to adopt these methods, but how to do so in ways that maximize both security and trust.

As fraudsters innovate, the industry must respond in kind. Meeting deception with diligence and building multiple lines of defense will be essential to protecting the integrity of every transaction.

(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)