The Best Way Agents Can Help Protect Clients From Real Estate Fraud

The real estate industry is rapidly evolving, driven in part by fresh technologies and the digitization of once-manual processes.

From applying for mortgages to finalizing sales, many real estate transactions can now be completed online, offering never-before-seen convenience and efficiency. And at large, these evolutions are positive: digital tools reduce human error, streamline operations, and open the market up to a broader audience.

But as is true for all technological advances, there are some risks to be aware of — particularly, in real estate, in the realm of fraud.

Real Estate Fraud on the Rise

While the benefits of digitization are abundant, the transition has also introduced new vulnerabilities. A few examples include:

• Title fraud: This occurs when someone steals your identity and forges documents to either remortgage your home and take the proceeds, or to sell your home out from under you.
• Foreclosure fraud: Foreclosure fraud usually occurs when you're struggling to make mortgage payments. Fraudsters may trick you into transferring your property title to them in exchange for a loan. From there, they often keep the payments you make and hold the title to your home, which they may then resell or refinance.
• Mortgage fraud: Mortgage fraud, also called application fraud, occurs when false information is provided on a mortgage application. Someone may falsify your documents or encourage you to do so, leading to financial and legal consequences.

Causing stress for buyers, sellers, and real estate professionals alike, these threats have become very real in the modern market.

Last year, a case made headlines when a Toronto couple's home was fraudulently sold without their knowledge. While the homeowners were away in 2022, a pair used fake identification to impersonate the couple, hired a real estate agent, and listed the property for sale. The home was sold — at the time, prices were nearing all-time highs while mortgage rates remained low — and the new owners took possession. The real homeowners didn't discover that their property had been sold until months later.

This incident, alongside a string of similar frauds across Canada, highlights the urgent need for stronger digital verification processes. Just one of many knock-on impacts is that title insurance companies are increasingly refusing to insure transactions deemed too risky, which raises concerns about the long-term sustainability of this type of coverage.

At the heart of these issues is a common factor: outdated methods of identity verification, which rely heavily on physical documents and in-person interactions. These methods leave room for fraudsters to exploit process gaps, meaning stronger digital verification solutions are necessary — particularly in real estate.

This is where Interac — a trusted provider of secure digital solutions across Canada — comes into the equation. Having long supported digital verification in industries like finance and government services, Interac comes armed with a useful service that can help combat vulnerabilities in real estate dealings.

Interac Verified: A New Standard in Digital Security

Interac Verified, a suite of verification and authentication services, can protect real estate transactions by digitally verifying the identities of all involved parties, ensuring that sensitive data remains secure. In essence, Interac Verified includes a series of three services that enable users to prove they are who they say they are. At a glance, the suite includes: Interac verification; Interac document verification; and Interac sign-in service. (Many will be familiar with the Canada Revenue Agency’s integration of Interac Verified, for example, which makes it easier to safely access the CRA’s portal and services.)

By leveraging trusted sources, such as participating financial institutions¹, and accepted government-issued identification² and biometric checks, the service provides a robust layer of security throughout the real estate transaction process, from mortgage pre-approval to closing. For businesses, the combination of added ease and security can make a profound difference. Integration of Interac Verified can:

• Help professionals acquire more customers, by converting more customers via easier data verification.
• Simplify onboarding processes, via streamlined compliance and the reduction of manual verification processes, which together speed things up while minimizing errors.
• Help professionals and businesses meet compliances standards, by facilitating Know-Your-Customer processes (so you can focus on delivering an optimal customer experience).
• Protect against fraud, by ensuring you know who your customer is — and that access is given to the right person.

“Digital verification is essential in today’s real estate market. With identity theft and fraud on the rise, we must equip professionals with the right tools to protect their clients, and ensure every transaction is secure from start to finish,” says Giles Sutherland, Head, Business Development at Interac.

What makes Interac Verified particularly valuable to real estate professionals is its ability to seamlessly integrate digital verification at every step. This ensures that brokers, lenders, and lawyers can facilitate secure and efficient transactions for their clients. While the service is used across multiple industries, its application in real estate is especially impactful, as it helps mitigate (growing) risks like fraud, identity theft, and title fraud.

“Professionals in the real estate sector need to be able to trust that the parties they’re working with are who they say they are,” Sutherland says, “and that’s exactly what Interac Verified ensures.”

For example, during mortgage pre-approval, real estate professionals can use Interac Verified to securely confirm a client's identity and personal data, ensuring all information is reliable and trustworthy. Similarly, when submitting an offer to purchase, the service can verify the buyer’s personal data, reducing the need for physical paperwork and minimizing fraud risk. This not only streamlines the process, but also enhances security at key stages of the transaction.

Join the Conversation

These are just a few of the ways Interac Verified can help real estate professionals facilitate safer transactions, ensuring that all parties involved — from brokers to buyers — feel more confident and secure. While Interac Verified plays a pivotal role across many industries that depend on identity security, its impact in real estate is particularly noteworthy, given the sensitive nature of transactions.

To further explore these topics, Interac and STOREYS are hosting an industry event in Toronto on October 17, 2024, from 5:30pm to 7:30pm.

The event will feature a panel discussion and a fireside chat with Sutherland, diving deeper into fraud prevention strategies — and the future of the real estate brokerage in a digital world.

Click here to register forTelling STOREYS: The Future of the Real Estate Brokerage Model

As the real estate industry continues to evolve, it's crucial to stay informed and take proactive steps to protect your investments. Services like Interac Verified can help real estate professionals do exactly that.

¹For a list of participating banks or credit unions that can be used to log in or access the Interac verification service, click here.

²For full list of government-issued documents eligible for verification by the Interac document verification service, click here.

Interac Verified is a trademark of Interac Corp. Used under licence.

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This article was produced in partnership with STOREYS Custom Studio.