Property fraud has become a phenomenon in recent years, and with fraud methods changing all the time it’s becoming increasingly difficult to spot red flags for legal professionals.
In Canada, especially in its two most populous cities, Vancouver, and Toronto, the ‘title fraud’ scam which involves stealing a homeowner’s identity to refinance or sell home without them knowing has become a growing concern.
The average home cost in Canada is over C$1m ($749,000; £620,000), and housing scarcity makes it an attractive target for fraudsters.
Recently, a Canadian couple discovered that their home was sold by fraudsters without their consent while they were out of town. This type of identity theft is known as title fraud, where criminals assume the identity of the owner of a vacant home and sell it to unsuspecting buyers.
This type of fraudulent activity is not only becoming increasingly more popular in Canada, few years ago in the UK a man returned from holiday to find his house in Luton had been sold by fraudsters. The Land Registry information shows that in 2021-22 it paid nearly £7m for 598 claims to their indemnity fund, which is used to help compensate instances of fraud, compared with £5.44m for 540 claims in 2020-21.
Pandemic and virtual title transfers
The pandemic has contributed to this rise as virtual real estate deals have made it harder to detect fake identification documents, while travel restrictions have made it easier for fraudsters to take over people’s property.
Reports indicate a rise in such cases since 2020, and they have become more sophisticated. For instance, fraudsters often use fake identification documents that appear authentic, making it difficult to detect the fraud. Fraudulent IDs used in these transactions often accepted without a verification taking place, with a lot of property professionals still relying on outdated ‘legacy’ systems.
How technology can protect you from ‘property fraud on the rise’
Technology can help prevent property fraud by enabling the real-time verification of property ownership and automated monitoring of property transactions. With these measures in place, title fraud can be detected and prevented before the damage is done.
Regulation advice and guidance
Stephen Moranis, past president of the Toronto Regional Real Estate Board advice that people on both sides of a real-estate transaction should make sure they’re comfortable with the identity of the person on the other side of the deal”.
Recent guidance for the legal sector from the Legal Sector Affinity Group noted:
“As an alternative to face-to face documentary verification, legal practices and practitioners may adopt or further utilise electronic means of ID&V [identity and verification] where appropriate to the risks present in the client/transaction.”
Know Your Customer (KYC) checks to combat property fraud
To prevent property fraud, it is crucial to verify the identities of the parties involved in the transaction with precision. However, even under optimal conditions, verifying the identity of clients in person can be an inconvenience for both the lawyers and the clients. Moreover, the effectiveness of the verification process depends on the skill and attention to detail of the person carrying out the checks, which can vary.
In contrast, KYC platforms such as Verify 365 and other technological platforms can verify electronic passports and other ID documents in a highly consistent and accurate manner, taking less than 5 seconds to complete the process.
Biometric Identity Verification ‘Digital ID’ checks
What are the benefits of using biometric technology for preventing fraud?
Processes and controls correctly implemented with digital ID tools map to legal requirements, reducing the complexity for practitioners to both comply and evidence compliance to regulations.
These tools can save time on manual processing of documentation and in-person checking through remote onboarding and accelerated verification processes.
Digital ID verification technology provides a more secure way of storing and managing identity-related documents. By encrypting and storing documents digitally, the risk associated with physical storage and management of documents is reduced. This ensures that sensitive information is protected from unauthorized access or theft, providing an added layer of security for both the legal practitioner and the client.
Digital ID verification can involve several technologies, including biometric verification, facial recognition, ‘liveness’ checks, machine-readable zones (MRZ), and others. These can increase the accuracy of checks while reducing room for human error, enabling legal practitioners to be confident about their client’s identity.
Providers may include features such as automated recordkeeping that ensure data is captured in a way that is standardised and secure. This can be useful for evaluation and auditing purposes, you can find more about Digital ID here
How can Verify 365 Dynamic ‘digital ID’ help?
Developed in the UK, but applicable worldwide, Dynamic ID is the most advanced solution of its kind, providing a secure and convenient method for verifying identities online. The technology is currently incorporated as the primary biometric risk engine within Lawtech 365’s comprehensive digital onboarding solution, “Verify 365“.
For smart and fast verifications that can verify individuals alongside a comprehensive list of 10,000 + documents across 195 countries – Dynamic ID biometric technology is perfect to help safeguard individuals and organisations from the potentially devastating consequences of identity fraud.
For more information on Dynamic ID or Verify 365 onboarding solution – get in touch here