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Real Estate and Payment Fraud? A Welcome Divorce


Digital payment fraud has fast become one of the most lucrative criminal businesses on earth.


Over the next decade, credit card fraud worldwide will likely cost industries $408.5 billion in losses. Moreover, as card payment volume reaches an expected whopping $79.14 trillion by 2030, we’re on a trajectory to lose an estimated $49.32 billion to hidden scammers.[1]


Frightening numbers, especially considering the sophistication going into pulling off this much fraud daily.


But let’s examine one of the hottest targets currently for payment fraud, Real Estate, and how and why this came to be.


Buying a home is a significant financial transaction with at least two payments by the home buyer. First is a small cash deposit to secure the initial application (called earnest deposit), followed by the larger down payment at contract closing.


That first earnest money deposit is paid within 1–2 days of signing an agreement to buy, is generally under $5000, and is the buyer’s way of saying, “I’m serious about purchasing this house.” It is usually paid with a paper check (such as a cashier’s check) or a bank wire, deposited into an escrow account, and not directly to the seller.


On the other hand, final payments are considerably larger at closing. These generally range around 20% of the purchase price plus an additional 3–6% for closing costs and are typically paid through bank wire from homebuyer savings, family money, or investments.

This leads us to the underlying reason exploited by scammers and hackers.

Real estate remains a legacy-driven and involved industry. Bad actors have become proficient in the multi-step processes required. They have learned how to cleverly interject themselves at nearly any point to scam homebuyers, especially when it comes to payments.


Dozens, if not hundreds of conversations, tasks, and documents combined open the door wide to a host of vulnerabilities.


Include the movement of money where account details get shared across email, phone calls, text messages, PDFs, Zooms, or more, and you have an excellent recipe for fraud.


Paper Checks & Sharing Account Info — Alive and Well

Paper checks have been around for over 300 years and are still alive today for property deposit payments.


While only 12% of Americans write checks, the use of paper checks is still looked at by some to avert the current increase of digital payment fraud.[2]


The most common deposit payment method has been sharing account information for bank wires, dating back to the 1970s.


It is also the most attacked method of deceptive social engineering, not to mention a high volume of human error.


  • When you write down someone else’s account info, it’s subject to human error.

  • When you write down someone else’s account info, it’s subject to human error.

  • When transmitting via email or attachments, it’s subject to business email compromise.

  • When shared through text or a messaging app, it can be subject to unwanted eyes or human error in copying into form fields in your bank account.

  • It is also subject to human error, or worse, call monitoring hacks when read over the phone.

Sharing sensitive account information is the most vulnerable of all steps in real estate payments.


However, this can now finally be avoided using new and advanced technologies.


The question is, how?


Technology as a Resolution

Before I jump into the solution, one key element doesn’t get enough attention on the importance of fighting payment fraud.


The REALTOR® or real estate agent.


While legally, an agent is not the party that accepts homebuyer payments, they will help ensure it is done in a timely and safe manner and follows their deals through to a happy conclusion.


After all, their good name, reputation, and future business are on the line in every deal.


But what happens when a home buyer gets scammed on a payment, loses their deposit, or even life savings.


That can spell disaster for everyone, especially trust in an agent, impacting their well-being to grow through local word of mouth and community referrals.


Which begs the question: with all the advances in technology, can this not be prevented?


The good news is that it has been solved — not only in preventing but detecting and isolating fraud before it happens.


Progress started several years ago with payment apps emerging in real estate for earnest money deposits using 2-factor authentication and integrated payment services.


However, most are limited to only validating parties, not if parties are bad actors, rendering 2-factor authentication impotent when identities are stolen or devices remotely hijacked. Not to mention a lack of secure, efficient, and easy-to-use account information-sharing tools anyone can use.


How We Can Solve It All

All of this can be solved using emerging technologies.


Blockchain, AI, and Cloud-Native technology are all rolled into a single turn-key solution for REALTORS®, title companies, escrow agents, law firms, mortgage brokers, and banks.


This now exists today, and we’re proud to announce the introduction of Blockrails™, the industry’s first cloud-based, highly secure platform using artificial intelligence to detect, isolate and prevent fraud before it can happen.


With a core focus on real estate, Blockrails™ promises that every payment made in its platform will be protected from fraud, fully backed by a $1 million Safe Payment Guarantee[3].

  • Homebuyers can have peace of mind they won’t get scammed,

  • Title companies and escrow can be assured their deposits safely arrive, and

  • REALTORS® can have peace of mind that their good reputation will be protected while focusing on what they do best — closing great deals.

Blockrails™ is now available for enrollment and use by everyone in the real estate transaction, with earnest money deposit services initially available, followed soon by total home deposits protected at closing, and followed by complete protection of high-value commercial property transactions.


If you’re in real estate, please visit Blockrails.com today and see how it can help provide you with the peace of mind you need in today’s fight against fraud.


And you can always directly DM me at jbennick@gatelesis.com for any questions!


About DIG

The Digital Innovation Group (DIG Holdings, LLC.) is a GA Telesis, LLC company, the leading provider of integrated services in the commercial aviation industry. DIG is a creative think tank and execution team that innovates business solutions using emerging technologies. Through the vision of a secure and connected world powered by ingenuity and democratized technology, DIG makes transformational technology accessible for every business. DIG is developing and introducing a series of innovative and related business solutions helping drive transformational change in removing friction and improving business speed and viability.


For further information, please email info@dig.tech.


[1] https://www.paymentsdive.com/news/card-industry-faces-400b-in-fraud-losses-over-next-decade-nilson-says/611521/

[2] https://www.kasasa.com/blog/personal-finance/how-to-use-checks

[3] Blockrails™ $1 Million Safe Payment Guarantee applies only to payments made using the Blockrails™ application and is subject to Blockrails™ Terms of Use.