From wire fraud to fake listings, the threats are evolving — and so should your defenses
With a wave of new technology entering the real estate industry in the past five years which has helped in ways that investors never thought possible, there has been an unfortunate downside as well: fraud. The same technology that has been an asset in so many ways has also fallen into the wrong hands and been used in numerous, devious ways to bolster fraudulent activity.
There are plenty of ways these perpetrators are negatively impacting the real estate industry and wreaking havoc on unsuspecting investors, but with the rise of fraud there has also been an increase in ways to combat it.
Brokers should be verifying information as much as possible for their investor clients and exercising due diligence at multiple checkpoints throughout the life of a loan when acquiring, selling or listing a property.
Locking down wire transfers
One of the most important ways a broker can protect their clients from fraud is during the wire transfer. This is the part of the loan process where money changes hands and the fraudsters can benefit most from a financial perspective. It can become a rinse and repeat process that investors often overlook. There’s also the factor of assuming that when dealing with monetary transactions, it’ll be the financial institutions that are safeguarding against fraud.
However, brokers can be the most judicious during this process by being aware exactly how fraudsters are trying to capitalize on potential oversights during the wire transfer. The main way they are inserting themselves into the transaction to commit fraud is by impersonating title agents and acting as if they are representing the company by providing new transaction instructions that are actually fake and getting the money directed to them instead. Speed is always a top priority in real estate transactions, and fraudsters take advantage of this during the wire transfer when speed is prioritized over accuracy. The high potential payout is why it is the prime point to commit fraud.
Brokers can now instruct their clients on how to combat this in numerous ways, and the most effective solutions can be the simplest ones. Verbal verifications are becoming more popular via phone calls from pre-verified numbers. A broker can also recommend turning to predetermined communication rules before the deal even starts. Any proposed changes would trigger a red flag, and investors can perform due diligence from there to weed out the fraudster. No last minute changes should ever be accepted for a wire transfer. The last and most complicated way that can also give brokers and their investor clients the peace of mind they need are secure portals or encrypted emails that fraudsters would not be able to crack. A standard, unprotected email with sensitive information is much easier to get a hold of and corrupt a transaction. The encrypted email provides that layer of security to frustrate any attempted fraudulent behavior.
Utilizing AI tools to foil fraudsters
In recent years, there has been frequent discussions about whether AI is truly helpful or if it has become too powerful too quickly. Now in 2026, AI is no longer optional, it’s standard operating procedure for companies that want to succeed, and more importantly, be secure. Similarly, AI systems and safeguards are a must now for brokers working with investors. The bad actors are utilizing AI to propel their fraudulent behavior, so in turn real estate professionals can use it to their advantage as well in the fight against fraud.
The rise in AI systems and cybersecurity tools can seem overwhelming, but brokers should leverage their network and service providers whenever possible because they are most likely already using some of these tools to protect their business. Industry research and free demos can help to put an investors client’s mind at ease once they decide they need to beef up their security in the form of AI systems.
There are key ways that these AI systems can help brokers prevent fraud on a daily basis. AI tools can monitor unusual behavior, especially as it pertains to creating new bank accounts or other rapid changes from a financial or structural perspective.
AI tools nowadays can also detect forgery in documents and mismatched identities. Fraudsters will try to make the most subtle changes that may go unnoticed by a human and redirect property ownership or large sums of money for their benefit.
With these AI tools at a broker’s disposal, they can start to create an overall fraud score for each deal and see how likely it is that something is just a human error that needs correcting or a potential criminal attempting to commit fraud. When used properly, AI tools and software can be a trusted ally for real estate brokers investor clients.
Eliminate property listing fraud
One of the largest growing areas of concern in the real estate industry is rental fraud. It has grown consistently every year and is centered around criminals being able to duplicate listings and trick would be renters into securing down payments on properties that are currently now available to lease. Alex Fahsel, co-founder of Property Shield, joined the Uncontested Investing podcast recently to shed some light on the growing issue and how a company like his looks to combat the issue.
“We’re seeing that 20-25% of all residential real estate listings have at least one or more duplicate listings committing fraud on a property,” said Fahsel.
That number is an alarming figure and one that can affect a broker’s business much easier than they think. With only property images, fraudsters can create fake listings of properties, set inaccurate rental figures, and use social media to their advantage to take advantage of unsuspecting renters. Brokers can prevent this by referring companies such as Property Shield to their investor client in an effort to make sure their property information stays up to date and the property is listed on the NMLS.
Property Shield runs this information constantly through their database to catch fraudulent listings and save a property from becoming the subject of fraud against countless people.
“Mom and pop” investor clients are the ones that are most susceptible to this type of fraud because they don’t have the proper barriers in place to ensure their properties won’t be targeted by this criminal activity. The larger nationwide shops typically have automated due diligence in place, whereas the smaller investor shops that are not keeping the most up to date information or scanning all different types of websites or social media platforms can fail to the fraudulent activity surrounding their property. This is where a savvy broker who is set up with the right tech resources can step in to fill these gaps in oversight.
Property Shield now has ways to prevent fraud before it ever has a chance to defraud would-be renters.
“The main goal is for us to do the back end trust and safety of ILS’s so we can catch and stop the fraud before it ever goes online,” says Fahsel.
An ILS is an Internet Listing Service and is essentially any website that allows for properties to be listed on their site. Brokers can perform an extra level of due diligence for their clients and make sure that sites they put their properties on are backed by Property Shield’s level of protection or at least something similar. The last thing a broker would want is for their investor clients’ properties coming under investigation or being reported for criminal activity for something they are not even privy to and could be preventing.
Key takeaways for fraud prevention
Fraud hasn’t just increased in 2026; it’s become more convincing and coordinated. Brokers that operate the safest don’t rely on one safeguard. They use layers of verification, technology, and discipline to make fraud extremely hard to execute against their business and their properties.
Technology and AI have certainly made it easier for criminals to commit fraud, but it’s the brokers that are combatting that with similar assets that are remaining diligent and protected.
This article was provided by RCN Capital
