With the number of instances of wire fraud continuing to rise, many victims are turning to court to seek damages after a large portion of their life savings or business liquidity was stolen by scammers.
According to a report published Thursday by wire fraud prevention firm CertifID, real estate agents, brokers and title companies are increasingly being held accountable if a consumer loses money.
In an analysis of more than 100 real estate wire fraud cases, CertifID found that the most common wire fraud-related legal liability issues for real estate firms are negligence, breach of contract, deceptive business practices and breach of fiduciary duty.
“Even though it’s criminals who are orchestrating the business email compromise scams, recent court decisions suggest that the professionals involved in a real estate transaction are required to do more to protect consumers from wire fraud scams or face a potential court judgment for damages,” the report stated.
“Over the last four years, fraudsters have become even more brazen in their attacks, prompting the courts to piece together more definitive standards of liability by looking outside of real estate fraud cases to draw upon well-established theories of duty and liability.”
Through its analysis, CertifID found that based on the court cases analyzed, there is “no practical way to hold a bank responsible for wire fraud losses if the account holder or authorized representative initiated the transfer.”
Additionally, unless there is “specific insurance coverage for stolen funds and all requirements to coverage in an insuring contract are satisfied, a claim for damages will be denied.”
CertifID said this is due to the court’s deference to Uniform Commercial Code Article 4A, which governs the rights and responsibilities of parties involved in electronic funds transfers. Despite governing this issue, the code does not include a mandate for account matching. It also…