Safeguard Your Real Estate Business Against Fraudulent Mispayments

Mispayments can ruin any type of business, especially when there’s so much money involved like real estate. Frauds can be a big reason for this and these types of mispayments occur when scammers intercept communications between home buyers, sellers and legal teams to get a large sum of money into their bank account instead. Criminals will target this sector due to it generally having transactions that involve large, predictable sums of money that can be high-value.

It’s important that you understand how to protect your business from these types of fraudulent mispayments, so you can protect your cash flow and private information. Continue reading to find out more.

Fraud Prevention Steps

Verify Bank Changes by Phone

Always call clients, vendors, or title companies using a known, trusted phone number to keep all your information safe from fraud so all the finances are going to the right place. You should never call the number listed in an email, as it could easily be a scam. Make sure to always verify that you’re on the phone to the right person. You can do this by having a conversation about something private that nobody else would know about.

Use Secure Platforms

You should choose carefully what platforms you use to send sensitive information. Always avoid standard emails, as these can be easily intercepted by scammers who can then use this information to gain access to your finances. There are encrypted tools and verification software available that are designed to confirm account numbers safely.

Enable Two-Factor Authentication

You can protect all staff email and financial accounts with two-step verification to block unauthorised access. Here’s how the process works:

1. First Factor (Password): You enter your standard username and password on a website or app.

2. Second Factor (Verification): If the password is correct, the system stops and asks for a second proof of identity.

3. Access Granted: Once you supply the correct second factor, the system confirms your identity and lets you into the account.

Train Your Employees

Build a human firewall by teaching staff to spot urgent pressure tactics, unexpected account changes and phishing attempts. When all of your employees know how to reduce the number of scams and see when there’s fraudulent attempts, there’s less chance of mispayments occurring.

Strict Internal Controls

Separate accounting duties so that more than one person must review and approve changes to vendor or client payment details. This practice, known as segregation of duties, prevents any single individual from having total control over financial transactions. By requiring multiple authorizations, you establish a system of checks and balances that makes it significantly harder for unauthorized or fraudulent changes to be processed without detection. Ensure these reviews are formally documented, and establish clear approval workflows for any new vendor setup or modifications to existing payment information.

Credit Insurance

Make sure that you have credit insurance to protect you from fraudulent mispayments, as this can help your business stay afloat during times of financial crisis. Even if you have all the protocols in place, fraud can still occur and lead to mispayments, making this type of insurance crucial.