How to Prevent Wire Fraud in Real Estate Closings | Ep 47

In a world where change is the only constant, Mo Shumil stands at the forefront, guiding title professionals to not just grow their businesses, but to master the art of innovation. With every episode, you're handed the keys to unlock unparalleled growth and stay ahead of the curve. Get ready for a transformative journey. Hello, everyone, and welcome to another episode of the Title Agents Podcast, where we bring you real conversations with a leader shaping the future of the title industry. I am your host, Mo Shumil, CEO of Alltech National Title.

Today, we're thrilled to have Andy White from Closing Lock joining us. Andy brings a wealth of experience and forward-thinking mindset that's helping title professionals navigate change and drive growth. We're diving into some powerful insights today, so let's get into it. Well, hello, Andy, and welcome to the show. As we start off every episode, we'd love to hear your story and your background.

Yeah, thanks, Mo. I appreciate you having me on here. My background is actually in computer engineering. In general, I just have a real passion for learning and solving problems. So not surprising, I went down the engineering route there and ended up getting a PhD.

I just really enjoy kind of understanding how things work, learning about them, where the problems are, trying to figure out how to solve those problems, particularly if they're problems that can be solved in fun or creative ways. That's something I get a lot of energy from. It's really cool when you kind of combine that passion for learning and solving problems with problems that kind of greatly impact society. I think wire fraud is a great example of that in the real estate industry. When you combine problem solving with problems that actually matter, you can end up with lightning in a bottle, so to speak.

So that's kind of how I've always approached life and something that's been kind of interesting. I like new challenges when things change. A lot of people are pretty resistant to change. I'm kind of the opposite. I like when things change a lot and was just kind of incredibly fortunate to find out about the title industry and some of the problems that have existed here.

What's your PhD in? Is it engineering? Yeah, yeah, it's in computer engineering. I'm happy to talk about kind of how I got Closing Lock started because it's a little bit different than getting a PhD in engineering or whatever makes sense from your perspective. So you're a rocket scientist, basically.

Exactly. Rocket surgery and brain science, that's what I call it. That's awesome. So what inspired you to start Closing Lock and how did your background in cybersecurity shape the vision? Yeah, actually my wife gets a lot of the credit here.

She was the one who... Smart man. She told me about kind of wire fraud in real estate. She was a marketing director at a Keller Williams group here in Austin. She came home from work and told me about a homebuyer that almost lost all their money.

This was back in February of 2017. So I guess about eight years ago now. She mentioned, hey, one of our homebuyers almost lost their life savings today. And I thought, hmm, that's interesting. Tell me more.

And she described an email phishing scam. And I thought, well, we just bought our house the year prior. I wonder what we did. And as most people on the call, if you've gone through the homebuying process, if you're not in the industry, it's a pretty foreign and strange experience. And you don't really remember anything other than you go to some office somewhere and sign a couple of hundred pages and then send a bunch of money somewhere.

So I went and dug through my old emails and found an email from an escrow officer at the title company we worked with here in Austin. They had sent me an email with wiring instructions in it, account number, routing number. I had driven to Wells Fargo, our bank at the time, and wired off our life savings, which was $20,000, to a random account number and routing number that I had gotten in an email. And when I realized that later the next year, when my wife was telling me about one of their clients almost losing their money, that was really kind of the light bulb moment of, oh, my goodness, I could have lost our life savings. I'm not exactly a cyber dummy.

I do have a PhD in computer engineering. So it really shocked me how easily I could have lost all of our money. And I thought, man, somebody really needs to do something about this because this is going to be a pretty massive problem. And so that was kind of the impetus for it. The other light bulb moment I think I had at that time was, why are we using this weird wire transfer system anyways?

The wire system as we know it was invented in the early 80s, so 40-plus years old. And we're still using that same system for moving money. And as you all know, you can't verify who owns the account. You're just literally wiring money off to a random account and routing number combination there. And so I set out to do something better.

Can't we just connect our bank account and get the money out of it and into the escrow account? Little did I know, I was very naive, at how difficult that was actually going to be. But that's what set me off on the journey here. One, built-in lead generation. Our inside sales team actively sets appointments for you.

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Yeah, trust-based is a key word there. So love to dig in on that one. But the early days with any business are tough, but they're also incredibly fun. I mean, you're starting to learn about stuff that you've never heard about. Even just thinking about the industry lingo or the industry terminology.

I remember in late 2017, we finally had a product. We were excited to try and get it to the market. And so we started trying to meet title companies in person here in Austin. And I went to one specifically that I remember. The first one, Abby and I, my wife, went together.

And we presented. We brought our projector with us. We showed the product, everything on the wall. And the two people in the room, it was the owner and the head of escrow there. They kept talking back and forth to each other.

Abby and I walked out and said, I think I only understood about 30% of what they were saying. I mean, even the questions they were asking, I didn't understand. I didn't know what an escrow officer was. I didn't know anything that was going on with their world. And so that was a big learning moment for us of, hey, we don't know this industry as well as we think.

We do understand cybersecurity and how it can apply and help people. But at the same time, we need to learn more about this industry. And the best way to do that was just get out to conferences, get out to customers, have those conversations, meet people. And then once we started kind of learning the lingo, so to speak, so we could understand the questions that were being asked and understand how to answer them. Then we started working on the trust building side, because that was another big challenge that we had.

We had a great idea. But when you want to convince somebody to take a chance on two, I'll call us outsiders at the time, it was pretty difficult. I mean, basically, I was going into title companies and saying, hey, let me protect the most sensitive part of your transaction, all the money that's going to move into your escrow account from your buyers and lenders. Let us help solve that problem for you. P.S., I'm not from this industry.

P.S.S., I've never done this before. And P.S.S., there are only two of us that work in this company, me and my wife, and you guys get to be the lucky first customer to actually try out this product with us. So you can imagine the hesitation and resistance that we first saw there. And so we learned, hey, let's just show up in person. Let's establish ourselves as like, hey, we're real people.

We're legitimate. We do know how to do this. We do have a good solution. We can make this work for you. And, you know, a little bit of bribery always goes a long way.

I know that's kind of a scary, scary term when we're talking about real estate here, but it's a bribery. Donuts. Yeah, exactly. It was Chick-fil-A lunch, Chick-fil-A lunch and present my product to you. And then let me learn from you.

What's funny is that I think probably the first three or four in-person meetings, I got so much more out of it than the potential customers were getting out of it, because I was there just trying to learn everything. I was like a sponge, right? Like, tell me about your process. What do you do today? Who's involved in these transactions?

How do they work? And so me buying them Chick-fil-A lunch was a great ROI in exchange for that information there. That's awesome. How have you seen the Taiwan escrow industry evolve over the past five years, especially regarding the cyber threats and wire fraud? Yeah, I mean, the industry is constantly changing.

We talked a little bit about change earlier. When I started, the industry was very big on protecting funds kind of out of the escrow account, but also wiring funds into the escrow. Me buying them Chick-fil-A lunch was a great ROI in exchange for that information there. That's awesome. How have you seen the Taiwan escrow industry evolve over the past five years, especially regarding the cyber threats and wire fraud?

Yeah, I mean, the industry is constantly changing. We talked a little bit about change earlier. When I started, the industry was very big on protecting funds kind of out of the escrow account, but also wiring funds into the escrow account, heavy, heavy focus on that. Then payoff fraud and payoff protection became kind of a big topic in the industry. And then seller impersonation fraud over the last couple of years has become more and more prevalent.

And so cyber crime, cyber threats, fraud, those aren't things that are going away. In fact, if you look at the IC3 report that comes out from the FBI every year, all the numbers are up a staggering amount, almost across the board. I think we're actually doing a pretty good job on the title side and protecting these escrow accounts. But in general, cyber crime is going up and fraudsters are evolving on a regular basis as well. One of the fascinating things I found about wire fraud in real estate early on was that it was a problem that was discovered.

Most of the time I think of discoveries, particularly in grad school of, hey, we invented a new algorithm or we invented a new way to do something or we solve some math problem that's never been solved before or some new material has been created. I mean, think about the synthetics and clothes now. Clothes are all stretchy now, which is great. I love all the stretchy clothes, but that's not something that existed before. And fraud follows that same type of trajectory where some type of fraud never existed before.

Somebody discovers it, they figure it out, and then it becomes prevalent. It becomes very widespread. And wire fraud in real estate was the great example of that. That problem didn't exist. I mean, maybe we could define exactly when the first attempt had kind of occurred, but 10 years ago, not a ton of people were talking about this.

And then fast forward a few years and all of a sudden, everybody's talking about it. And that's because fraudsters discovered how we move money in real estate transactions in the US, which by and large, we use email, phone, and fax. That's almost exclusively what we use for communicating. And then almost exclusively checks and wire transfers for moving that money. Out of those five things I just described, the newest one of those things is actually the wire transfer system, which I mentioned earlier, came out in the 80s.

And so the newest system we're using was built over 40 years ago. It's not surprising then that fraudsters kind of figured out how these transactions work, how the money moves around, and then how they can insert themselves into the middle of that. And then if we fast forward, that's kind of the history as I've seen it over the last 10 or so years in the industry. But we start thinking about going forward with AI, right? That's a very hot topic.

Mo, I'll just turn the tables real quick and ask you a question. Two years ago, or maybe three years ago, would it have ever occurred to you that the title industry would be talking about bleeding edge technologies like AI? Personally, yes. Yeah, personally? That's personally, yes.

We're mainly, we're talking about bots like five, six, seven years ago. I'm talking about bots. But in the sense of all, I totally agree with you. It's the purpose of this show is really to educate the tell agents on how to leverage automation technology. Yeah.

I was the first adopter, Ted's a PT, he's like my best friend. I'm like my girlfriend, my wife is jealous. You know, you can get good relationship advice from Chad GPT as well. I've done that. I've done that, yes, strictly business.

I've asked, I'll admit, and Abby will probably listen to this, but I'll admit I've typed in a text message before to it and said, hey, make this sound more friendly than it currently sounds. So it saved me. Yeah, so you know how men versus women, like how we communicate, like just like very short words. Hopefully my wife will listen to this podcast. I don't want to spend a lot of time with Chad GPT kind of formulate an answer.

It's like more paragraphs instead of one, two words. Exactly. Like how do I respond to this? But you know, so talking about kind of the automation stuff that you were just hitting on, you're right that that has been something that's been discussed in the industry, but it's not something that's been super prevalent. And particularly from an artificial intelligence perspective having smart machines or systems that can do some of these tasks.

Deep fakes now, like deep fakes are the scariest thing now, like video jet fakes. Yeah, it's great. And voice entering. Yeah, the voice deep fakes are incredible. The video deep fakes, I mean, you know, some of the tactics I heard recently, if you wave your hand in front of the camera there, deep fake will have a hard time kind of keeping up with that but that'll change.

I mean, a year or two from now, they'll have that problem solved as well. In fact, there was a Harvard study last year that was using AI generated phishing emails and they found that consumers, and so, you know, phishing emails, this is not a new scam. These have existed for forever. Basically since email first launched, people started phishing each other with it. And, but the AI generated phishing emails were generating 3X the click rate as the human generated phishing emails.

So the machines effectively were better at duping humans into clicking their emails than even the humans were. So now, you know, in the past, cyber criminals had to worry about particularly, you know, when you think back to like the Nigerian print scam, they had to worry about crafting an email that sounded like it was actually from a human. Now the machines are like, hey, let's go a step farther. I'm gonna make it better than what the human's going to generate for us and get people to click it. And so, you know, that's not going away.

And as scary as it is, it's only going to be more pervasive. This podcast is made possible by our sponsor. You have worked so hard to build your business. So why do 70 to 80% of businesses never sell? The truth is most owners wait too long.

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Visit alltechnationaltitle.com or DM us to start the conversation. Alltech National Title, smart transitions built to last. So what mindset shifts do you think title professionals need to make to stay ahead of these digital risks? Yeah, from a mindset perspective, I think there are kind of two main themes. One is around embracing change.

I talked earlier about change a little bit. Our industry has changed a ton in a very short period of time and that's not going to go away. In fact, the pace of change, the pace of innovation is going to accelerate as we go forward. You can even think about just AI. We talked about AI a second ago on defrauding all of us, but AI tools to create better software, AI tools to improve the workflows, to improve the customer experience.

I mean, we think about customers, they expect more today than ever before and that's not going to change either. Five years from now, they'll expect more than they expect today from us. And, you know, telling our customers, hey, go to the bank, get a check, things like that. Those are not great long-term plans. Those were fine and acceptable five years ago, 10 years ago, but the world is changing very quickly and our customers will expect us to adapt as well.

And by us, I mean the title industry in general. And we'll have to be flexible too, right? So there's change and then there's the flexibility that accommodates that change. This idea that, hey, we've always done it this way, we're going to keep doing it that way is really the wrong mindset. We need to have that growth mindset, that flexible mindset, because if we think about further into the future, I won't say this is coming in the near-term future, but long-term future, you know, title companies and attorney offices, they'll be expected to settle transactions on nights and weekends.

We think about some of these new payment rails, FedNow, RTP. Sure, they're not 100% adopted yet, but they will work closer and closer to that. And eventually consumers are going to say, hey, if you can move all the money at 7 a.m. on a Saturday morning, why can't I come close on my house on Saturday morning? Why do I have to take off work on a Friday to make that happen?

And so I think those consumer expectations are going to adjust and shift over time. And us as an industry are going to have to embrace that because if we're the title company owner that says, hey, you know what? Why don't you close on Saturday and Sunday with us and we'll make this more convenient for you, you better believe that a lot of home buyers and home sellers are going to be more interested than that and the business will go there. I think on kind of the second part there, I mentioned two things. In the past, we've always said, we do things in person, let's educate our employees and train our employees and we'll be safe.

Like nobody's going to defraud us because we're checking IDs in person, we're training our employees, we have all of our procedures and policies in place. I think we're quickly accelerating past the point of where that is sufficient. I talk a lot about when you do things in person, you feel more secure and there's more trust there, but the reality is a digital system can do a whole lot more checks on an individual than just somebody showing up with their. and we'll be safe, like nobody's gonna defraud us because we're trying to, you know, we're checking IDs in person, we're training our employees, we have all of our procedures and policies in place. I think we're quickly accelerating past the point of where that is sufficient.

I talk a lot about when you do things in person, you feel more secure and there's more trust there, but the reality is a digital system can do a whole lot more checks on an individual than just somebody showing up with their driver's license. And if you think about it, we have a identity verification system. When you log into that, not only are we checking is your ID real or not, which is difficult for a human to do, very easy for a machine to do, but we're also checking where you're logging in from, what kind of connection do you have, how old's your email, your phone, all these risk factors that you can put together that are all digital things that you can't actually do just face-to-face. And so you can actually check the validity of a person a lot easier electronically than you can kind of in person there. And the other side of that too, is just this concept that, oh, well, we have these procedures in place, we have these policies in place, we're just gonna train our employees.

How many times have we heard about a fraud instance because somebody didn't follow what they were supposed to or didn't realize they were supposed to be doing something? So I really think as we continue down this journey, obviously I'm a technology vendor, so I'm biased to say this, but I think we'll have more technology in place to help us solve these critical problems. Absolutely. I know you mentioned that the wire system is a 40-year-old, six-year-old. Is there an alternative besides the FedWire thing you mentioned earlier?

And isn't that FedWire the instance kind of when once you submit the money, it's like it's gone kind of thing, just it'd be more riskier versus having the ability to sometime recall a wire, you have that window of two hours to 24 hours, you can still have a chance. Yeah, no, that's a great point. So do faster payments mean faster fraud? Very potentially, particularly to your point, RTP and then FedNow, that system, when you move money through those, they're largely irreversible and they are instant. I've used these many times, we've been testing them out at work for quite a while now.

You click send and the money's in the other account within seconds and it is not easy to get that money back and particularly the problem we're gonna have in our system here in the US. Now, it's hard to send that money in that same system overseas, but domestically, you can move it around pretty quickly. As you know, and probably a lot of our listeners know, with wire fraud, there are typically money mule accounts involved, right? Money gets moved to another bank and to another bank and then it gets wired overseas. And you know, it's a romance scam.

Somebody gets $100,000 in their account and the person they think they trust says, hey, I just put $100,000 in, can you wire it to me in Russia or wherever? And they do because they don't think anything's wrong and from their perspective, $100,000 came in, $100,000 went out, like what did they do wrong in that scenario? The problem we're gonna have with these faster payments is you can imagine an RTP or a FedNow that gets initiated on a Monday morning at 7 a.m., right? Before the Fedwire system is quite open yet, before the banks are open, at 7 a.m. we start moving this money around and we run it through six different financial institutions through money mule accounts within a matter of minutes because 15 seconds to get through each of those six accounts, it's at the destination account, Fedwire system opens at 8 a.m.

or 9 a.m. or whenever, that money gets wired overseas immediately. There's no, there was never even a chance to call the first bank in that process to try and stop it, which our wire transfer system, you know, it takes time to move between all those accounts. RTP and FedNow, that money will be through six accounts and can you imagine trying to get six financial institutions to coordinate with each other on, hey, where'd that money go and I need to get that back and that money's already been wired overseas? It's just, it's a problem that won't be able to be solved from that perspective.

So tell me about the, is it FedNow or Fedwire which is the new system? Yeah, so FedNow is the new one, it is by the Feds, they're both by the Feds. Fedwire was the existing wire transfer system. So the purpose of that, having instant access to money, that's by the intent. But I don't see, I don't see the tele-industry adopting it or having any kind of appetite for it.

Like, I mean, it just kind of really increases the, like the risk, like just another exponential, having that zero window for recalling something. Having a few hours, that means you have a little kind of, hopefully, you need to have a chance to move it to that zero chance. Yeah, you're exactly right. We have to think about who's incentivized to do this, right? Why would a title company be incentivized to do this?

Maybe they get lower fees than what they're getting with their wire fees, but usually wire fees are pretty nominal or over free anyways. And so you're exactly right. Who has the incentives for these things to actually be implemented? The banks obviously are very interested in using these, these systems for moving money faster, but yeah, getting title companies on board or consumers on board as well. You think about it from a real estate agent's perspective.

If I'm a real estate agent and you're gonna send me my commission and you can send it now instantly to my account and I don't have to pay an incoming wire fee, I've got a huge incentive to be asking a title company to be paying me off that way. But the title company is gonna have the friction of, well, we don't really wanna do that because we are worried about the fraud risk here. So it'll be interesting to see how this world evolves. Yeah. So what innovations are you most excited about in the security space for real estate transactions?

Anything Foggenlok is working on that you can see? That's what- Yeah, yeah. No, I love the real-time transactions actually. What we were just talking about, real-time payments, we've been at the forefront of that for years. I remember even when we started the company in 2017, I was reading the clearing house's spec for the real-time payments network, trying to understand it, how we could use it for real estate transactions and eventually replace the wire transfer system we have there today.

So that's something that I've always been just super interested in, super excited about. Anything that can kind of move the industry closer to faster transactions, more secure transactions are things that I'm interested in. So there's certainly the money movement piece, right? We've done a great job actually of helping clients and home buyers get their earnest money, their closing costs, their down payment, et cetera, into the escrow account, which completely eliminates wire transfers from that fraud vector. So we've done a great job of getting money into the escrow account.

Now can we help get money out of the escrow account in efficient and secure manners? And on top of that, so there's, if you think about a real estate transaction, there are basically two parts to it. There's moving all the money around, which I just talked about, but there's also moving all the data around and communications and workflow automation. We have some stuff today that already helps with that, but super excited about leaning more into that. How can we keep all the parties updated on where they are, get everybody in a unified, secure system so we're all communicating through a secure platform rather than email, phone, and fax, automating things.

Mo, you and I talked earlier about you guys being at the forefront of automation for a while. And I'm sure you guys are doing 10 times more than a lot of title companies out there, but I'm sure you'd also admit there's a long way to go. Like there's so much other cool stuff we can be doing on the automation side. Yeah. So Dale, what advice do you have for other entrepreneurs or tech leaders who are watching to use change in a legacy industry like the title net scroll?

So this one's interesting because I think I'm gonna give maybe a little bit of a different answer than some typical entrepreneur might give. Instead of trying to disrupt, I don't love that word, particularly if it's an established industry. Some people say legacy. I'll call it an established industry. We've been settling real estate transactions in the US for hundreds of years before I even existed.

We'll be doing it for hundreds of years after I exist here. But instead of trying to figure out, hey, how do I upend everything that's going on in this industry? Say, how can I solve their real world problems that they have in a manner that's not replacing people? It's helping them do things that are more valuable for their job. I mean, how valuable of time is it to send a bunch of emails back and forth with your lender trying to balance out a CD?

Like that's not a good use of time. If I could use that time taking a real estate agent out to lunch or meeting with my home buyers or my sellers or all the other people that I work with, that's value add to the business. So try to figure out ways that you could enable your customers. Instead of trying to, because I've seen this with other industries, they'll come in and they'll try to replace the people that are there, right? And they'll say, hey, why don't we do a digital title company?

There's a company that tried that and it didn't go so well. And instead of trying to replace what's there, why don't you say, hey, how can I help what's already there and help them be more successful at what they're doing, help them grow their business? That requires kind of a lot of things, but that's my general view on entrepreneurship. This podcast is proudly sponsored by. Need extra hands without extra overhead?

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Sapphy Virtual, expert support, tailored for title professionals. What are two to three immediate steps title professionals can take today to reduce their exposure to wire fraud? Well, just one, sign up with ClosingLock. But no, that's enough of us yet, Marega. There's certainly KYC verification stuff, know your customer, a common term in the fintech and banking world there.

I'm actually surprised at how many people in our industry receive money or even send money, and they don't really know who it's coming from or where it's going. The banking industry does not like that at all. They have very strict requirements on if money's coming in or money's going out that you know where that money is going to. So there are a lot of different ways to implement that, and I'm happy to kind of work with people on what that would mean. But in general, knowing where your money is going in and out.

Another one that I think is extremely practical that I still don't see a lot of is multi-factor authentication on everything, particularly your tier one accounts, your very sensitive systems and information that you might have. Email is obviously- Self-production software. Exactly. Banking apps, your password managers, like all of those things. If you don't have multi-factor authentication, you're just, I mean, yeah, you're negligent.

I'll just be that transparent about it. If you're not using MFA on those logins, you're being negligent. And a lot of the systems that make you, they almost make you, which is a good thing. Yep, exactly, exactly. And the last thing I'll say, and this one's kind of harder to do, but anytime you can kind of get email out of the equation, it's a pretty good thing.

That's still where the vast majority of fraud goes through is through email connectivity. So anything you can do to get out of email, there are a lot of different tactics for that as well. But in general, that's a good one. How do you combat social engineering? That's probably the biggest risk.

I would just say the weakest link transaction is a realtor. And it happened to us multiple times. I'm pretty confident it happened to every single type of company. I've said many times, if a fraudster wants to go after a particular person or a transaction, particularly a sophisticated fraudster, that's pretty difficult to stop. If I wanted to go look up all of Mo's information, I know your name, I know which region you're in, I can go get all these reports on age, who you're married to, your addresses, your former cars.

I can probably answer a lot of those KBA questions even that we see from time to time just by knowing who I'm going after. So to your point, social engineering can be kind of very difficult to stop. I always say it depends on the problem we're solving as well. If we're talking about how do I wanna make sure a buyer never sends their money to the wrong spot? Like if I wanna just guarantee this home buyer is going to send their money to my escrow account.

Well, you've got a couple of options. One, you can fly to wherever they are, drive to wherever they are, escort them to the bank with your wiring instructions and say, this is the account number and this is the routing number. If you do anything else, I'm gonna shoot you. And like that will guarantee you're gonna get the money from that home buyer. Not a great consumer experience, probably not something we're gonna be implementing here.

There are other systems. We have a system and I don't wanna turn this into an advertisement for us, but it will just take the money out of their account and put it into the escrow account. So they're not actually typing in an account and routing number. They have no other way to send the money to the wrong spot. They can't send it to a fraudster even if they have been targeted by social engineering.

So that's just kind of one example. You know, there are other cases as well that if we wanted to solve that particular problem, that there are ways to do that. Here. What's the biggest misconception you think people have about cybersecurity in the title industry? I think the biggest one I have encountered is that security and simplicity are on opposite ends of the spectrum.

And that is, I mean, admittedly, I've thought of that as well. You can be secure, you can be simple. You can't be both. And we just talked about multi-factor authentication. That makes it more complex, right?

Like if we add multi-factor authentication, it's less simple, but it is more secure. And so typically we think of those things as opposite ends of the spectrum. Occasionally you can find and build things that are both simpler and more secure than what actually exists today. So I think the big misconception there is that you don't necessarily have to sacrifice one to get the other one. And so I've seen this many times in the industry, and I don't think I have time to get into all the examples, but there were cases where title companies implemented complex procedures or processes thinking that they were adding security.

They were not. They weren't solving the actual problem they were going after. They thought they were, and it felt good, and it made them probably sleep a little bit better at night for a little bit, but they weren't actually solving the problem that they were intending to solve. And so I'm always very cautious on, hey, let's not make it complex and make ourselves feel like it's more secure. Let's actually understand why we've added these hurdles, and are they solving the actual problems that we're trying to solve?

And the dumbest example I'll give real quick, just to make it tangible for everybody. Early on, I heard a customer tell me, oh, well, I don't worry about incoming wire fraud because we put our company logo on our wiring instructions. And I mean, just the absurdity of that, right? And they thought that was actually helping prevent wire fraud in that case. Now, that was a long time ago.

People have evolved. I don't think anyone would say that today, but I think that's an example of, we did something, so we still did it. It's a naivety kind of thing. Exactly, exactly. Come to Google.

Can you share a story, maybe a close call or a success story where a closed and locked solution directly prevents a fraud? Today's episode is sponsored by. Hey, you, title agents, stop wasting time digging for answers or waiting on an email or callback from your underwriter. With titlegpt.ai, you get instant, reliable answers to your title questions fast. No more delays, work smarter, close faster, and keep deals moving.

Try www.titlegpt.ai today. I actually, I was planning to talk about this one, that I had one earlier this, we had one earlier this week where they were doing the selfie check and they had 3D printed a mask, right? So they had a fake ID. They had 3D printed a mask to match that fake ID. And the pictures are incredibly creepy.

I don't know if we're gonna be able to release them or not. I hope we can, because it's like this person wearing this fake mask, like trying to do the selfie verification there. They failed for a couple of other reasons as well. That one was actually just kind of bizarre and kind of unusual. I know of a customer in Michigan, I think they're in Michigan, Capital Title Insurance Agency.

They told us shortly after they signed up with us, they caught seven consecutive seller impersonation fraud attempts. They would have been, I think they said $2.1 million or something like that. And just a two month span from using our seller ID verification platform. So we see that a lot. We get customers all the time.

There's another one I can think of real quick, Flying S Title. I know they caught three vacant land seller fraud attempts in a single month using our platform as well. So we just see it on a unbelievably regular basis. And what I always think about is, I guess I won't give away too much information on our customer base, but we protect X percent of real estate transactions, Y percent are unprotected. And that Y is actually greater than the X.

We're not over 50% market share yet. And so it does make me wonder how many of these are going through on a regular basis. And if we're relying on some of these outdated systems or we're just hoping our employees are checking things correctly, it's a scary world out there. Yeah. So your solution, that's a seller identification or customer identification on top of like money transfer, is that correct?

Yeah, exactly. It'll check a lot of different things like make sure it's a legit person, legit ID, real person. The social security number is not fake or dead. We see people that try to use deceased social security numbers, which also just kind of surprises me. I don't want to give away all our secrets because fraudsters will listen to this and then they'll figure out everything.

But you can, I mentioned earlier, you can piece together a lot of fraud signals together and say, hey, do I think this is actually a legitimate person or not? And is this who they say they are? And then we can attach wiring instructions on the back end of that. And we insure it actually up to $2.5 million. We have a wire fraud indemnity policy that says, hey, we feel very, very confident that we know what we're doing here.

So that's one way actually that I think has added a lot of peace of mind to customers is, hey, not only are we using all this leading edge technology to make sure you're dealing with the person you think you're dealing with, but even if there were something to go wrong at some point, there is insurance coverage for it. Because as you know, most policies today are not protecting against this type of fraud because it's so, so rampant. Yeah. So the way to, I'm sure you have a payoff solution, like you verify the payoff, which is legitimate. So what's the, part of the biggest red flag with like a new account set up, I guess you can send the money to a new account or it gets triggered, you get like a red flag.

Yep, exactly. And so what we try to do actually is combine insurance coverage for it because, you know, as you know, most, you know, most policies today are not protecting against this type of fraud because it's so, so rampant. Yeah. So the, the way to put them, sure you have a payoff solution, like you verified a bit payoff, which is legit, but so what's the, part of the, the biggest red flag with a new account set up, I guess you can send the money to a new account or it gets triggered to get like a red flag. Yep, exactly.

And so what we try to do actually is combine all those fraud signals and new accounts. Account age is certainly one of those fraud signals and vectors that exist, but you put all those together. And this is a good example. We talked earlier about security versus simplicity. We actually give the customer, our customers, title companies, a pass or fail grade at the top because I've seen other fraud systems.

You know, I evaluated a bunch when we first started this and they were like, Oh, it's a 73 or, Oh, this one's a 62. Well, what the hell does that mean? I don't know what a 73 is. And I'm like, is that good? Should I send this person money?

Should I not? So providing useless information. Yes or no. Yeah. Exactly.

So we take that into product design. It's like, yes or no, did they pass or fail? And if they failed, let's go through why, because there could be some legitimate reasons that somebody fails. In fact, a fun one that we had in Dallas, we've had this in Atlanta as well. One of the Dallas Cowboys new coaches just purchased a home through our platform and he failed the identity verification.

But when you go through the report, the reason he failed was because he was a public figure. And so the system was like, Hey, this is a public person, like that doesn't seem right. And so it failed him. We had a real housewife of Atlanta buy a home through our platform as well. And she failed the identity verification because it said, Hey, this is a public figure.

And so when you provide that back to the title company and they're like, well, yeah, that's who we're working with, then, okay, everything's fine. But being able to provide those reasons for why something doesn't actually pass can be insanely valuable as well. Absolutely. So do you have a favorite quote? Favorite quote?

Yes. Smart people learn from their mistakes. Wise people learn from others' mistakes. So I try to be wise, I don't always implement that. But that's a good one.

If you can learn from others, that's insanely valuable. How about a favorite book of all time, or maybe one that you read recently? My original thought on this was Bible, and is it too cliche to say the Bible? Maybe, but it's certainly full of lessons on perspective, life, how to be joyful. If we're talking non-religious text, I'd probably go with Malcolm Gladwell's stuff, particularly Outliers.

I think that was the first one I read from him. Just love his unique data analysis that he provides and just fascinating stuff. And I always really enjoy when you meet people that have different perspectives on life. And Gladwell is certainly one of those people. He's just got a very unique perspective.

That's awesome. Do you have any last words of wisdom to our audience to keep our money safe? I wish I did. Sign up for ClosingLock. Those are my words of wisdom.

I hate sounding like an advertisement here, but how about I put it this way? You don't have to sign up for ClosingLock, but you should be doing something. And there are competitors out there. You guys know who they are already. Sign up with somebody if you're not using something today.

Well, thank you so much for your time. I appreciate you. Yeah, thanks so much, Mo. This was a lot of fun. I appreciate it.

Well, that's a wrap up of our conversation with Andy White. A huge thanks to him for sharing his time and expertise. If you enjoyed today's episode, please don't forget to subscribe and leave a positive review. And most importantly, share it with your fellow title pros. Until next time, keep innovating, keep growing, and thanks for listening to the Outer Ages Podcast.

See ya. And that's a wrap on today's journey with Mo Shamil from the Title Agents Podcast, reminding you that mastering the art of innovation is key in the title industry's fast-paced world. If you're finding it tough to keep up with the changes and challenges, remember, you're not alone. Our calendar is open for you. Find the link in the show notes and let's connect.

Make sure to hit subscribe to not miss out on strategies that elevate and insights that empower. Together, we'll navigate the future of the industry. I look forward to our next meeting in the upcoming episode.