The happy days when an individual’s word and handshake were their bond in business transactions aren’t just gone, they’ve been obliterated by the new and ominous evil of cybercrime.
In today’s snake pit of online business transactions, it’s increasingly difficult to know if the person you’re dealing with is the real deal or some imposter hoping to steal away anything from your credit card information to your house, as seen by dozens of home-theft scams across Canada in recent years.
Edmonton’s Treefort Technologies, a leading cyber-security firm, says cybercrime is growing in frequency and magnitude.
“The reality is that any new potential clients could be fraudsters, representing themselves using sophisticated fake ID, banking, credit and other falsified documents,” said Treefort’s Kim Krushell, a former civic politician and Treefort’s cofounder with her husband Jay Krushell.
Jay Krushell was a partner at the law firm Witten for 23 years and came to specialize in online real-estate transactions.
If it were measured as a country, cybercrime would be the world’s third-largest economy after the U.S. and China, reports Steve Morgan of Cyber-crime Magazine. It inflicted an estimated US$6 trillion in damages in 2021, said Cybersecurity Ventures. It’s expected to grow 15 per cent per year.
Cybercrime comes in different forms, such as ransomware, digital identity theft and money laundering, Kim Krushell said, but a new target is residential real estate.
When it hits an individual homeowner, it’s devastating due to the magnitude of the loss and legal mess, Jay Krushell said. He hopes government and business will take measures so this criminality doesn’t flourish in Alberta.
“Even if there were only three (such frauds) that happened in Alberta last year, can you imagine the difficulty you would be in if you were over in Dubai for a year, you moved back, and somebody was living in your house? It could ruin your life. Trying to unwind it is horrific.”
There are two general types of real estate cybercrime — mortgage fraud, where the criminals impersonate the owner to get a new mortgage, and title fraud, where they seize title of the house and sell it. In both cases, the criminal attempts to quickly make off with the money, leaving owners, buyers, banks, home title insurers and governments to sort out the fiasco.
In mortgage fraud, the bad guy pretends to be the homeowner with high-quality fake identification, Krushell said.
“Typically all they need — and this is the crazy part — all they need is a fake driver’s licence.”
The bad guy then gets a copy of the online title for the home and uses the credit rating of the real homeowner. Bad guys tend to target homes that are paid off, with no mortgage and no existing bank lender to question things.
For title fraud, an absent homeowner is often targeted so that a realtor can be conned into showing the house. It’s often private lenders — such as groups of wealthy individuals with their own funds — that are targeted for the loan, Krushell said. Such lenders don’t have the same level of safety protocols as the major banks.
What can be done in the face of such alarming criminality?
Police have limited resources to track down cybercriminals in other countries. But Treefort’s technology is helping to limit such fraud with a unique tool to check identity.
There are three ways to make such checks — scrutinizing ID, looking at related personal documents such as from banks and utility companies, or checking out the person’s credit rating.
Each step is weak in isolation but Treefort uses its tech to do a more detailed analysis and strengthen the verification system, Krushell said. “If you do all three, it won’t stop all frauds but it raises the bar exponentially higher.”
Two things must happen to help clamp down on cybercrime, he said.
Private business needs to drop its fiercely competitive stance and collaborate to start securely sharing information about suspected fraudsters, thus alerting other business people to criminal methods.
Second, more robust verification rules are needed, including at provincial government land titles offices, Krushell said.
The province has an assurance fund to compensate owners for land title fraud in cases where there’s no title insurance in place, as seen with about half of Alberta homes.
Given the high stakes and huge amounts at stake, though, no government can afford for this criminality to get out of control.
Allowing for digital identity checking on land titles will both cut down on red tape and provide more security, something any government might well appreciate.