Over the past five years, there has been an increase in headlines announcing online property scams. Some are run by very sophisticated syndicates, with buyers, sellers and renters not the only victims - property practitioners are also being targeted.
The very technology that helps people to communicate and action activities from behind a screen also exposes them to innumerable scams, and it can be difficult, given the high level of manipulation by fraudsters, to identify an honest or genuine transaction.
Scams are varied and range from purely digital communications from a con artist or syndicate to the interception of property transaction funds. Businesstech.co.za reported in 2021 that the increase in scams through purely the interception of communications between attorneys, estate agents and their clients, was so significant that the Attorneys Indemnity Insurance Fund made the decision not to cover attorneys who fall victim to cybercrime.
Cybercrime affects all global industries, which has driven advances in cybersecurity. Still, the criminals behind these types of scams are equally adept and qualified at finding ways to manoeuvre around these prevention measures. Real estate transactions are particularly attractive to fraudsters because a large portion of society is still so trusting, and, of course, any property funds transfer across the internet for deposits, for example, can be pretty significant.
While many larger agencies and conveyancing firms use secure email servers and other added protections, they are expensive, leaving the smaller agency firms vulnerable. This requires everyone involved in a property transaction to be ultra-vigilant
Here is a look at some of the known types of property scams.
Property practitioner posers
Last month a Cape Town estate agent was arrested for 'allegedly' swindling her clients of R5-million. Promising potential investors interested in investing in her real estate company some good returns, she misappropriated the funds over a two-year period.
In Bloemfontein, a 60-year-old man was convicted, also in July, of fraud and contravention of the Estate Agency Affairs Act Section 26 and Prevention of Organised Crime Act and money laundering. He falsely advertised a property and lured a buyer to give him R100 000 for the purchase.
These are a few recent events which the victims may have avoided if they had checked that the agents held a valid Fidelity Fund Certificate. The certification can be easily checked through the Property Practitioner Regulatory Authority website. Another avoidance strategy is to search online for the property practitioner's name and any so-called company being represented. Asking the property practitioner for referrals from past clients is not enough reassurance, as seamsters often pull in friends and family to support any claims they make.
Electronic communication
This is the most common method criminals use to scam their unknowing victims. The scammers tap into communications between authentic buyers, sellers, conveyancers and property practitioners, and at an opportune time, usually, before any payments are due, send an email from an almost identical email address to notify the purchaser (or conveyancer) that there is a change in banking details. The buyer then innocently transfers, via electronic banking, funds into the fraudster's bank account.
Not only do buyers lose their money, but their agreement of sale is also breached, which can also make them liable to the seller, who can claim damages.
This communication intervention scam can occur at any point during a property transaction, even after a property sale has been cancelled when the buyer expects a refund from the conveyancer. Posing as the buyer, and sometimes even using the buyer's actual email address, the scammer informs the conveyancer of new banking details, and once the refund is paid over, withdraws those funds and simply disappears.
Always check email addresses carefully, and don't immediately hit the reply to an email without first checking that the email addresses align exactly with previous communications.
Online property sales and rentals
A number of syndicates are actively targeting the unsuspecting public who seek to buy or rent a property without physically doing a viewing. This is more prevalent with holiday rentals, which are usually booked sight-unseen. In this case, when dealing directly with the owner, the advice is to check as many of the ‘facts’ presented as possible. Such would be asking for identification, but even IDs can be forged. Ask for referrals from previous tenants, and check that they have active profiles across social media. If they do, they might consider a request to confirm if the property or holiday rental is legitimate.
Be alert
Regardless of the circumstances or the challenges, always trust your instinct. If something feels a little off, or requires an exchange of funds you cannot afford to lose, ask for verifications. Find out who the person is, their credentials, bank details, and even a physical address that you could check to confirm authenticity. If, during a transaction, you are asked for funds, which is likely the deposit when you are buying or renting a property, notification of a change in banking details should raise a big red flag.
When paying money over, always try to involve more than one party in the fund transfer notifications, such as the agent, the conveyancer, your personal banker, and even the seller. If any party suggests that these funds are not due at this time, you may just be able to have your banker stop the payment. Be vigilant, and check every tiny detail - it may be time-consuming, but you may avoid being a victim.
Writer: Kerry Dimmer