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Best Practices

New Fraud Scheme Targets Title Agency Corporate Names

May 31, 2012

Last week, the Florida Land Title Association (FLTA) reported information provided by Stewart Title about a new fraud scheme in South Florida targeting title companies.

According to a Stewart Title bulletin, corporations have been established with names similar to those of licensed title insurance agents. The corporate name is modified slightly with the addition of "services," "group" or "corporation" for example, to allow for incorporation with the state division of corporations.

Once registered, the fraudulent companies are able to obtain a federal tax identification number and open up bank accounts. Stewart reported it has found that these entities do not have fixed office locations and commonly use cell phones as their office phone.

“The imposters create documents purporting to be title insurance commitments, using commercially available software and provide lenders with fraudulently created insured closing service letters,” the bulletin stated. “We have discovered the existence of these schemes through claims made by defrauded lenders as well as reports from our agents who have discovered imposter agents. Your efforts to maintain the integrity of your agency's corporate identity is crucial in our efforts to fight agency identity theft.”

In the bulletin, Stewart lists several things agents can do to thwart this fraud:

  • Be aware of communications received from buyers, sellers, vendors, lenders, brokers or any other parties relating to a closing that you have not been asked to handle. This may seem like an innocuous request since many times a closing simply has not yet been referred to you, or your office was the proposed recipient of the closing and the file has been moved to another closing agency. However, these calls are also the primary method to catch this type of identity theft.
  • Many times a party to the imposter's closing will try to contact the imposter, but find your contact information in a phone book or in a vendor's or lender's database, and call you relating to the imposter's closing. You will need to train your staff to be cognizant of this specific type of phone call and if one is received, you will need to gather as much information from the person as possible relating to the imposter agency. It is imperative the parties are made aware your office is not handling the closing.
  • The use of positive pay, strict guidelines as to who is authorized to make withdrawals and continual diligence/oversight with respect to the transactions occurring in your escrow account.
  • Regular review of records maintained by the Secretary of State relating to your corporate name may be appropriate.
ALTA and FLTA encourage those who believe they have been targeted in this type of “corporate identity theft” scheme to contact their underwriter immediately.

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