A few months ago, when Billy Roehrenbeck was working on a title transfer for the sale of a vacant piece of property in Hot Springs Village, he made a shocking discovery: The seller of the land was not the actual owner, and the land wasn’t even really for sale at all.
By the time Roehrenbeck realized he’d been a victim of a new — and quickly expanding — form of real estate fraud, it was too late. Tens of thousands of dollars had been transferred to the fake seller, who then disappeared without a trace. “We wired the funds unknowingly to the perpetrator’s bank account, payable to the real owner of the property,” he said.
“Basically, the perpetrator identified themselves as the owner of this lot using both verbal and electronic communication,” Roehrenbeck, owner of Pulaski County Title in Little Rock, told me. “The perpetrator signed and returned the documents with an out-of-state notary, and about a month after the closing, the real owner surfaced who had no idea his lot was being sold.”
“The buyer was going to build a spec home” on the property, Roehrenbeck said. “He had not started construction, thank goodness.”
Known as seller impersonation fraud, the scam uses artificial intelligence to execute the scheme.
It’s been happening around the U.S. for some time, and, according to Roehrenbeck, is now a growing problem in Arkansas. The scammers create fake profiles that mimic the identity of a seller, complete with bank account information, government-issued identification, even the capability of making voice calls that sound like a real person. (“We always used verbal communication as the antidote in the past,” Roehrenbeck said.)
Roehrenbeck said that properties with out-of-state owners are usually the ones targeted. Pulaski County Title has subsequently identified additional attempts to sell property out from under real owners. “A competitor had a loss on Lake Hamilton that was an even higher amount,” he said.
(In Connecticut, developers began building a $1.5 million house on a property purchased from a fake seller.)
To combat the scam, Pulaski County Title now takes additional steps to make sure the real owner is actually selling the property. Roehrenbeck’s team will contact the seller and ask questions that only the individual would know how to answer, he said. They also run multifactor checks on documents and identification, like driver’s licenses.
“With one fraud attempt we foiled, we were able to determine the real owner of the property had purchased it because it was a couple of lots away from their in-laws and that they did not attend the closing when they bought it,” he said. “We asked these questions to the perpetrator. The real owner could answer the questions. The perpetrator could not.”
That was for a property on Lake Catherine near Hot Springs.
“What used to keep me up at night was, did we miss anything in the title search?” Roehrenbeck said. “Now what keeps me up at night is all of these fraudsters. The real underlying takeaway is that AI is exponentially increasing fraud in general in multiple ways.”
Roehrenbeck added that the experience also “underscores the importance of title insurance.”
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