Fraudsters are exploiting the desperation of prospective homeowners and tenants to have roofs over their heads and secure cheaper accommodation to defraud victims.
There has been an upswing in the fraud schemes since the coming of online platforms and money transfer in the banking sector. The social media has also been badly hit, as different groups have been created to fleece members. Most victims have been tricked to wire down payments to an account for pending real estate transactions.
Globally, the wire fraud schemes, especially E-mail Account Compromise (EAC) has turned into a $12.5 billion industry, according to United States’ Federal Bureau of Investigation (FBI). In Nigeria, senior officials of the EFCC could ascertain the amount lost over a five-year period, but believe that the financial loss is huge.
In major cases, some claim to be marketing consultants with mandate to sell property in choice areas such as Banana Island, Ikoyi, Asokoro and Lekki worth billions of naira. Others collude unscrupulous elements to market non-existing landed property. They also hand out allocation letters, but in reality, the land has encumbrances.
The common cases involve tenants paying for rental apartments without taking possession of the property. Such matters abound with security agencies, and over N200million may have been lost in that process yearly. Most of these fraudsters use known property platforms on the internet and social media to perpetrate their crimes.
Hackers also break into e-mail account to obtain information about upcoming real estate transactions. After monitoring the account to determine the likely timing of a close, the hacker will send an e-mail to the buyer, posing either as the title company representative.
A lot of Nigerians abroad have fallen victims in the process of buying property at home. Advanced fee fraudsters have cornered substantial part of the money transferred. FBI says, a total non-U.S. exposed dollar loss was $671,915,009. According to World Bank report, Nigerians living abroad sent home $22bn in 2017, a 16.4 per cent increase from the amount they repatriated in 2016.
Statistical data released by FBI shows that between December 2016 and May 2018, there was a 136 per cent increase in identified global exposed losses. The scam has been reported in all 50 states in America and in 150 countries. Victim complaints filed with the Internet Crime Complaint Center (IC3) and financial sources indicate fraudulent transfers have been sent to 115 countries.
Based on victim complaint data, Business E-mail Compromise (BEC)/EAC scams targeting the real estate sector are on the rise. From calendar year 2015 to calendar year 2017, there was over an 1100 per cent rise in the number of BEC/EAC victims reporting the real estate transaction angle and an almost 2200 per cent rise in the reported monetary loss. Victims participating at all levels of a real estate transaction have reported such activity. This includes title companies, law firms, real estate agents, buyers and sellers.
Victims most often report a spoofed e-mail being sent or received on behalf of one of these real estate transaction participants with instructions directing the recipient to change the payment type and/or payment location to a fraudulent account.
The funds are usually directed to a fraudulent domestic account, which quickly disperse through cash or check withdrawals. The funds may also be transferred to a secondary fraudulent domestic or international account. Funds sent to domestic accounts are often depleted rapidly making recovery difficult.
Two popularly property websites in Nigeria- Property vault and Instant Warehouse Nigeria told The Guardian that the activities of fraudsters are threatening online property businesses. They revealed that because of the scams, they display caveats that mandate the buyer, lessor or tenant to verify advertised property before closing transaction.
The Chief Operating Officer, Instant Warehouses, Mr. Sam Duntoye, disclosed that such incidents cannot be totally eradicated, but can be reduced through the use of verified estate agents.Land economists also confirmed the growing fraudulent activities in the real estate sector, and cautioned tenants, prospective homeowners or property buyers against the use of non-professionals.
The first Vice President, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Sir Emma Wike, blamed the trend on non-professionals. According to him, a lot of prospective homebuyers and tenants or gullible ones have fallen into their trap, and lost huge sums of money to them.
“There a lot fraudsters in real estate now, you will see a building going on, they would tell people they are ready to deliver in 16 or 18 months, people will ploy in their money, in the next four years, the property is still the same way they saw it the last time. At that point, it is difficult for them to get back their money. The developer will tell them, he has used their money as part of construction cost.
“The solution is that the public should always consult the professionals – estate surveyors and valuers when it comes to real estate to reduce the problem. No professional will like to part with clients’ money without embarking on due diligence, to know whether the property is encumbered or not,” he said.
The Chairman, Lagos branch of the institution, Olurogba Orimalade collaborated Wike’s submission and advised prospective homeowners and tenants to seek their services to prevent such incidents. He admitted the trend is growing as more Nigerians engage in internet activities.He said: “You cannot eliminate fraud, but it can be reduced to the barest minimum in real estate, if those that are interested in any form of asset, enlist the services of estate surveyors and valuers.”
The immediate past chairman, Royal Institute of Chartered Surveyors (RICS) Nigerian Group, Mr. Yinka Omotosho said the government should create a law to regulate the estate agency profession. However, he urged the public to use the right professionals that are registered and regulated. “Property is one of the easiest ways of taking people’s money. The public should do their due diligence before engaging any professional, ” he added.