1031 Exchange Fraud Prevention: Protect Your Exchange Funds

From the sale of your Relinquished Property to the acquisition of your Replacement Property, a convincing email or urgent payment request can put substantial proceeds at risk. For investors, fraud awareness and prevention should be an essential part of the transaction planning process from the very beginning.

2026 Fraud Update: Latest Real Estate, Wire and AI Fraud Statistics

Criminals increasingly target the funds, identities, and communications involved in real estate transactions, including 1031 Exchanges. Recent research documents higher reported real estate losses, more seller impersonation attempts and growing concern among closing professionals.

• Business email compromise, the primary tactic for diverting wire transfers, generated $3.05 billion in reported losses in 2025, up from $2.77 billion in 2024, according to the FBI’s Internet Crime Complaint Center (IC3). (FBI IC3 2025 Annual Report released April 2026)
• Real estate fraud losses jumped approximately 58%. The FBI recorded $275.1 million in reported real estate fraud losses in 2025, compared with $173.6 million in 2024. Complaints increased approximately 32%, reaching 12,368. (FBI IC3 2025 Annual Report)
• Seller impersonation threatens property transactions. ALTA’s 2026 study found that 59% of surveyed title insurance firms experienced at least one seller impersonation attempt in 2025, compared with 28% reporting a prior-year attempt in its 2024 study. (ALTA)
• Wire fraud attempts are increasing. In CertifID’s 2026 State of Wire Fraud report, approximately 60% of surveyed title professionals reported an increase in fraud attempts. (CertifID)
• AI makes impersonation harder to spot. In ALTA’s 2026 survey, 58% of respondents rated deepfake voice or image technology as at least somewhat common in seller impersonation attempts. (ALTA September 2026 Seller Impersonation Fraud Study)
• A single diverted wire can mean a six-figure loss. CertifID reported a $343,497 median loss for seller-proceeds fraud in its accepted 2025 recovery cases. These cases involve criminals redirecting sale proceeds to fraudulent accounts. (CertifID 2026 Wire Fraud report)

What to Ask When Choosing a QI

• What security controls are in place to prevent cyber and real estate fraud?
• How are my exchange funds held, and are they segregated for my benefit?
• Who can authorize and release funds? Are dual approvals required?
• Are referral fees or is revenue share being paid to my broker/real estate agent/advisor?
• Is the QI insured and bonded? What are the amounts of coverage?
• What secure processes are in place for your fund transfers?
• What is the procedure for reporting suspected fraud during my transaction?
• Read more questions to ask your QI here.

Financial Strength and Safeguards Matter

Qualified Intermediaries are subject to federal tax rules governing 1031 Exchanges, but they are not federally regulated or licensed in the same manner as banks. Investors should evaluate the financial strength, oversight and fund-handling practices of the company holding their Exchange Funds.

As a wholly owned subsidiary of Fidelity National Financial (NYSE: FNF), IPX1031 combines financial backing with documented fund controls, audits and specialized 1031 Exchange expertise. Security extends beyond where exchange funds are held to how a QI identifies, manages and protects against risks throughout the transaction.

IPX1031’s safeguards include:

• $100 million Fidelity Bond, $50 million Written Performance Guaranty and $30 million Errors & Omissions coverage (link to certs)
• Segregated accounts for the benefit of the named Exchanger, using the Exchanger’s taxpayer identification number
• Written Exchanger authorization and dual authorization for disbursements
• Fund transfers controlled by a separate Banking Division
• Regular reconciliation of exchange fund balances and organizational audits and controls

1031 Experience Matters

Technology and insurance alone are not enough.1031 Exchanges require seasoned expertise and proven guidance. With IPX1031, you gain:

• Dedicated 1031 experts — attorneys, CPAs, and Certified Exchange Specialists (CES®) on staff
• Extensive experience — serving clients since 1988, professionals who have facilitated billions of dollars of transactions and thousands of Exchanges each month
• Industry leadership — a trusted track record backed by very high compliance and security standards
• Recognized excellence — consistently honored as the Best 1031 Exchange Company

Take Action: Protect Your 1031 Exchange in 2026

IPX1031’s September 2026 fraud survey found that 51% said they had experienced identity theft and 95% expressed concern that criminals could use AI to steal their personal information.

The survey also revealed security habits that can increase exposure to fraud. More than half (56%) reported reusing passwords across accounts, and 24% do not use multifactor authentication. While these findings relate to identity theft broadly, they underscore the importance of securing the accounts, communications, and financial information used during a 1031 Exchange.

Here are four steps exchangers can take to reduce risk and protect their identities, their exchange funds, and the successful completion of their 1031 Exchange:

1. Protect your accounts. Use unique passwords and enable multifactor authentication, especially for email and financial accounts.
2. Understand and follow your QI’s security procedures. Confirm how documents, approvals, and payment instructions will be transmitted and verified before the transaction begins.
3. Pause and verify any changes. Treat last-minute requests, urgent instructions, or changes to wiring information as potential red flags. Independently verify all payment instructions with your QI and closing team.
4. Prioritize security, not just price. Evaluate your QI’s financial strength, fund controls, insurance, transparency and experience.

Your Risk is Real—Your Solution is IPX1031

With IPX1031, compliance and security come first. As a national leader in 1031 Exchange services, IPX1031 has the financial assurances, security and expertise essentials to protect your funds and provide answers and guidance throughout the exchange process.

Know who is holding your funds. Know how they are protected. Know the experience and financial strength behind your Qualified Intermediary.

Talk to one of our 1031 Exchange experts today to discuss your unique needs and learn how IPX1031 can help facilitate your next exchange.

Previous Year’s Real Estate, Wire and AI Fraud Statistics

1031 Exchange Fraud Prevention FAQs

Read More

1031 Due Diligence – Questions to ask a QI 
How Important is Your Qualified Intermediary?
Study: Most Americans Say Referral Fees and Revenue Sharing Are Unethical or Questionable
Safeguarding Your 1031 Exchange Transactions: Navigating Cyber Risks in Real Estate
1031 Cybercrime
Safety and Security for Investors
IPX1031 Knowledge Center

Your exchange. Your funds. Your choice matters.