What Every 1031 Investor Should Know about Real Estate Fraud and Cyber Risk
A 1031 Exchange can be vulnerable to wire fraud, identity theft, seller impersonation and phishing scams, and other cyber threats. Protecting Exchange Funds starts with choosing an experienced Qualified Intermediary (QI), understanding how funds are safeguarded and transferred, and independently verifying all payment instructions.
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.
Today’s Most Dangerous 1031 Threats in 2026:
- Cybercrime, wire fraud, and AI-powered scams
- Seller impersonation and other real estate scams targeting exchange funds
- Misappropriation, misuse or mishandling of exchange funds
- Underinsured/uninsured Qualified Intermediaries (QIs)
- Hidden incentives and undisclosed conflicts of interest
- Inadequate safeguards and controls for holding and transferring exchange funds
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?
- See our full list of questions to ask a Qualified Intermediary.
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:
- Protect your accounts. Use unique passwords and enable multifactor authentication, especially for email and financial accounts.
- Understand and follow your QI’s security procedures. Confirm how documents, approvals, and payment instructions will be transmitted and verified before the transaction begins.
- 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.
- 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 Years’ Real Estate, Wire and AI Fraud Statistics
2025 Real Estate, Wire and AI Fraud Statistics
Today’s Most Dangerous 1031 Threats 2025:
- Cybercrime and wire fraud
- Real estate scams targeting exchange funds
- Hidden incentives and undisclosed conflicts of interest
- Underinsured/uninsured Qualified Intermediaries (QIs)
Real Estate & Cyber Fraud: The Growing Threat
Cyber and real estate fraudsters don’t just threaten email inboxes, they target wires, real estate closings, and Exchange funds. And this fraud is escalating at alarming rates:
Wire fraud is soaring. The FBI’s Internet Crime Complaint Center (IC3) reported $16.6 billion in total internet-crime losses in 2024, with $2.77 billion linked to Business Email Compromise (BEC), the primary tactic for diverting wire transfers. (FBI ICE 2024 Annual Report)- Real estate wire fraud losses have multiplied fifty-fold in less than a decade, soaring from under $9 million in 2015 to more than $446 million in recent years (ALTA, NAR, HousingWire referencing FBI/IC3 data)
- Nearly half of all real estate transactions show fraud attempts/indicators, with a median loss of $70,000 per case (United States Real Estate Investor)
- One in four consumers receives a fraudulent message during real estate closings, and nearly 5% fall victim (CertifID, 2024 Wire Fraud Report)
Take Action: Protect Your Exchange in 2025
Given that 1 in 3 Americans have already lost money to fraud this year, don’t let cyber fraud or real estate scams put your Exchange and funds at risk. Choose a QI that is reputable, transparent, highly insured, cyber-secure and backed by a Fortune 500 company. Your financial plans deserve nothing less.
2024 Safeguarding Your 1031 Exchange Transactions: Navigating Cyber Risks in Real Estate
Best Practices for Securing Your 1031 Exchange
In today’s rapidly changing digital age, criminals are using sophisticated techniques including artificial intelligence to steal the funds of companies and individuals.
Since real estate transactions involve the wiring of monies, cybersecurity has become a critical concern for owners and investors. Fraud and scams are becoming increasingly sophisticated and harder to detect, making vigilance more important than ever.
Unless investors and property owners use a 1031 Qualified Intermediary that has state of the art safety protocols, 1031 Exchanges, which allow investors to defer capital gains taxes on property sales by reinvesting in similar properties, may also be vulnerable to cyber threats.
Findings from our recent American Fraud and Identity Theft Statistics 2024 report highlight the alarming rise in scams, with nearly 1 in 3 Americans having been scammed in the last 12 months alone. These statistics underline the importance of vigilance among investors and all parties involved in 1031 Exchanges transactions.
Latest Cyber Threats to Be Aware of
- Phishing attacks
- BEC – business email compromise
Phishing attacks, where cybercriminals employ deceptive emails and AI-generated content to trick recipients into revealing sensitive information or clicking on malicious links, can be a significant threat to 1031 transactions. AI-generated emails and cloned voice and video content that mimic and impersonate trustworthy sources continue to intensify the depth and sophistication of phishing.
Business email compromise (BEC) schemes are also escalating. BEC schemes involve hackers gaining access to email accounts and manipulating transactions for financial gain. Given that more than 40% of Americans receive suspicious communications daily but only 44% report them, awareness and proactive measures become even more critical.
Tips to Stay Ahead of Cybersecurity Risks
- Use strong passwords and change frequently.
- Enable Multi Factor Authentication (MFA) on your online accounts including email, financial, social media platforms.
- Be cautious and skeptical of emails requesting sensitive information. Phishing emails may contain typos or appear threatening. If something seems suspicious, report the email as phishing or junk.
- Avoid clicking on unfamiliar links or opening unexpected attachments.
- Keep your software updated to ensure your systems and devices have the latest security measures.
- Report identity theft immediately if your accounts or personal information have been compromised.
- For your 1031 Exchanges, select a Qualified Intermediary that is knowledgeable, informed and vigilant with proactive protections in place to thwart cybercriminal activities.
CLICK TO DOWNLOAD SAFETY AND SECURITY TOPIC PDF
IPX1031 Security Measures
IPX1031 employs various security measures, including a secure electronic document-signing platform to help prevent potential fraudulent activities in exchange transactions.
IPX1031 Financial Assurance
IPX1031 is a Fidelity National Financial company (NYSE:FNF). As part of a Fortune 500 Company, IPX1031 provides sophisticated technologies to protect your funds. These protections are backed by a $100 million Fidelity Bond and a separate $50 million Written Performance Guaranty. Click here to see our full umbrella of coverage.
2023 Cybercrime States & Steps To Prevent Fraud
Nationwide in 2023, fraud and cybercrime continued to escalate. In our 2023 research, Americans shared that 1 in 3 have been victims of identity theft and 55% have been victims of scams.
Unfortunately, incidents are trending upward, which is impacting commercial real estate transactions including 1031 Exchanges. Technology and tactics used by cybercriminals to access financial, corporate and personal data, particularly relating to real estate transactions, continues to evolve. Bottom line, any of your data and transactions may be at risk.
Many individuals and businesses underestimate the threat online fraud poses to their profitability, cash flow and reputation. Do not leave your data – and your profits – open to cyber criminals. Take a few simple steps towards keeping your computers, your information and business secure. Reduce your vulnerability and you reduce your threat.
Tips on Staying Protected from Scams in 2023
- SECURE your devices and accounts to help safeguard your information
- Bolster Your Password Protocol: create strong, unique passwords and use multi-factor authentication
- Protect Your Home Network – read How To Secure Your Home Wi-Fi Network
- Recognize and Report Phishing or to report that you’ve been a victim by filing a complaint with the FBI’s Internet Crime Complaint Center (IC3)
- UPDATES – Keep your security software, devices and software up to date
- Report Identity Theft if your accounts or personal information have been compromised
- For your 1031 Exchanges, choose a Qualified Intermediary (QI) that is informed and vigilant and one that has proactive protections in place to thwart cybercriminals.
A Qualified Intermediary (QI) holds your funds during the 1031 Exchange. However surprisingly, there are no Federal requirements regarding the security that QIs have in place for the monies they are holding for their customers. With IPX1031 as your QI, rest assured that protective measures are in place to safeguard your real estate funds.
1031 Exchange Fraud Prevention FAQs
What is 1031 Exchange wire fraud?
1031 Exchange wire fraud occurs when criminals deceive transaction participants into sending sale proceeds or purchase funds to a fraudulent account, often using impersonation or altered wire instructions.
How can AI be used in real estate fraud?
Criminals can use AI to produce convincing phishing messages and cloned voice or image content. Verify payment requests through independently established channels, even when a message looks or sounds familiar.
How can I reduce the risk of 1031 Exchange fraud?
Evaluate your QI’s safeguards, verify wire instructions independently, use multifactor authentication and follow established authorization procedures. Pause and verify any unexpected change to payment instructions.
What should I do if exchange funds were wired to a fraudulent account?
Immediately contact the sending bank, QI and closing team, request a wire recall or reversal, preserve transaction records and file a complaint at IC3.gov.
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
Taxpayers should always consult with their tax and legal advisors for advice with respect to their individual situation.
Your exchange. Your funds. Your choice matters.