Court Rules All Participants May Be Liable For Fraud Loss

CertifID, a real time identity management platform that helps protect real estate professionals from wire fraud, released its most recent white paper, “WIRE FRAUD IS EVERYONE’S PROBLEM.”  Written by Thomas Cronkright II, CEO and Co-Founder of CertifID, the white paper addresses the recent ruling by the District Court of Kansas in Bain v. Platinum Realty, LLC et al. which heightened the standard of care owed by transaction participants to prevent wire fraud losses.  (Bain v. Platinum Realty LLC et al., Case No. 16-CV-02326-JWL, Dist. Court, D. Kansas, 2018). According to the ruling, anyone, including title agents, underwriters and mortgage lenders, involved in a real estate transaction may be held liable where fraud occurs, regardless of the relationship between the parties.

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The jury in the Bain case found a real estate agent and her broker jointly and severally liable for 85% of losses incurred by a buyer when the buyer was tricked into wiring funds to a fraudulent account in connection with a real estate transaction.  Based on the pleadings and motions filed with the court, the real estate agent’s email account was compromised by cyber fraudsters who used the account access to send fraudulent wiring instructions to the buyer.  The buyer trusted the wiring instructions because they were sent directly from the agent’s email account and contained information relevant to the upcoming real estate closing.  The jury found the agent and her broker liable for negligent misrepresentation and ordered both of them to pay $167,129.27.  Importantly, there was no direct tie between the buyer and the agent or the broker, as the agent and broker in this case, represented the seller.  The buyer was an experienced real estate investor that was unrepresented.

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“The moral of the story appears to be that, no matter your role in the real estate transaction, you have a duty to take reasonable steps against cyber fraud,” said Cronkright. “Title companies; loan officers, attorneys or financial institutions…this ruling sends a strong signal that we’re all responsible to guard against cybercrime and wire fraud.”

Cronkright states the case appears to expand the duty of care in two ways. First, participants may be held jointly and severally liable for losses due to cybercrime if their email, systems or information is compromised.  Secondly, the standard of care may expand to all parties in a transaction regardless of direct contract or fiduciary relationships between them.

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The white paper includes the following:

>> Key facts, pleadings, pre-trial motion activity, verdict and post-verdict motions; and

>> Ways to meet the new standard of care including best practices to keep you and your customers safe.

It is now available for download at no cost at

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at